Olympics: Are They Worth It?

As everyone knows by now, the 2012 London Olympics open in just two days’ time. This blog is not so very interested, at least from an athletics point-of-view, although perhaps noteworthy incidents might still arise.

Meanwhile, Christian Hönicke from the German business newspaper Handelsblatt approaches the Games from a proper business perspective to expound on How metropolises profit from the Olympics. Yes, the medals-won table is already there over on the right side (all zeros for now, of course; “Afghanistan,” “Albania,” and right on through) and Hönicke’s piece is regularly interrupted by mini-accounts of past medal-winners, but the text itself provides a good treatment of the question: “Is it worth it for a city to host the Games?”

The answer is: “Not necessarily. It depends.” The Olympics are an expensive proposition; London 2012 will ultimately cost somewhere between €9 billion and €14 billion. Who pays for this? Well, the International Olympic Committee does stump up a €2.5 billion contribution to costs out of the considerable advertising revenue it gains, but the rest is up to the host. Back in the good old days, that meant the national government, but since then it has mainly meant the specific host city.

Those “good old days” lasted up until the 1976 Summer Games, when according to Hönicke the Canadian government broke precedent to let Montreal know that it would mostly be on its own in paying for them. In fact, the city is still paying for those Games 36 years later, according to one expert quoted here – so that, for Montreal, those 76 Games still leave the bitter taste of a financial millstone for which very little was gained.

But we’re getting a bit ahead of ourselves. One thing is for sure: no Olympics can be counted upon to bring its host city any permanent rise in employment or other income. Rather, the benefits (if any) have to be found in the first place in more nebulous factors such as image and reputation. The 1972 Games (despite the massacre of the Israeli athletes – or maybe even because of it?) put Munich on the map of the world’s consciousness as a proper city of media and culture. The same was true for Barcelona after the ’92 Games there, and the article claims that all of Australia benefitted in reputational terms from the 2000 Sydney Games to the tune of the equivalent of €4 billion.

It’s not just reputation, though, for the infrastructure investments that hosting the Olympics necessitates can also revitalize a city. Again, this was the case for Munich, which in particular was able to expand its subway (U-Bahn) system for the 1972 Games, but also for Barcelona, whose Olympic Village subsequently formed the kernel of an entirely new city quarter.

The Greeks Freaked

Or not, and here we come in particular to the 2004 Athens Games, for which Hönicke and his assembled experts have little regard. The Greeks somehow failed to figure out how to keep in permanent use many of the buildings they erected for those Olympics after the event had passed; what is more, although they built an airport-to-city subway connection as part of their preparations (something you would think is useful in general), Hönicke terms that “unaffordable.” Things then get more mysterious: one of Hönicke’s experts avers that “the Greeks knew they were broke” and therefore should not have applied to host the Games at all. (Note that he has to be talking about the 1998-2000 time-period here.) Hönicke adds a gratuitous blow by calling the atmosphere around those Games “poor” (something that I don’t remember in particular).

Nonetheless, whether for gain or for loss, Rio de Janeiro is committed to hosting the 2016 Games and has already started clearing away slums (and the people who live in them) in preparation. Any officials down there who happen to read German would do well to consider the lessons in this article.

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