Healthy Olympic Skepticism

Historically, hosting the Olympics has been a symbol of patriotism and national rebirth. Hosting the Games has been a way to show off the best of one’s country and has been a way to demonstrate a nation’s ascent (Beijing, 2008), international superiority (Atlanta, 1996), and, now, national rebirth (Tokyo, 2020). When Japan won its bid a month ago for the 2020 Summer Olympics, the national reaction was euphoric. Japanese prime minister Shinzo Abe told The New York Times that “the joy [of winning the bid] was even greater than when I won my own election.” Four years ago, when Rio de Janeiro won the bid for 2016, then-Brazilian president Inacio Silva had to battle back tears during the press conference as he exclaimed, “our hour has arrived.”
However, times are changing. Protests in Brazil surrounding the country’s decision to host the 2014 World Cup and 2016 Summer Olympics have brought to light the negative sides of winning a bid for these events. From an economic perspective at least, the Olympics are an international event with only fleeting advantages but permanent financial burdens.
A recent test case, South Africa, illustrates this point rather clearly. According to Planetizen’s Nate Berg, the South African National Treasury invested more than 2.1 billion rand (about $230 million) in transportation and infrastructure to support the influx of a new stadium. To compound the problem, the government spent an additional R2.2 billion on building soccer stadiums that electrify the country for four weeks but last for years as unused remnants of a nation’s glory days. And with their yearly maintenance costs of up to R3.3 billion, the stadiums are not done draining the country of funds after the tournament is over.
As Berg writes, although “these stadia are seen as springboards for development,” the risks are significant and “there’s also the distinct danger that they could become unsustainable money pits.” In South Africa, the IMF projected an additional 2.6 percent GDP growth from the World Cup that turned into a 3.5-point deficit after accounting for the tournament’s costs, adding up to six percent of the country’s GDP. The infrastructure built up cost for the country to nearly R22 billion more than expected; things that appear to be benefits—such as the new transportation system—have hidden costs that go beyond financial burdens. The travel system furthered income inequality—with its R100 cost making it inaccessible for the poor. Similarly, only 30 percent of stadium construction benefits went to those below the poverty line, meaning that the majority of the stadium’s benefits did not go to those who needed it most. While short-term construction opportunities temporarily lowered unemployment, financial benefits from the event went disproportionately to the rich.
More recent cases bear out the same outcomes. Even in a developed country like Britain—with significant infrastructure around London that limited the costs for certain Olympic events (ex. The conveniently located All England club)—had costs go above fifteen billion dollars, about 0.7 percent of the country’s GDP. For Beijing the number was nearly $40 billion; in the last 12 years, the only Summer Olympics to cost less than $15 billion was Sydney in 2000.
Most importantly, the money spent on the stadiums and the Games rarely funnels back to the people that need it most. Instead of spending the money on valuable infrastructure to either shore up preexisting weak areas of the country or expand into valuable new frontiers (think universal high-speed Internet), the country pours billions into two weeks of international spotlight. As athletes bring home gold medals—or in the case of the World Cup, put ball after ball in the back of the net—the costs are pushed to the background. However, the images that lasts are those of the permanent stadiums, rising high above the cities that surround it. Emblematic of the irrational economic cost of the Games, these stadiums—which often require maintenance costs in the millions of dollars a year—represent the implicit tradeoff required in hosting the games: two weeks of fame for the opportunity to take an economic step backwards.
Photo Credit: www.beenidrew.com