Over the last couple of decades, there has been a big reason for the lack of support to the IOC (International Olympic Committee) from host cities' postulations to host the Olympic Games: the high cost of hosting an Olympic Games. "Many people fear that the cost is immeasurable," Miklós Hajnal (1), one of the Budapest organizers of the bidding committee, after dropping the candidature to host the 2024 Summer Olympics. Budget concerns have led city after city to abandon their Olympic dreams recently. Stockholm (Sweden) and Krakow (Poland) withdrew their candidacies for the 2022 Winter Olympics, which were later awarded to Beijing, China. And due to the lack of bidding cities to host the games, it led the IOC with no option to award Paris to host the 2024 and Los Angeles 2028 Summer Games; a double nomination has never happened before at the IOC host city competition.
Rio 2016 opening Ceremony Image. (2)
An Olympic host city has to plan, pay for, and build large sports venues and infrastructure projects. Security costs can run into billions of dollars. Thousands of hotel rooms must be built for athletes and tourists. Most of this expense goes into the taxpayer's pocket, with little discernible financial benefit. Researchers at Oxford's Saïd Business School estimate that the excess cost for the 2016 Olympics in Rio de Janeiro was $ 1.6 billion. Expanding millions of dollars on athletes' accommodations (3) and building dorm towers with no future function as hotels, college usage or any other profitable function, this led the infrastructure to a huge devaluation of real estate. Redevelopment work has stalled after three companies involved were found guilty of corruption for over-charging for their work.
Considering that the venues that cost millions of dollars are beginning to be completely ghosted, one of the most dramatic examples is the Maracana Stadium in Rio. More than 7,000 of the 80,000 seats are now missing, there are gaping holes in ceilings (completely renovated for Rio 2016), and many of the catering areas have been stripped bare (5). None of the private companies who milked the cash cow in delivering the re-constructions now says they are responsible for footing the bill for the upkeep. Rio's state government and Maracana SA - the firm responsible for running the stadium - blame the Rio 2016 organising committee. They, in turn, say they delivered the stadium back in the state they were contractually required to. Maracana SA is refusing to accept responsibility until the Olympics organising committee carries out repairs - and in the meantime, the ground upkeep is left in limbo.
Interior Photo of Maracana Stadium Empty Seats. (4)
Elected leaders have argued that ticket sales, construction jobs, and increased tourism are easing costs. But economists say the true benefit of hosting the Olympics is not all that attractive, considering logistics, transportation, broadcasting rights, venue requirements and security investment are details that not all the cities are aware of before being elected by the IOC.
Montreal, the host city of the 1976 Summer Games, provides perhaps the best example of long-term cost. Before the games, its mayor, Jean Drapeau, said: "The Olympics cannot continue to lose money like a man cannot have a baby."(6) He was totally right. Gross cost overruns left the city with $ 1.5 billion in debt, which was not paid until 2006. The Olympic Stadium, known as the Big O, was converted into a ballpark and is now largely inactive. Montréal citizens now call it Big Owe.
The Montreal experience spooked potential host cities for 1984. Only one, Los Angeles, made the bet and was consequently able to put conditions on the International Olympic Committee (IOC). A new model was pursued that relied heavily on private financing. Los Angeles also used existing stadiums as venues, eliminating one of the biggest costs associated with hosting the Olympics. The result? A profit. In 1979, the L.A. organizing committee had made a deal. If the games saw any profits, LA ‘84 would give 60 per cent back to the U.S. Olympic Committee and keep 40 per cent for Southern California.
At the end of the games, the total expenditures came in at a respectable $546 million, but even more impressive was the profit: A surplus of $232.5 million of profit, meaning $93 million would stay in the region of Southern California (7). This was huge for LA Organizing Committee, whose pragmatic, low-frills approach to hosting was grounded in using existing facilities, including the majestic Coliseum built by the city to host the 1932 Games. This increased the Olympic spirit in other cities to even consider bidding again to host.
Recent host cities have taken a different approach. Russia is said to have spent an incredible $21.9 billion on the Sochi 2014 Olympics. China spared no expense to host the 2008 Beijing Games. In Rio, the most recent host of the summer event, venues built for the Games are already in disrepair. The IOC knows it has a problem: it is implementing a series of reforms to reduce the costs of bidding and running the Games.
The Olympic Games have made clear, at least, the fact that a city presents itself as a candidate to host a “mega-event” entails a series of risks that must be kept in mind so that these administrations do not end up being a financial disaster, speaking, for example, in the cases of Montreal or Athens that we have studied.
Athens 2004, "No one in Greece is interested in ping pong or kayaking," said Kyriakos Chondrokoukis, a high school physical education teacher when he is not coaching his son. "Greece didn't need big stadiums [to host those events]. What it needs is neighbourhood stadiums for not more than, say, 3000 people." And what of Greece's Olympics legacy? "But what do we have?" he retorts. "Nothing! To be an athlete in this country, you must be a mythical hero. It would have been better had they never taken place." (9)
London 2012, a TheGuardian article title says, “Legacy, what legacy? Five years on the London Olympic park battle still rages”, much of what’s been done is quite good,” says Simon Munk a cycling campaigner who lives in Walthamstow. “But you only need to ride there for five minutes, and you can see bad surfaces, cycle tracks that stop and start, tracks that come to junctions that are not suitable for cycling. It’s a 1980s approach, with no coherence.” Some of the Olympic Park is already threatening to fray here and there, yet it still gives off an air of abnormal newness: impersonal but with free wifi. From the comfortable charity coffee shop to the private security guards ushering you this way or that when events are on, the managed nature of the place seems to be its defining legacy. (10)
As a positive example, we have Barcelona 1992, "The Barcelona Olympics unleashed a torrent of money from both the government and private sources to build sports facilities all over the country and support sports which had not previously had support in Spain. By the end of the decade, we saw the results. Now Spanish sports make money. Real Madrid may be the most profitable football [soccer] club in the world." The Olympics represented a major effort to restructure the city. A study by Ferran Brunet of the Universitat Autònoma de Barcelona on the economic effects of the Olympics shows the scale of the infrastructure investment.
"Roads represented an increase of 15 per cent over those existing in 1986; new sewage systems, 17 per cent, and new green areas and beaches, 78 per cent." This investment came at a cost of $11.4 billion in 2009 dollars (that's over 400 per cent over budget). Brunet argues that the investment was worth it. For example, unemployment dropped dramatically, from an all-time high of 127,774 in November 1986 to a low of 60,885 in July 1992. Olympic infrastructure created for the games is thought to have provided over 20,000 permanent jobs for Barcelona.
Crucially the games seemed to change the way people thought of Barcelona. Between 1990 and 2001, the country went from being the 11th "best city" in Europe to the 6th, according to one ranking. The IOC says that 20 years after the games, Barcelona is now the 12th most popular city destination for tourists worldwide and the 5th in Europe.
Soon to host is Paris 2024, providing very futuristic and affordable games having by title, “Compact and Accessible Games” they are proposing a 95% reduction of conduction and restoring cost on existing or temporary venues. Using existing facilities will minimise Paris 2024’s investment budget and carbon footprint. Solido, the company formed to deliver the Olympic facilities, will only build three venues: the Aquatics Centre (next to the Stade de France in Saint-Denis), the Olympic and Paralympic Village, and the Media Village. (12)
Paris 2024 Organizing committee is showing huge leadership in redefining the concept of the Olympic games. Their objective is to deliver Spectacular Games to take the sport to places it’s never been before as part of celebrations in city centres by building new bridges between culture and education. Sustainable, environmentally friendly games inspire future generations and leave a valuable legacy for people individually and society as a whole. If this organization fails, the IOC will have serious trouble finding a new host for future events.
It seems clear that the forecasts regarding income from the increase in tourism or improvement of the city's image are always too optimistic, and they never generate what had been estimated. Especially since the majority of candidate cities in recent years have already enjoyed great worldwide recognition (London, Rome, Paris, etc), this leads us to wonder if the Games would not have a greater impact on emerging cities, whose international image can still be exploited, and marginally increase their international trade and economic activity.
After studying the previous examples of past Olympics (Rio, Athens, or London), it seems clear to conclude that the economic success of the Olympic Games depends on various factors. First of all, they must be performed at a moment suitable for the local economy, not in times of economic crisis. Otherwise, there will be problems with liquidity, such as a significant deficit that could be incurred and excessively high public debt.
In addition, it is essential to undertake a good planning preparation time, especially regarding costs. Avoiding incurring excessive cost overruns that dislodge budget items, as in the cases of Athens or London. Likewise, the event's celebration should be used to undertake the urban regenerations that the city needs, which will be the true legacy of the Olympics, as seen in the case of Barcelona or East London. Finally, it is essential to have the post-event legacy planned. Planning good management of the infrastructures before undertaking unaffordable investments that will then become a burden on the city upon completion of the event (so-called “white elephants”) should be avoided. However, this means closing the stadiums after the event or using new techniques, as in the case of demountable stadiums, an initiative that was already launched in the past London Games.
Lately, determining a Games success or failure comes down to its “legacy,” the measuring-stick concept developed by the surprisingly large body of academics concerned with the Olympics. Most of them agree that legacy involves a Games’ long-term planned and unplanned, positive and negative political, economic, social, cultural, infrastructural, and environmental impacts on a city. The sought-after positive legacy outcomes include urban renewal, increased tourism and employment, enhanced city image and reputation, improved public welfare, and a renewed sense of community. Among the negative outcomes measured are ongoing debt from construction, infrastructure that becomes unnecessary after the Games, increased rent, and unjust displacement of citizens.
Because every game will be epic, every culture has its own richness, and there will always be the Goliath moment, so the real deal is how the world will still perceive your city years after the event; it doesn't matter if the HOUR ZERO at the opening ceremony would be perfect but one year after, it will be a complete ghost town. That is why the impact of a mega event investment is not worth it if it will only give you a one-time revenue. By not having investment or budget regulations from the IOC, it could be a shot in your own leg.
As result, hosting the Olympics can really hurt your city if there is not an intensive and detailed distribution of the city administration to organize the games and still rule the city, to make sure that the year the games are being planned, they still have dominated spending priorities to allocate enough funds to crucial services such as education, health care, and citizens safe. In effect that all of the cities can be part of the organization and not just have a one-sided benefit for the IOC and the organizing committee.
Bibliography
[1] Money.CNN Article, Budapest drops 2024 bid: Why nobody wants to host the Olympic Games. February 2017. https://money.cnn.com/2017/02/23/news/olympic-games-cost-budapest-2024/
[2] Balich WorldWide Shows, Opening Ceremony Rio 2016.
[3] PDF, The Oxford Olympics Study 2016: Cost and Cost Overrun at the Games.
[4] Abandoned. Picture: Guilherme Pinto / Agência O GloboSource: Supplied 2018
[5] Rio’s Olympic Aquatic Centre left in ruins after grand promises. February 2017. https://www.news.com.au/sport/sports-life/rios-olympic-aquatic-centre-left-in-ruins-after-grand-promises/news-story/f0d7a5aedfd314c41ae42f66b98d5ca3
[6] Article, 1976 Montreal Olympics: Drapeau's baby from bid to billion-dollar bill. July 2016. https://montrealgazette.com/sports/1976-montreal-olympics-drapeaus-baby-from-bid-to-billion-dollar-bill
[7] Article, The Olympics are dead. Or are they?. July 2015. https://brandondonnelly.com/2015/07/29/the-olympics-are-dead-or-are-they/
[8] Opening ceremony at the 1984 Olympics in Los Angeles. Corbis/VCG via Getty Images.
[9] TheGuardian Article, Athens 2004 Olympics: what happened after the athletes went home?, https://www.theguardian.com/sport/2012/may/09/athens-2004-olympics-athletes-home
[10] TheGuardian Article, Legacy, what legacy? Five years on the London Olympic park battle still rages, https://www.theguardian.com/cities/2017/jul/27/london-olympic-park-success-five-years-depends
[11] How The Olympic Games Changed Barcelona Forever, https://www.businessinsider.com/how-the-olympic-games-changed-barcelona-forever-2012-7
[12] Paris 2024 Compact and Accessible Games Website. https://www.paris2024.org/en/compact-and-accessible-games/#:~:text=Paris%202024%20will%20use%2095%25%20existing%20or%20temporary%20venues&text=Solideo%2C%20the%20company%20formed%20to,Village%2C%20and%20the%20Media%20Village.
