Welcome to the third article of The Sports Economy series.
Sport is much bigger than its economic contribution so can its full role be quantified?
The impact of sport on society goes far beyond the direct and indirect economic contribution which was the topic of the two previous Sport Economy columns.
This wider societal contribution is well recognized by stakeholders and includes impacts on health, wellbeing, education, social capital and social behaviour.
There are of course some negative effects too, such as sports injuries and some elements of anti-social behaviour but the sweeping consensus is that the overall impact on society from sport is positive.
It would be ideal if these overall positives could be quantified and valued.
Value of Benefit
The value of the benefit could then be related to expenditure on sport to derive benefit/cost relationships and make a strong quantified integrated case for increased private and public support of sports infrastructure and activities.
The aim would be to clearly identify in quantified terms that expenditure on sport is good value for money.
There are three main steps in the process for proving in detail the societal impact of sport
• the identification of the link between sport and various societal issues and benefits,
• the quantification of this impact,
• the costing and valuing of these impacts.
This column looks at some of the available data and quantification associated with the non-economic aspects of sport.
In particular, it draws on the 2019 Observatory for Sport in Scotland paper Sport Participation in Scotland: Quantifying the Benefits.
Upward Trajectory
Recently there has been an upward trajectory in the amount of literature and studies on the social impacts of sport both home and abroad but unlike the measurement of economic results, the measurement of impact on health, wellbeing, education, social capital and crime, remains challenging.
The greatest increase in understanding and quantitative analysis of social impact has been in the area of health (both physical and mental health).
• According to the current National Physical Activity plan for Ireland, physical inactivity has been estimated to cost Ireland approximately €1.5 billion per year.
• In 2009 physical inactivity costs were estimated by the UK Department of Health to be approximately £8.3 billion per year.
• The US Department of Health and Human Services reported in 2007 that ‘increasing regular moderate physical activity among the more than 88 million inactive Americans over age 15 might reduce annual direct medical costs by as much as $76.6 billion.’
Furthermore, there has also been a growth in research on the impact of sport on subjective wellbeing such as happiness and life satisfaction, and it has regularly been estimated to give a person value in the tens of thousands of Euro per year.
Irish Sport Monitor
Sport Ireland’s Irish Sport Monitor has advanced understanding and quantification of some of the links between societal wellbeing and sport.
It provides data on social participation in sport which builds social capital and the link between mental wellbeing and sport.
According to the 2019 Irish Sport Monitor 47 per cent of the adult population are involved in a social form of sports participation which is defined as attending events, club membership or volunteering.
36 per cent of adults are members of a sports club. 19 per cent of adults attended a sports event in the past seven days. 12 per cent of adults regularly volunteer for sport.
The Irish Sport Monitor provides excellent data on the link between mental health and sport through the energy and vitality index (EVI) and other indicators of wellbeing.
The average 2019 EVI score for highly active people was 67 per cent and the sedentary average was 59 per cent. On self-assessment measures, the physically active consistently report more positive self-ratings of their mental wellbeing than those who are inactive.
The difficult task is in valuing or monetising these clear quantitative impacts of sport participation.
Other areas of social impact such as crime, social capital and education have been less researched and are more difficult to quantify.
The Observatory for Sport in Scotland paper referenced earlier makes the point, for example, that ‘’it is more difficult to establish [let alone quantify] whether sports participation reduces anti-social behaviours, or whether people who engage in less anti-social behaviour are more likely to participate in sport.’’
Despite these challenges, there have been some efforts made to quantify the overall societal impact of sport participation and volunteering.
Sport Wales for example quantified that the overall societal value of sport for 2016/2017 was £3.4 billion which was as much as three times higher than the economic value (GVA) of £1.1 billion.
Using a Social Return on Investment (SROI) framework, the Sport Industry Research Centre developed a model to value the social impact of sport, and significantly did so at the population level, finding that that the value of sport in England in 2013/14 was £44.8B versus costs of £23.5B.
In other words, for every £1 invested in sport, £1.91 worth of benefits are generated.
Furthermore, the study notes that the value of the social impacts reported is likely to be underestimated.
Source: Social Return on Investment in Sport: A participation-wide model for England – Sport Industry Research Centre.
In Ireland, Delaney and Fahey’s 2005 report on the social and economic value of sport in Ireland and Indecon’s 2010 report on the Economic Impact of Sport both refer to various quantitative aspects of the social impact but they do not put a monetary value on them except for volunteering.
Can a Social Return on Investment framework be applied to sport in Ireland?
An SROI framework is a principles-based method developed by Social Change UK that ‘’helps organisations to understand and quantify the social, environmental and economic value they are creating and generates a key ratio of benefits: costs for an action or activity’’.
The Observatory for Sport in Scotland paper that I have referred to previously asked how Scotland could apply an SROI and quantify the social benefits of sport participation. This provides a useful roadmap for how Ireland could go about doing the same.
They outline the methodology
1. Identify key stakeholders
2. Map outcomes
3. Measure and value outcomes
4. Establish impact
5. Calculate SROI
6. Report
It is clearly desirable to undertake an SROI for Ireland even though there are currently substantial data gaps.
But it should be noted that the Irish Sport Monitor provides much data for specific aspects which are in advance of many other countries. It is certainly worth the effort to increase our knowledge of the quantification of the impact of sport on Irish society as is already recognised in the Irish National Sports Policy and by Sport Ireland which is involved with BOSS, a project facilitated by the European Network of Outdoor Sports aiming to address some of the methodological issues of measurement for capturing the value of social benefits.
Conor Foley has a business degree from Trinity College Dublin, an MSc in finance from DCU and is a Chartered Financial Analyst. Over a 12-year professional career, Conor has experience of advising clients such as institutions, charities and bodies in the areas of global strategy, project management, asset allocation and financial structure. Conor will be working with Sport For Business to produce The Sport Economy, a regular piece, offering insights from the domestic and international sporting worlds of finance, economics and business, aims to bring Sport For Business members lessons and information from around the world to aid you in your strategy, financial affairs and business decisions. Conor has worked in leading financial institutions both at home and abroad and is committed to the growth and development of professional and amateur sport in Ireland.
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