THE ECONOMICS OF SPORT: Benchmarking Olympic Medal Tally.

Home advantage could once again play a part in how the Olympic medals are shared in August; but the superpowers of the US, China and Russia are again set to battle it out at the top of the Olympic Games medals table in London in August, according to a new analysis by economists at PwC.

This is the fourth time that PwC has published an analysis of how medal performance at the Olympic Games can be linked to such factors as past Olympic performance, economics and state support for sport. This paper updates these estimates to allow for actual results in Beijing 2008.

The following economic and political factors were found to be statistically significant in explaining the number of medals won by each country at previous Olympic Games before allowing for past performance (which subsumes some of these factors as explained in the paper):

. Population
. Average income levels (measured by GDP per capita at PPP exchange rates)
. Whether the country was previously part of the former Soviet/communist bloc (including Cuba and China) that tended to give significant state support to Olympic sports; and
. Whether the country was the host nation.

“In general, the number of medals won increases with the population and economic wealth of the country, but less than proportionately,” says the report’s author, PwC’s UK Chief Economist, John Hawksworth. “David can sometimes beat Goliath in the Olympic arena, although superpowers like the US, China and Russia continue to dominate the top of the medals table.”

Some of the more interesting conclusions to be drawn from the PwC model are:

. Now it is no longer the host country, China may find it more difficult to stay ahead of the US (as it did in Beijing on gold medals, although not total medals won).
. The PwC model suggests that the British team could win around 54 medals this time around, beating an already exceptionally good performance of 47 medals in Beijing due to home advantage, which has proved significant in all other recent Olympics except Atlanta in 1996.
. Russia is projected by the model to continue to perform strongly relative to the size of its economy in third place (68 medals), but it does continue to drift down the table relative to the heights of its performance in the old USSR era.
. The model still suggests that India is a significant underperformer relative to its population and GDP, with a model target of around 5-6 medals for London after allowing for past performance. The most plausible explanation is that, with the exception of hockey, Indian sport tends to focus on events that are not included in the Olympics, notably cricket.
. The model estimates suggest that larger Western European countries such as Germany, France, Italy, Spain and the Netherlands might be expected to broadly match their Beijing 2008 performances – though they will no doubt hope to do better.
. Countries where the model targets for London are below those for Beijing include Australia (still in gentle decline from the heights of Sydney in 2000) and some former Soviet bloc countries where the legacy advantages of strong state support from the pre-1991 era may be gradually fading, such as Ukraine and Belarus.
. As well as Great Britain, countries that the model suggests have the potential to do better than in Beijing include: Japan, Romania and Turkey.

For more information at http://www.pwc.com