DOES HOSTING THE OLYMPICS MAKE ANY SENSE?
Written By Antun Katalenić
On Wednesday, 6 September the International Olympic Committee (IOC) confirmed that Paris would host the 2024 Olympics while Los Angeles was awarded the 2028 Games. The official ceremony in Lima, Peru was a mere formality as it had been known since July that the IOC would break the unwritten rule and name two future summer Olympics hosts at the same time. Long story short, both cities wanted the 2024 games but eventually LA agreed for a later term in exchange for a slightly better deal that mayor Eric Garcetti could spin as a victory for the US press. Hence Paris was awarded its 2nd Games exactly a century after the first ones.
Numerous cities across the globe had initially shown interest in bidding but most pulled out as soon as the cost estimates came in. Apart from the eventual winners, the trio of Rome, Hamburg and Budapest stayed in the running the longest. The election of Virginia Raggi from the populist Five-star movement spelt the end for Rome’s bid, meanwhile in Hamburg 51 percent of voters rejected the idea at a referendum while just the threat of such a scenario prompted the city officials in the Hungarian capital to withdraw.
US economist Andrew Zimbalist points out in his 2015 book Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup that hosting any major sporting event such as the Olympic Games or the FIFA World Cup is unjustified from an economical perspective. The last Olympics that had an actual budget surplus were the ones in Atlanta, 21 years ago. After Atlanta 1996 there were Sydney, Athens, Beijing, London and Rio de Janeiro – all with a budget deficit. The devastating effect that the Olympics can have on a city can best be seen in Brazil where a struggling economy is unable to maintain decaying infrastructure which was supposed to benefit all of Rio’s citizens but in turn produced only a short term economic gain for the very few.
Barcelona 1992 kept 70 percent of the Games’ profit while Rio 2016 got less than half of that.
According to a paper by the University of Oxford the costs of hosting summer Games on average surpass the estimated costs by a whooping 156 percent. The absolute record in this aspect is still held by Montreal 1976 whose costs septupled and the city only repaid the debt 3 decades later. That this trend still holds true can be seen on the balance sheets of the upcoming Pyeongchang 2018 winter and 2020 Tokyo summer Games where the estimated costs have doubled.
Zimbalist however admits that there are exceptions to this rule and Paris to a lesser and LA to a greater extent could be subject to this. After all LA turned a profit the last time it organised the Olympics in 1984. The reason for this exception is that Los Angeles already has most of the needed infrastructure to host the games and so the final bill would likely be much lower. The economics however tell only one side of the story.
The other side, as the campaigners of NOlympics LA vehemently point out, is the threat to the environment by the inevitable increase in construction work as well as the displacement and gentrification that comes with it. Other concerns include further militarisation of police units and the expansion of their powers, exploitation of workers on short-term contracts, diversion of public funds towards Olympics-related projects and so forth. All these processes are part of every Olympics and not even LA will be exempt from this just like it wasn’t in ‘84.
The economics tell only one side of the story.
Cities’ interest in hosting the Games is at a low point however the IOC has yet to face the situation when it would have to search for a host. Facing increasing scrutiny the Committee launched the so-called Agenda 2020 which should ease the burden on host cities. What the agenda promises is a fairer profit-sharing scheme between the IOC and the hosts and that economic and cultural aspects will be taken in consideration when picking future hosts. How much will the IOC, a traditionally grossly nontransparent and undemocratic organisation, play by the new set of rules is yet to be seen.
The announced inflation of events and athletes that come with it is not mentioned in the agenda despite the fact it puts extra burden on the future hosts while the profits end in Lausanne where the IOC is based. Same is also true for the ever more lucrative TV deals. For an example, Barcelona 1992 kept 70 percent of the Games’ profit while Rio 2016 got less than half of that. The IOC, for all its talk, spent a little less than 1,8 billion US dollars on the last Olympics, a mere fraction of the 14,6 billion $ that Rio spent.
Given the current status quo, it seems that the only hosts in the future will be the biggest and richest Western cities along with autocratic dictatorships.
The IOC is far from unique in this conduct. Brazil, which also hosted the FIFA World Cup in 2014, didn’t collect taxes from FIFA and its corporate sponsors which would have amounted to some 250 million euros. The street protests managed to get at least some of the crumbs from FIFA’s table back into the city’s budget. A similar small victory was achieved by the protesters in London back in 2012 where some corporations, feeling the heat, agreed to scrap contracts that made them tax-exempt.
It does appear however that the IOC will be forced to reform if it wishes to avoid the worst case scenario. A similar drought of applicants faced them when choosing the 2022 winter Games’ host which were eventually given to Beijing who beat their only rival Almaty, Kazakhstan. Given the current status quo, it seems that the only hosts in the future will be the biggest and richest Western cities along with autocratic dictatorships.
The unrest in Ciudad de Mexico in 1968, the terrorist attack in Munchen 4 years later and Montreal’s enormous bill already brought the Olympics to the tipping point where hosting the games was no longer a politically attractive option. The IOC responded by opening up the Games to global capital which provided a sustainable economic model for at least some time. However this model no longer works and what can worry the IOC even more is that the charm that once surrounded the Games seems to be fading and is having less and less effect on the citizens who no longer fear to be vocal about their opposition to the Olympic Games.
The next reform will have to be more than just an economic one. Agenda 2020 is a step in the right direction but greater changes will have to come to the top of the rotting fish, the IOC itself. The only ones who will be able to force these reforms are the cities themselves or rather its residents.
A version of this article was first published on Radio Študent.