Home The Washington Diplomat August 2016 As Brazil Racks Up Bills, Many Cities Say Games Aren’t Worth Costs

As Brazil Racks Up Bills, Many Cities Say Games Aren’t Worth Costs

As Brazil Racks Up Bills, Many Cities Say Games Aren’t Worth Costs

It’s seen as a glittering prize, having your city be the focus of world attention for a few weeks as the host of the Summer or Winter Olympic Games. But what about the run-up to those two weeks in the sun? And after the races have been run, the shots put and the hurdles jumped, does the prize still glitter? When all that’s left are stadiums that require upkeep and a bill as long as the gold medal javelin winner’s throw, does hosting the Olympics still seem like a good idea?

Photo: Luca Zeitvogel
Greece decommissioned an international airport at Elliniko to build stadiums there ahead of the 2004 Olympics. Within a few years after the Games had left town, the airport and stadiums were crumbling into oblivion, with tumbleweed rolling down the runway and airplanes with Olympic rings on their tails standing idle.

“I’m a proud Bostonian. I like the idea of showing off Boston, and I think that’s the spark behind an Olympic bid,” said Chris Dempsey, the Harvard Business School graduate who quit his day job as a consultant at Bain & Co. to work pro bono to make sure the Olympics did not come to Boston in 2024

“We didn’t want our governor and our mayor to focus on where to put the velodrome and what the opening ceremony would look like,” said Dempsey, a co-founder of the grassroots No Boston Olympics movement, which, on a shoestring budget, took on the big guns and successfully kept Boston Olympics-free.

“We wanted our governor and our mayor and others to focus on fundamental questions about quality of life in the city and we were concerned that the Olympics would distract from that,” Dempsey said.

And distract from ordinary problems the Games do. While the lavish spectacle gives nations the global spotlight and a bump in tourism, the add-ons — from state-of-the-art stadiums to frightening ski-jumps to intricate, man-made waterways for canoe and kayak competitions — bring little benefit to the average inhabitant of London, Beijing, Atlanta, Athens or Sochi. And they cost an arm and a leg to build and, after the Games, to maintain.

“Stadiums, which cost a lot and produce minimal economic benefits,” wrote Binyamin Appelbaum in an Aug. 5, 2014, article in the New York Times, “are a particularly lousy line of business. (This is why they are usually built by taxpayers rather than by corporations.) And even though Brazil, like other recent hosts, has sought to make stadium spending more palatable by also building general infrastructure, like highways and airports, the public would derive the same benefit at far less cost if the transportation projects were built and the stadiums were not.

Photo: By Atos International, CC BY-SA 2.0 via Wikimedia Commons
The Olympic Rings stand outside the main park in Sochi, whose 2014 Winter Games were estimated to cost Russia between $50 billion and $70 billion.

In Rio de Janeiro, people are beginning to see the downsides of hosting the Olympics, but will be paying for those failings for years to come, said Dempsey. Brazilians should have taken a cue from the fate of stadiums that were built for the World Cup in 2014, but by that time, the Olympic bid had been signed and sealed for five years.

Brazil built a dozen stadiums for the 2014 World Cup — the most profitable soccer world championship for the global federation, FIFA, but not for Brazil, which spent more than $3 billion on the stadiums alone, mostly using public money. Many of the stadiums are now in financial straits, and officials are desperately trying to find a way to make the venues productive contributors to the communities in which they stand. The $550 million stadium in the capital, Brasilia, is now a bus parking lot.

If stadiums cost stupid money, they’re just the tip of the expense iceberg that comes with hosting the Olympics, said Smith College economics professor Andrew Zimbalist, author of “Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup.”

“One of the things that’s true about all of the Olympic Games before now is that there have always been massive cost overruns,” Zimbalist told a meeting of No Boston Olympics in January 2015.

“For London, it went up from $4 billion [the official budget] to the $15 to $20 billion range; for Athens, it went from $1.6 to $16 billion; for Sochi, it was $12 billion and it went up to between $50 and $70 billion.”

Zimbalist said the costs spiral out of control because committees bidding for the Games don’t come clean about how much they’ll cost. Their aim when they’re bidding for the Olympics is simple: They want to “convince a political body to support their ideas, so they always come out first with a barebones sketch of what they want to do,” Zimbalist said.

“Once there’s a political go-ahead, they start adding the frills and the bells and the whistles and the price keeps going higher and higher,” he said. And very often, taxpayers are left picking up the tab.

The budget for the Rio Olympics has risen from less than $9 billion in 2009, when Brazil bid for the Olympics, to $12 billion this year. And that’s just for the preparation stage. The cost of running the Games in London — $4.1 billion — was supposed to be covered entirely by private money. “They fell short — $1.6 billion short, which the London government had to come up with,” Zimbalist noted.

Photo: Danilo Borges/Portal da Copa / CCA 3.0 Brazil via Wikimedia Commons
The interior of the Estádio Nacional in Brasília was re-inaugurated following renovations for the 2014 World Cup. Brazil built a dozen stadiums for that year’s World Cup — the most profitable soccer world championship for the global federation, FIFA, but not for Brazil, which spent more than $3 billion on the stadiums alone, mostly using public money.

Supporters of the London Games counter that the Olympics helped revitalize a rundown section of East London that otherwise would’ve taken decades for private investment to develop. They also note that many of the structures have been repurposed for other sporting events.

But the legacy of London remains mixed, with promises of a large-scale economic boost largely unfulfilled. Still, London was financially better off than other cities to absorb the cost overruns that inevitably entail Olympic construction. Rio may not be in the same fortunate position.

Two months before the start of the Games in Brazil, officials in the state of Rio de Janeiro warned that a mix of inflation, a weakening currency, government crisis and heavy spending on the Olympics meant they would not be able to continue offering public health, security and education services, Luisa Leme wrote on the Council of the Americas website.

“Most of the Olympic venues are finished or in the final stage of construction, but many of Rio’s so-called ‘legacy projects’ — urban infrastructure to support the Games such as a new subway line — are running behind,” Leme wrote.

Brazil, of course, has had no shortage of Olympic-scale headaches, many of them self-inflicted. Public mistrust of the government is seething ahead of the Games. A massive corruption scandal involving the state-owned oil company has ensnared dozens of top politicians, including its highest-profile casualty, President Dilma Rousseff, who was suspended in May and faces impeachment charges for allegedly manipulating government finances ahead of her re-election campaign.

Meanwhile, the once-booming economy is tanking, with the country registering its worst recession in 25 years in the first quarter of 2016. Striking police recently greeted visitors at a Rio airport with banners that read, “Welcome to Hell” and “Police and Firefighters Don’t Get Paid.” Top athletes have withdrawn from the Games over fears about contracting the Zika virus. And while concerns about Zika may be overblown given that mosquito season in Brazil is technically over in August, headlines about raw sewage being spilled into Rio’s waterways doesn’t exactly inspire confidence among athletes who’ll need to swim in that water.

Sochi, a microcosm of Russian corruption, and Athens, emblematic of Greek mismanagement, were also public relations nightmares in the run-up to the Games. But most host nations ultimately get their acts together and in the spirit of solidarity, the world tends to overlook the bumps on the road to Olympic glory.

Photo: IOC / C. Moratal
International Olympic Committee officials light the Olympic Torch Relay in Lausanne, Switzerland, in April 2016 ahead of the Rio Summer Games in August.

Once the athletes and spectators file out of the gleaming new villages and stadiums, however, residents are left to pick up the pieces.

A 20-minute ride south on the Athens Metro — built to support the 2004 Olympics — followed by a 20-minute walk through drab neighborhoods and industrial sites takes you to a sad reminder of Greece’s Olympic mistakes. The old international airport at Elliniko was decommissioned ahead of the 2004 Olympics and several shiny, new stadiums built there. Within a few years after the Games had left town, the airport and stadiums were crumbling into oblivion, with weeds sprouting on the bleachers and tumbleweed rolling down the runway. At the far end of the runway, several airplanes now stand idle, the Olympic rings on their tails unable to save them from becoming yet another Greek ruin.

On the other side of Athens, the Olympic village, which was supposed to be turned into public housing after the Games, is also in a state of decrepitude — empty, abandoned, crumbling and stripped of copper pipes, marble and anything of value. Thousands of Greeks put their names into a lottery that would give them the chance to buy homes in the Olympic village. But according to an article in Britain’s Telegraph newspaper, seven years later, only half the apartments were occupied and those who did buy into the dream found themselves in a nightmare. Cracks have appeared in the façades of buildings, moisture is creeping up the walls and parents have to drive for miles to take their kids to school because only two of the promised schools near the Olympic village were completed and they are over-subscribed.

Former javelin thrower turned politician Sofia Sakorafa told the Telegraph that the Games were “a hugely wasted opportunity and one that sticks in the throat of many people. We are left with installations that are rotting away because we don’t even have the money to maintain them.”

If it makes Greeks feel any better, they’re not alone. Montreal was nearly bankrupted after hosting the Games in 1976. Residents of the city spent a decade paying down the $1.5 billion debt the city was stuck with after the event. They were also stuck with a stadium, which they dubbed “The Big O” in honor of the debt, that has been described by a Canadian journalist as a “huge, round, pale, sterile, soulless architectural excrescence.” The stadium’s roof has torn and collapsed in the past. A new roof was recently budgeted at $300 million, probably more than residents want to spend, again, on the stadium.

Balloons fall on spectators at the closing ceremony of the 2004 Athens Summer Games. After the Olympic party was over, however, many Greeks were unhappy with the debt and empty stadiums left behind.

Beijing’s Bird’s Nest stadium cost $480 million to build, and now costs $11 million a year to maintain. The stadium, designed by dissident Chinese artist Ai Weiwei and Swiss architects Jacques Herzog and Pierre de Meuron, has been described in recent years as little more than a mediocre tourist attraction. (An Olympics aquatics center, however, has found new life as a successful water park.)

But Beijing may get more bang for its buck. The city recently doubled down on its Olympic gamble by winning the right to host the 2022 Winter Games. Indeed, for emerging nations such as China and Kazakhstan, which competed with China for the Winter Games, the Olympics are a source of national pride and prestige. Governments such as China, Russia, Kazakhstan and Qatar that don’t necessarily have to answer to public opinion can also afford to spend big in an effort to send a message that they’ve arrived on the world stage.

Yet despite the large costs and limited rewards, public support for hosting the Olympics tends to be high, even though the euphoria can sour once the Games are over.

But if the Olympics don’t benefit the average citizen in the host city, they have to be appealing to someone, right? Otherwise, why would anyone bid for the Games?

In Athens, “a lot of entrepreneurs and property developers got rich very quickly,” Sakorafa told the Telegraph. Likewise, despite the estimated $50 billion price tag for the Sochi Winter Games, many of Russian President Vladimir Putin’s business cronies reportedly walked away with a nice chunk of change.

Others who benefit from the Games are members of bid committees — even ones that don’t get the Games. Bostonians were up in arms when they found out that the head of Boston’s bid committee, former Massachusetts Transportation Secretary Richard Davey, was being paid $300,000 a year to try to bring the Games to their fair city. Five other bid committee officials were also on six-figure salaries, and former Massachusetts Gov. Deval Patrick was offered $7,500 for every day that he traveled to promote Boston’s bid. Patrick refused to take up the offer and, of course, the bid committee is now history.

Dempsey said the Olympic ideal of “people coming together, laying down arms and competing fairly is wonderful and something to be celebrated.” But, he added, there’s a problem with the International Olympic Committee’s (IOC) outdated business model, which hasn’t changed since the 1890s.

Since the second modern Olympics, held in Paris in 1900, the Games have jumped from city to city every four years.

Photo: By Rafael Rabello de Barros – Own work, CC BY-SA 3.0 via Wikimedia Commons
Brazil’s iconic Christ the Redeemer statue overlooks Rio de Janiero, site of the 2016 Summer Olympics.

“We’ve really moved beyond a model of having to move the Olympics to a different city every four years — every two with the Winter Games — but the IOC has not. They’re still asking cities to spend all this money to build up venues and centers that don’t really have any good use and cost the host city a lot of money, but don’t bring a lot of payoff,” Dempsey said.

“In today’s connected world, there is surely a much better way to put on these events and celebrate our athletes and all the wonderful things that happen with the Olympics without the enormous costs and drawbacks that are part of the IOC’s model,” he added.

To address some of the concerns, the IOC announced a strategy called Olympic Agenda 2020, an overhaul of the bidding process that would force cities to lower infrastructure costs before they are considered for the Games, thereby expanding the pool of candidates and adding long-term value to the host city.

Some have also suggested holding the Olympics in one city all the time. Athens, where the first modern Games were held in 1896, has been suggested as the ideal single-site Olympic host city. But whether Athenians would embrace that idea after their post-2004 Games experience is another thing. The IOC would likely resist the change, too, as it might leave them on the hook for more Olympic expenses.

About the Author

Karin Zeitvogel (@Zeitvogel) is a contributing writer for The Washington Diplomat.