Article by Mark Davidson

On 4 April running to 15 April 2018, the Gold Coast hosted the 21st Commonwealth Games.  The Queensland state government put up $1.5 billion to deliver the event.

This was a significant investment in to the Gold Coast which is home to almost 600,000 residents.  The amount easily dwarfs the £425 million cost of hosting the 2014 games in Glasgow, Scotland which has a similar population to the Gold Coast (excluding the greater Glasgow area). Although it is significantly less than the US$4.1 billion cost of the 2010 event held in Delhi – the most expensive Commonwealth Games ever. Glasgow was fortunate enough to have a significant amount of the infrastructure already in place,  unlike India which had to contribute significant resources. 

What are we getting for the investment?

The Gold Coast had most of the infrastructure in place, with only three additional venues being required. These were the Coast Sport and Leisure Centre at $105.3 million, the Coomera Indoor Sports Centre for $40 million and a new velodrome track in Brisbane.

Substantial procurement contracts were also awarded for broadcast, lighting, temporary seating, temporary power and event staging. A further $657 million was awarded in construction contracts for the venues and the Games Village, with around 90% of that figure going to businesses in south-east Queensland. Under a deal with the Queensland Government and the Commonwealth Games authorities, the city council agreed to renovate or construct the buildings and sporting grounds to Commonwealth Games standards.

Although that does not mean the money was spent wisely. There was the $2.1 million for a mass of bright lights and yellow poles that sit between Brisbane and the Gold Coast, which has been labeled a monstrosity.

How did the games impact Glasgow 2014?

It is worth noting that the Glasgow Games were heralded a success, however an opportunity cost analysis suggested that the £425 million of public money spent on the games could have generated similar economic effects if spent on other activities.  The analysis did not consider the effect on the community in terms of sport and recreational activity.

What about Melbourne from the 2006 Commonwealth Games?

Melbourne appears to have fared okay from their investment of $2.9bill into the Commonwealth Games held there. Melbourne received an increase in Gross State Product of around $1.6 billion over a 20-year period, with around half of the impact occurring in the year of the Games and employment of around 13,600 full-time or equivalent jobs.

Before the Gold Coast Commonwealth Games

No one can doubt that in preparation for the Games, particularly from 2013 to 2018, the Gold Coast and South East Queensland were booming. The significant investment brought increased construction which had positive effects on many other industries. Employment opportunities were growing. It was a boom period for the Gold Coast and local businesses were benefiting. Although the boom was primarily the result of the $1.5bn invested by the Queensland Government.

Impact on the Gold Coast

The impact of the Games has been estimated to be an increase in Gross State Product of $2 billion. This figure is hopeful, but it is worth noting that the majority of spending and investment has already occurred and the Gold Coast is now again reliant on tourism and other industries which are critical to its economic success.

Leading up to the Games, locals were advised that it was going to be so busy that it would be best to prepare. Prepare they did. Many locals planned holidays or arranged to work from home. The hospitality industry ordered more supplies and staff during the time.

At the time of the games, however, the hot spots of the Gold Coast were dead. The normally bustling tourist strip was a ghost town.  People were attending events to be sure, but they were not going out afterwards.  This caused a major loss to businesses, particularly, those that expected a significant influx of customers during or after Games events.

Comparing April 2017 to April 2018 when the Games was held reveals that total spending by residents and visitors at the Gold Coast was actually down 5%.  This naturally had a significant impact on businesses, who had prepared for what they thought was going to be a busy period, but was in fact quieter than the previous year.

Is it going to get better

Whether or not the Gold Coast economy remains strong after hosting the Commonwealth Games can be linked to:

• What the effect will be of there no longer being significant investment in the Gold Coast by the State Government; and

• The current state of the national economy as a whole particularly around the tightening of finance and the impact on the housing market. 

We have recently seen on the Gold Coast that certain businesses have really been struggling, particularly in the hospitality and retail industries.  We have also seen that properties on the Gold Coast have been difficult to sell and have not achieved prices expected. 

The takeout is that the outlook after the Games is going be bleak for some businesses.The local businesses that have a sound business model and the appropriate systems and people in place will do well from the Games and the infrastructure it has created. However, unfortunately other businesses are going to struggle as the Games did not bring in the revenue and general exposure that they thought it would bring.

 Where can you get advice and assistance?

If you have a business on the Gold Coast which is in financial difficulty as a result of the Commonwealth Games or otherwise, please don’t hesitate to get in touch with usfor a free initial consultation.