JUSTIFIED INVESTMENT

Eurovision is coming to Baku! Late at night, on 15 May 2011, all Bakuvians were filled with emotions, the city rejoiced for several days and a year in anticipation of a big show - a song fest - started in Azerbaijan. And at those moments, few people thought about what a tremendous amount of work has to be done and how much money and human resources need to be used to welcome thousands of visitors from all over Europe and demonstrate a real show to the discerning European audience. And today, when the sceptical statements, the anxiety of the organizers and the hard work of the performers are behind, we can safely say - we did it!

Of course, from a financial point of view, Eurovision has always been expensive. Even mere participation in it costs a lot of money, not to mention the organization of the contest in a country. Nevertheless, each state participating in the contest tries to win, since it is clear that the costs will be repaid in full, even if not immediately and not in the form of cash. It is a unique opportunity to show the world the achievements of the country, its culture, history and economic opportunities and tourism potential in just a few days. It is a huge investment in the image and future prospects, and these investments cannot be unrecoverable.

How it happens

Eurovision can certainly be called the third biggest television event after the Olympics and World Cup. It is clear that an event of this magnitude involves major investments. Speaking of concrete figures, in general, Eurovision costs a country tens of millions of dollars.

It should be noted that originally, the budget of the contest was formed mainly from contributions by national broadcasters for broadcasting rights. But the cost of organizing the contest increases year by year, so now the budget of the contest consists of funds invested jointly by the host country and the organizers - the European Broadcasting Union (EBU).

They recommend an approximate budget of the contest to the host country. Half of the recommended budget is provided by the EBU. The remaining amount must be allocated by the host country itself. It cannot spend less than this amount, while it is allowed to spend more. The funds provided by the EBU are the minimum amount required to rent the equipment for the contest.

Throughout the existence of the contest, a group of professionals has taken shape to provide technical support for Eurovision in various places. The range of companies - manufacturers of equipment used in the contest - has also been determined. And the national television of the host country usually does not have to deal with broadcasting issues.

EBU funds are formed from contributions collected for the contest from TV companies participating in the contest and international sponsorship agreements. Not all TV companies can afford to buy the broadcasting rights, so the organizers decided to involve major sponsors who will ensure that the show is held at the appropriate level and help poorer countries to pay for broadcasting.

The host country decides for itself how to get money for the contest. It can allocate it from the budget or raise funds.

The costs of the contest depend on the number of participating countries, the presence of the necessary equipment in the country, the site and the cost of renting it, interest from sponsors, the level of the show, which is organized by the host broadcaster, and a number of other factors.

The expenses of the host country are covered by sponsorship agreements, ticket sales, advertising and revenues from SMS voting.

There are a number of marketing conditions which govern the conduct of the contest. You cannot put up advertisements inside the hall, except for advertisements of partners in broadcasting and TV voting. In the countries that have already hosted Eurovision, there is competition between companies for the right to be its suppliers. This applies to photography and printing services, food and clothing. That is to say they use every opportunity to place the brand logo up to the entry tickets.

Mere participation in the contest costs a considerable amount of money: filming of the clip, promotional tour, selection of musicians and the trip can cost up to a million dollars. For the right to send a participant to the contest, each country needs to pay a decent amount. The tax on Eurovision is different for all, and the rate is calculated by a special formula that takes into account the economic development of a country, its territory, number of potential viewers, etc.

The game is worth the candle

Eurovision has always been a high-level contest, because it was born in Europe's richest country - Switzerland, where stability and wealth are the usual priorities in life.

And the fact that Azerbaijan won last year's Eurovision and was entrusted without a doubt to conduct this contest shows that the country's economy has fully reached the safe level. After all, the right to host Eurovision has never been entrusted to countries with dubious economic development.

Yes, Azerbaijan had to spend a lot of money to surprise the European guests and spectators. First, it is the construction of a special complex for the contest - the Baku Crystal Hall, the establishment of the infrastructure around it, improvement of the road infrastructure, increasing the number of hotels, more active work in the whole tourist complex, in the area of IT-technologies, etc. All this, of course, required money, which was found and invested thanks to the stability of the economy.

The financial costs of Eurovision-2012 will be announced only after the international song contest. Today we know only that on the basis of the 10 February decree of the Azerbaijani Cabinet of Ministers, the distribution of a 77-million-manat budget for international and national events in 2012 was approved, and 50 million of it ($ 60 million) was earmarked for Eurovision-2012. Thus, Eurovision in Baku can already be considered the most expensive in the history of the contest - previously the palm belonged to Russia, which spent $ 42 million.

According to information made public by the official partners of Eurovision-2012 - the Heydar Aliyev Foundation and the working group of the contest, Gilan Holding, Kapital Bank and the airline Silk Way were selected as local sponsors. The general sponsor of the contest is Azercell, while the international sponsors are the Ministry of Culture and Tourism of Azerbaijan, the State Oil Company of Azerbaijan and the company Swarzkopf. The travel partner of Eurovision-2012 is the Association of Tourism of Azerbaijan. In addition, the European Broadcasting Union proclaimed one of the leading companies of Azerbaijan, SOCAR (State Oil Company), as the official partner of Eurovision-2012.

Thus, the state and representatives of large private businesses work together to do everything for the implementation of the almost unbelievable amount of work in just one year, and the world will be presented with a grand show worthy of the Land of Fire. Of course, in this context, many are interested in another question: will the costs be recouped? Today we can clearly answer: there is no point in thinking about the momentary return of all investments in terms of money - it's just impossible. Revenues will come from the sale of tickets, whose prices range from 60-100 manats (rehearsals) to 160-240 manats (final), the arrival of tens of thousands of tourists in the country (accommodation in hotels, tourist tours, use of infrastructure, restaurants, etc.) and so on, but it is not enough to cover all the costs. The huge TV audience of Eurovision-2012, thousands of tourists and hundreds of journalists will show and tell the world about our country, in other words, this contest will be the largest advertisement for our country and its tourism potential. And this, of course, will bring considerable dividends in the future and contribute to the development of virtually all areas of the non-oil sector of the economy. Ultimately, this is the very goal that the country's leadership and government sought to achieve in recent years. That is to say indirect revenues from Eurovision-2012 will replenish the country's budget for years to come, which, in essence, makes the contest one of the best investments in Azerbaijan since independence.