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Downsizing the Olympics… a necessary evil?

October 31, 2011

Sports can re-energize a city, create a profound feeling of national pride, and support businesses of all varieties.  But can sports alone develop a nation?  The International Olympic Committee (IOC) gives off the impression that their once every four year sporting extravaganza can spur development.  In fact, prospective cities pine to host the Olympics.  The draw of hosting such a prestigious event has clouded the minds of governments and civic officials vying to win hosting rights and caused them to overlook the historic economic challenges that are often associated with the Olympics.

2004 Olympics opening ceremoy in Athens

The Olympics have become an economic liability to their host cities, with the high chance of leaving a negative impact.  The 2004 Olympics in Athens were highly anticipated and produced extremely competitive and exciting sporting events.  However, the aftermath left Greece with stadiums that have become white elephants, draining millions of dollars from the Greek economy.  These stadiums have been rarely used since the August 2004 closing ceremonies—failing to capitalize on sensible opportunities to recoup some of the costs from the USD $12 billion hosting price tag.  There have been no post-Olympic planning committees in previous years to create long-term uses for the infrastructure developed for the month long games.  In order for cities hosting the Olympics to be successful, governments need to realize that “Even one day is very precious. Plan, plan, plan, and have a post-Olympic plan from the first moment,” according to Fanni Palli Petralia,  the Greek Alternate Culture Minister in charge of Olympic venues.  Alternatively, it might be a good idea for the IOC to take on some of the event-planning costs, using their robust revenue stream to alleviate some of the financial burden.  The IOC could then recover these costs by receiving a greater share of the profit made from sponsorships, concessions, and/or ticket prices.

From the outset, anti-Olympic activists in Greece felt that rising budgets and lack of planning would be detrimental to Greece’s economy.  Nana Vafidi, leader of one of these organizations, iterated again and again that,

We are going to bankrupt Greece so big companies and big interests can get rich off the Olympics.

With the expenses of the Greek Olympics more than seven times higher than the Sydney Olympics in 2000, it is easy to see that the pressure to put on a glamorous spectacle is putting countries in a financial pickle.  Some argue that the current state of the Greek economy can be traced back to the massive debt left by the 2004 Olympics.  While the Olympics did not solely bankrupt Greece, it certainly contributed to the depth of it’s financial crisis.

The 2008 Olympics in Beijing cost China upwards of USD $44 billion.  While this set a new high in the Olympic spending record books, it also created a standard that will be hard to replicate in upcoming years.  While China’s economy may be able to take the financial hit necessary to impress the rest of the world, will London be able to do the same in 2012? Rio de Janeiro in 2016?  While international perceptions of China may have improved following the Olympics, the purely

China's Bird's Nest is now used for sledding

economic side of hosting the Olympics was a major failure.  Olympic facilities in China are largely unused, and the famous Bird’s Nest stadium is now used for sledding in the winter by locals. There is hope, though, for cities campaigning to host major international sporting events.  The 2010 FIFA World Cup has proved to be a great success for South Africa’s development.  South African cities had multi-dimensional plans ready to implement following the end of the World Cup.  Now, stadiums are used to host local soccer teams, concerts, and to entice future international sporting events, like the 2013 African Cup of Nations, to choose South Africa as their host. Maybe the key to a successful Olympics is using cities that offer stadiums already built, and infrastructure already in place to host the wide array of events and scores of spectators. While hosting these sporting events provides developing countries with the opportunities to invest in gaps in their infrastructure, a financial safety net should be implemented to account for the long-term effects that may arise. Not every country will be able to generate sustained use and revenue from these developments, which may cause countries to rethink their hosting bids.  With Azerbaijan and Turkey as two of the six finalists to host the 2020 Olympics, both might want to start planning for the aftermath of the games should they be “awarded” to either country.

2 Comments leave one →
  1. Stephen Gottlich permalink
    October 31, 2011 5:48 pm

    Interesting subject, not that different to the stadiums that every city wants to build in the USA, for the benefit of the city or is it the owners and the Media? The only amatuer thing about the olympics are the sportsmen and women, everything else is professional, makes sense to think and write about this subject, well done!

  2. June 12, 2012 11:24 am

    I recall this same conversation occurring in South Africa, as I was there during the five months prior to the commencement of the World Cup. The country spent a lot of money on building stadiums and is now the only location within Africa to be able to hold international events at such a large scale. However, many of the stadiums were built to avoid seeing the poor side of the country – attempting to showcase that South Africa was more developed than previously considered.

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