Road to riches or rings of ruin?

Kayaker Lisa Carrington has set her sights on an Olympic double gold medal in Rio next year. Photo / APN

Brazil has poured billions into infrastructure for the 2014 FIFA World Cup finals and the 2016 Olympic Games with little discernible benefit to the nation.

London's 2012 Olympics "legacy facilities" are under-utilised, and Beijing's 2008 Olympics' iconic Birds Nest is on the tourist circuit and hosts only a few events. South Africa's 2010 FIFA World Cup facilities are also largely unused five years after hosting the biggest show in football. Have sporting mega-events like the Olympic Games become too expensive for any nation to contemplate?

A quick glance at estimated cost figures for recent mega-events makes for eye-popping viewing. Athens 2004 came in at US$16 billion, Beijing 2008 came in at US$40 billion, London 2012 at US$15 billion while Sochi's 2014 Winter Olympics cost a whopping US$51 billion. It is little wonder that countries are starting to baulk at the price tag. The bidding process for the Winter Olympics in 2022 saw four of the six candidate cities pulling out due to reluctance on the part of either the government or the population to foot the bill.

What, then, is the pay-off for host nations? Economically, the big events often fail to make a return. Of the six Summer Olympic Games since 1988, only two (the United States in 1996 and the United Kingdom in 2012) experienced higher average economic growth in the four years post-Olympics than the four years preceding the event. Only one of the last six Winter Olympic host countries (Canada in 2010) experienced higher growth after the Olympics than before.

The buzzword doing the rounds in recent Games has been "legacy". But rather than leaving a beneficial legacy such as that attributed to Barcelona, the legacy of recent Olympics has been anything but beneficial.

The Olympic Games in Athens has been blamed for some of Greece's economic woes - with unused facilities creating a cost for the taxpayer to maintain. The situation is similar in Beijing. The Birds Nest stadium costs an estimated US$11 million every year to maintain - and doesn't have a major tenant.

So why do countries continue to line up in spite of the fact that hosting is costly and the legacy is shrouded in doubt?

In more recent times, the Games have been used as a catalyst to turbocharge development of run-down and less desirable parts of cities with less opposition than what might normally be encountered in the absence of the Games. The appeal of the Games as an advertisement for the city and country is strong. There are also hopes that the Games will bring an economic boost with an influx of spectators spending money which, in turn, generates more jobs and incomes.

Yet all of these hopes should come with a warning label. Games-related development does not always work unless it is part of a wider plan. The Games can have a negative effect if things go wrong, and the evidence shows that tourism isn't stimulated. Australia suffered a four-year decline in tourist numbers after Sydney 2000, while New Zealand enjoyed a 30 per cent increase in the same period.

International Olympic Committee (IOC) president Thomas Bach visited New Zealand in May as part of a global tour to drum up support as an increasing number of countries view hosting the Games as a poisoned chalice. The IOC wants more candidate cities but if it wants greater buy-in it must champion sustainable economic management of the Games. The IOC's rationale is simple: the greater the number of bidders, the higher the chances of the successful city over-paying for the privilege.

In this context, a 2014 pre-feasibility report compiled by Queenstown's Bruce McGechan, which recommended that Queenstown and Auckland bid for the 2026 Winter Olympics, needs to be treated with caution. Ultimately, cities and countries need to carefully consider the benefits and costs of hosting.

Mega-events like the Games benefit only a few in the host country, while the costs impact on everyone. Governments owe it to their constituency to perform due diligence on the actual impact of hosting the event. That includes being as transparent as possible regarding the true costs of hosting. Greater transparency will ensure cities and countries realise exactly what they're putting in - and getting out.