The Poshest Show on Earth: Why is the Olympics Falling from Grace?
For many of the people, the Olympics are the greatest show on earth. Televised in over 200 countries and watched by over 3 billion people worldwide every 4 years. Attracts over 6 million people to the host city and the country gets maybe the largest advertising opportunity. Last but not least, the host city gets to throw to one of the coolest parties in the world, the opening ceremony. It all sounds fancy and appealing, doesn’t it? However, like everything else, there are some down sides to hosting the Olympics too. In this blog, we will explore why the Olympics started to be treated as the ‘bad boy of the block’ and why nobody want to be friend with him.
(Original publish date: December 2020)
Just back in the start of the 21st century, countries around the globe was racing to host the Olympics. There were about ten bids from different parts of the world for every summer Olympics that held in the first decade of the 21st century. However, with the start of the 2010s, the bid numbers started to decrease gradually and the cities which originally wanted to be in the race started to withdraw their bids. For instance, three countries; Hungary, Italy and Germany, withdrew their bids to host the 2024 Summer Olympics. So why do cities hesitate to host the greatest show on earth?
Economics of the Olympics
It’s no brainer that hosting the Olympics costs a lot but even attempt to host the games costs too much. For instance, it’s estimated that only the bid itself for the London 2012 games costed around £13 million. However when we compare the actual expenses for hosting the event to the bid’s cost, it’s nothing. The actual proposed budget for the London games was £4 billion but like every host city, London, too, spent way more from the actual budget. By the end of the games, the Brits spent just under £9 billion for two weeks of sports and entertainment. According to a study, the Olympics have the highest overrun cost, which is about 156%, in any type of mega-event and nearly half of all the host cities exceed their proposed budget by more than 100%. So can the countries profit after this much spending?
Simple answer to that question is not likely. Generally, the Olympics seen as a boost to economy or a job creating opportunity but it isn’t the case all the time. For instance, Salt Lake City, which hosted 2002 Winter Olympics, achieved to create only 7.000 new jobs which is just 10% of the projected number. Also, income from the games, including but not limited to ticket sales and TV coverage rights, only covers a small portion of the expenditure. The London 2012 games only covered £5.2 billion of aforementioned 9£ billion spending. Another more dreadful example is the Beijing 2008 games. The city only generated $3.6 billion of more than $40 billion expenditure. So it’s clear that the economic gains of the Olympics to the host city is non-existent. Also one more harsh comment by a sports economist who was also part of the No Boston Olympics campaign states ‘It ends up being financially and environmentally very wasteful.’ which brings us to the legacy of the Olympics.
White Elephants
The candidate cities should fulfil the requirements provided by the International Olympic Committee (IOC) which includes adequate transportation, accommodation and most importantly new and modern venues for the games. The problem for candidate cities is most of them don’t have the infrastructure required to withstand the two-week influx of athletes, coaches, fans, and media members. Therefore they build new venues and transportation hubs just for the games which make up most of the expenditure by the host cities. For instance, building cost of the London Olympic Stadium was £701 million and this is just one of the many venues that was built for the games.
Even though the idea of building state-of-the-art facilities sounds good, the past examples show otherwise. Strashin states that most of the venues being abandoned right after the medals are awarded and the athletes head home. Since this phenomenon occurs almost after every game, the literature has a proper term for it: white elephants. One of the many reasons for abandonment is the enormous size of the venues. For instance, Norway built two ice hockey venues with the capacity of 11,000 each to a small town with just 24,000 population for 1994 Winter Olympics. Another reason for abandonment of the venues is the maintenance cost of the buildings. For instance, Bird’s Nest arena of Beijing costs $10 million in annual maintenance. Since these huge costs create burden over taxpayers, the cities just leave buildings to abandonment which results in creating environmental hazards.
Future of the Games
Up until this point, we looked at the reasons for why cities don’t want to host the games. So what does the IOC do to prevent these problems? Recently, the IOC announced a new agenda called ‘Olympic Agenda 2020’ which introduces a new set of solutions for potential host cities of the future. The first item of the agenda is about the changes to the candidature procedure. With this adjustment, the IOC demands sustainable long-term economic planning from candidates to ensure the costs of the games stays in reasonable limits. Also the agenda aims to reduce costs of bidding by decreasing the number of presentations that are allowed as well as providing internal funds to candidates. Also in line with Olympic Agenda 2020, the IOC announced a new partnership deal with Airbnb worth $500 million. With the new sponsorship deal, the IOC aims to reduce costs for host cities by minimising the need for new accommodation infrastructure and to create direct income to locals and communities of future host cities.
While the countries hesitate to bid on future Olympic games because of the mentioned reasons, it’s uncertain that the IOC’s new agenda will have positive effect on its new ‘bad-boy of the block’ look. Regardless of outcomes of the changes, there’s no doubt that the Olympics will stay as the greatest show on earth.
