The Lower Lea Valley and inner-city Sheffield are 142 miles apart, but they are much closer when it comes to using leading sports events for self-promotion. In the 1980s, as the closure of local steel mills heralded a rapid economic decline, the council running the South Yorkshire city latched on to the idea that the 1991 World Student Games could spark urban regeneration.

Jump to 2008 and London is banking on the 2012 Olympic Games doing the same to one of the most socially and economically deprived parts of the UK. The scale is markedly different, but the motivation is similar.

Indisputably, sport has brought significant benefits to Sheffield, home to the world's oldest football club. It contributes about a fifth of South Yorkshire's economy, generating £680 million in 2006. Close to 150 sports-related businesses have been spun out of the city's universities. “It is bigger than large-scale manufacturing,” Richard Jones, the chief executive of Yorkshire South Tourism, said.

John Major's vision for a national city of sport, housing a centre of excellence modelled on Australia's National Institute of Sport, may not have come to pass, but it is not far off. Sheffield has the English Institute of Sport, which is the headquarters for nine governing bodies, including boxing, netball and volleyball, and support services such as sports science to Britain's elite athletes.

Tall, lithe volleyball players fresh from their debut in the Dutch men's professional league prowl around the gym as Jessica Ennis, a heptathlon medal hope for both 2008 and 2012, goes through her workout routine.

In the snooker academy on the floor above players chalk their cues at tables where Ding Junhui trains along with five other Chinese professionals. A superstar in his home country, where the sport is played by two million people at any one time, Ding is a local celebrity and is drawing more Chinese sportsmen and women to the city.

It all helps to foster the image of Sheffield as a buzzing sporting hub. This weekend the city plays host to 77 of the world's best divers - including Tom Daley and Blake Aldridge, of Britain - who will compete over two days in the Fina World Diving Series.

The event takes place at Ponds Forge International Sports Centre, one of only a handful of Olympic-standard facilities in Britain. The venue is booked up with galas every weekend until October 2009, is a preferred training venue for British Swimming and is so well used by the community that its operator - Sheffield International Venues (SIV) - would rather turn away the entire China swimming team in the warm-up to London 2012 than have the pool off limits to loyal locals for the summer.

A legacy of the World Student Games, it has worked well. Yet the pool, used by 200,000 lane swimmers a year, does not make money. The only way the venue - built for £53 million - can begin to wash its face is because it also has three gymnasiums, a café, a sports hall and conference facilities. Even then it requires a £1million subsidy from the city council to cover its £4.5million annual operating costs. Which is why executives at SIV cannot understand how 2012 Olympic organisers hope to turn the £303million aquatics centre in East London into a viable community facility after the Games.

The intricate designed structure, the cost of which has soared from £75million amid expensive architectural revamps and inflationary pressures, will collapse in size from 17,500 seats in competition mode to 2,500 in legacy mode and will be used by local residents, schools and clubs.

“You tell me any pool on its own that makes money - maybe in Australia,” Paul Green, SIV's sales and marketing manager, said. “The after-use in London has not been thought out. Legacy management is an area we are pretty strong in. Yet we've had delegations over from China but not a single person from London has been up to see us.”

London may heed the lessons of Sheffield, which is bidding for the European Figure Skating Championships and hoping for its own fillip from 2012. It took more than a decade for the impact of the World Student Games to be fully appreciated - besides Ponds Forge, which is still favourably compared with more modern swimming venues, facilities built for the Games include the Don Valley International Athletics Stadium and the Sheffield Arena.

Despite being an organisational success, the Games were so unpopular for saddling the council with a huge debt after a £150million capital spending spree that Labour lost control of the inherently socialist city for the first time in 70 years. “The public has come through that era and is now proud of the venues,” Green said. “What happened to us nearly 20 years ago is going to happen in London.”