Ignore the costumes, the Eurovision Song Contest is serious business
Eurovision isn’t all fun. It’s serious business, too.
SVT, Sweden’s national broadcaster has set aside a budget of £11m for this year’s show. But the cost of Eurovision has been larger-still for some countries. Vienna, last year’s hosts, spent £28m while the Baku extravaganza of 2012 cost an eye-popping £48m.
Even participating can be prohibitively expensive: the IMF persuaded Hungary to withdraw when it faced financial troubles. Sadly, Luxembourg will be missing this year because of cost pressures.
Read more: The summer of sport to give UK economy a £3bn boost
So, is the Eurovision Song Contest worth it? As with so much in life, economics provides handy answers in two ways: what are the benefits that flow to host cities from the costs they incur and what else could they have gotten for their money?
In common with sports events, festivals and tourist attractions, a justification often given for funding Eurovision is that it attracts visitors who spend money and create jobs. The visitor numbers are impressive. During the last three contests, in Malmo, Copenhagen and Vienna, between 30,000 and 40,000 people travelled to the host city.
There is no doubt that their spending – on hotels, meals and in shops – created jobs. Malmo reckons Eurovision generated 130 full-time equivalent posts, while Copenhagen clocked up 140 and Vienna an impressive 420. The winner in recent years, however, was Baku, with 530 jobs.
Is it worth it?
Host cities might not be getting the best bang for their bucks when it comes to Eurovision.
Yet if job creation was one of their goals, Eurovision looks like poor value for money.
A common way of judging whether a job creation scheme represents a good deal it to work out the cost per job created. In Vienna, the average cost per job was over £67,000 while in Baku it topped £90,000. These are nothing compared with Malmo, where each job cost £130,000 and Copenhagen at a staggering £260,000.
Putting these in context, the National Audit Office estimated that the last government’s Regional Growth Fund created jobs at an average cost of £33,000 and that was thought by some to be pricey.
If cities want to boost their economies, there are better things to spend their money on than Eurovision.
Opportunity costs
Sweden is paying £11m to host this year's contest. That could get you 0.1 per cent of an Olympic Games, or put 150 students through a three-year university degree.
The riposte to all of this is obvious enough. I’m just another cynical economist who knows the price of everything and the value of nothing.
That might be a fair charge. Perhaps it’s best to admit that Eurovision is just one great and absurd party and that all those hours of fun are worth the price.
Just remember two things. First, in the unlikely event that Joe and Jake pull-off Britain’s first victory since Katrina and the Waves in 1997 (they are 25/1, but good luck lads), we will have to host the Contest in 2017.
Second, if we decide to spend as much as Sweden will this year we would be giving up the equivalent of two episodes of Strictly Come Dancing, five year’s worth of the Great British Bake Off, 409,000 Big Macs, 24,000 iPhones or the remainder of Jamie Vardy’s contract with Leicester City.
Which would you choose?