The winner is … white elephants
Published: July 27, 2012 – 7:18AM
The first Olympics I can really remember were the 1992 Barcelona Games. I had been studying Spanish at school. My radio-cassette player blared with the sound of my new favourite song ”Amigos Para Siempre” by Sarah Brightman and Jose Carreras.
On a trip to Barcelona a few years ago, I couldn’t let the opportunity pass without climbing Montjuic, a hill rising from the coast to the south of the city and site of the Olympics.
Along with a trickle of other tourists, I found my way to the faded and empty Olympic Stadium where we stopped for a tasteless and overpriced packaged sandwich.
We found the Swimming Hall where Kieren Perkins won gold in the men’s 1500m Freestyle. We pressed our faces against the dirty glass windows. We marvelled at the Montjuic Communications Tower, which at 136 metres, resembles something from a sci-fi movie standing sentinel over a vast and abandoned plaza. As we strolled the empty streets and rode the still functioning cable car, I was enveloped by the quiet sense of faded glory. But most of all, I was struck by the waste.
Every four years the Olympics light up our lives for three exciting weeks only to leave behind it a new ghost city of expensive infrastructure.
When you really think about it, building a completely new set of Olympic facilities every four years is completely crazy.
Much academic ink has been spilt trying to quantify the economic impact on cities of playing host to the Olympics. In their attempts to secure host rights, countries employ economic consultancies to tout the billion-dollar gains in tourism, employment, sponsorship.
But an ever-mounting pile of studies reveals that, in hindsight, playing host rarely, if ever, delivers lasting benefits for cities. Instead, the Games impose billions of dollars in upfront infrastructure costs, cause transport chaos and have no lasting health benefits by inspiring cities to get more active.
A study last year by Monash University academic economists James A. Giesecke and John R. Madden estimated the Sydney Olympics generated a loss to private and public consumption of $2.1 billion in present value terms. It is no coincidence, the authors note, that this is roughly the same as the upfront cost of constructing Olympics facilities of $1.9 billion. Quite simply, the rest of the Olympic hoopla is not sufficient to overcome this upfront cost.
Crucially, hosting the Olympics in Sydney did not increase tourism over the long term, as claimed by boosters. While for lesser-known world cities, such as Seoul, hosting the Olympics can have some impact, for well-established tourism destinations such as Sydney, there is little impact.
Nor was there any great lasting benefit for tourism relative to other parts of Australia. In fact, in the three years leading up to the 2000 games, foreign willingness to pay for NSW tourism grew at a slower rate than other Australian destinations. In the three years after, this tourism gap was even bigger. ”Thus our historical modelling results do not provide any indication of an induced tourism effect associated with the 2000 Olympics,” they conclude.
Advocates also point to the immediate stimulus effect in terms of increased spending on ticket sales, tourism and cafes and restaurants. But, as Giesecke and Madden point out, this ignores the ”substitution effect”. As Australian households forked out for Olympic tickets and trips to Sydney, they reduced their consumption in other areas.
Money spent by firms on Olympic-related advertising and sponsorship came at the expense of other marketing.
While the Games created some jobs they were temporary, and with a tight labour market largely drew workers from other industries.
The Games did draw in revenue from the sale of tickets, merchandise, advertising, sponsorship and TV rights. But this was more than offset by the cost of construction ($1.9 billion), labour, and the drain on public resources such as government administration, health and policy and security services.
When it’s all said and done, hosting the Olympics was found to have left little lasting benefit and involved a huge upfront infrastructure bill paid for by taxpayers at the expense of private consumption – or having the government spend the funds on other things, such as public transport.
Playing host to the Olympics is less wasteful for cities when it involves the creation of much-needed infrastructure. Athens still benefits from better transport and communications systems created for the Games. London’s Lower Lea Valley area is presently getting a much-needed facelift. And with a jobless rate about 8 per cent, the jobs boost in London will be of benefit.
But experience shows Olympics generally run at a loss. Sure, there are non-economic benefits in terms of national pride and enjoyment. But in a world of massive public and private debt, building completely new facilities every four years is a financial folly the world can ill afford.
I have a better idea. Let’s move the Olympics back to Athens permanently. Let’s build them once and build them properly. Athens was host to the first Games held under IOC auspices in 1896. There were questions at the time as to whether the Games should be held there permanently, but the IOC disagreed. The Games moved on to Paris in 1900 and have been an ongoing drain on public purses the world over ever since.
Why not use the hundreds of millions of dollars countries pour into expensive lobbying to secure host rights and instead invest them in a creating a permanent home for the Games in Athens. It would create a new and ongoing industry for the moribund Greek economy, stimulating economic growth and jobs. We could hold the Games more regularly and help solve the euro crisis in one fell swoop.
It’s time to take the Olympics home, and leave them there.
This story was found at: http://www.smh.com.au/opinion/the-winner-is–white-elephants-20120726-22uzf.html