Olympic mythology shrouds real cost of hosting

A stockpile of crowd control barriers in front of the Olympic Stadium in the 2004 Olympic Games Complex. Few of the city's Olympic facilities are still in use. Photo / Getty

Brazil is a country currently grappling with its worst recession in a century, its worst health crisis in a century, its unemployment is at 11 per cent, and its president is awaiting an impeachment trial amid charges that she manipulated government accounts. It is concurrently hosting the world's biggest sporting event.

Apart from war, nothing so affects the political mind as national sports rivalry. It stirs patriotism, ostentation and group hysteria. At the peak of this mania are two so-called mega-events, the Olympic Games and football's World Cup. Politicians will beg, bribe, cheat, lie and spend unlimited sums of taxpayers' money to "win" a hosting of these contests.

When London was awarded the 2012 Games, it paid $500,000 in fees to the IOC just to bid. The British government then increased a customarily understated budget of £3 billion (NZ$5.5 billion) to more than £9bn (NZ$16.5 billion). The IOC demanded London build a new, fortified city at Stratford, despite the new Wembley having been designed for the purpose. The so-called Olympic "family" required five-star hotels and fleets of limousines, roads to be cordoned designated for their private use, including a "Zil lane" past Harrods, and traffic lights that turned green on their approach.

Britain, like other host nations, went into banana republic mode. The BBC turned soft in the head, its presenters screaming at every medal like Stalinist sycophants. Newspapers abandoned all news judgment for the duration. Critics were treated like conscientious objectors during the Great War, wimps who could not stand the sight of weapons of mass expenditure.

By exploiting television and product sponsorship, the IOC and Fifa turned the contests into primarily commercial events. They were soon in thrall to the big venue contractors (mostly American). The Games became essentially a tax on nation states, with profit going to contractors and the IOC and Fifa themselves. In the 1960s the IOC was still taking just 5 per cent of the Games' rights revenue. It nowadays pockets more than half, usually leaving the host nations crippled with debt.

Olympic hosting costs

• Sochi 2014 Winter Games: US$51 billion
• London 2012 Summer Games: US$14.6 billion
• Vancouver 2010 Winter Games: US$6.4 billion
• Beijing 2008 Summer Games: US$44 billion
• Athens 2004 Summer Games: US$11 billion

According to a study by Oxford University, all 17 summer and winter games from 1968 to 2012 exceeded their budget, with an average cost overrun of 179 per cent. If Brazil experiences the average cost overrun of 179 percent, the final cost could balloon to more than US$17 billion.

By the 1970s, the Olympics were assailed by political boycotts, drug scandals and the near bankruptcy of Montreal in 1976. For the 1984 Games, says sports economist Andrew Zimbalist and author of Circus Maximus, "the brand was so markedly tarnished" that the only bidder was a private syndicate from Los Angeles, offering to rent the city's existing facilities. They did so and made a fortune.

Los Angeles was an elixir for the IOC. Amateurism was abandoned, a blind eye was turned to doping and ever more rights revenue was skimmed from host cities and sporting committees. Then in 1992, Barcelona offered to locate its Olympics in a rundown part of the city, thus declaring the Games primarily a "legacy". Los Angeles and Barcelona saved the Games. To all complaints over costs, the IOC now refers to the Olympics as "a huge sporting, economic and social legacy".

The upcoming Rio Olympics has been plagued with setbacks in every area and could end up costing US$20 billion. Photo / AP

Zimbalist has proven such claims to be rubbish. Los Angeles and Barcelona were exceptions, in that sporting events were adapted to suit the host city, rather than vice versa. The economic multiplier of these mega-events is proven false. City or state GDP does not increase. Tourism does not rise during the contests. The 2000 Sydney Olympics led to a four-year fall in numbers, and Beijing 2008 saw a collapse in visits. The British government hired bevies of accountants to claim that the 2012 Games would make a profit, "earn Britain £13bn in extra trade" and "deliver a tourism boost". They did nothing of the sort. The stadiums were to be dismantled and reused elsewhere - they were not.

Most gratuitous have been the white elephants. Athens now has more Olympic ruins than classical ones, with 21 out of 22 structures erected for the 2004 Games standing derelict. The debt undoubtedly contributed to the country's economic collapse. The demand of the IOC for "gold-plated" stadiums has left cities from Atlanta to Barcelona, Beijing and London with near unusable monoliths.

Some cities may see a one-off boost to transport infrastructure, but as Zimbalist comments: "Why should it be necessary to spend tens of billions of dollars to host an event to get hundreds of millions of dollars of worthwhile investment?" Instead the world is littered with empty velodromes, kayak runs, beach volleyball stadiums, speedskating ovals and bobsled tracks.

Tomas Bach, president of the International Olympic Committee, sitting at a traditional bar-restaurant in Rio de Janeiro, Brazil. Photo / AP

Putin's spending of more than $51bn on the 2014 Sochi Winter Olympics dwarfed even Beijing's $40bn on summer 2008. Zimbalist recounts the oligarchic chicanery and racketeering involved. The Russian ruler's vanity is now incurring even higher costs for the 2018 World Cup. (If western leaders wanted to hurt Putin, they would boycott that event, but their vanity is the equal of his.)

Zimbalist has no answer to all this beyond a resigned shrug. For the Rio Olympics, that impoverished city must find more than US$14 billion (NZ$19.6 billion) in costs for two weeks of elite sport. It will receive a mere $1.5 billion (NZ$2.1 billion) out of some $5 billion (NZ$7 billion) in expected rights revenue, the rest vanishing into the "expenses" of the IOC.

Brazil is currently grappling with its worst recession in 100 years and employment has gone to 11 per cent from around 6 per cent in 2014.

The Olympics have become a straightforward rip-off. But as long as politicians exult in the glory of a brief sojourn in the world spotlight, there is no remedy. Rio's favelas will gaze down at the passing cavalcade and be told to marvel at the honour done them - and pay up. Soon, however, this will be a game only dictatorships will play.