Big Games, Small Profits
“Faster, higher, stronger” – that’s the motto of the Olympic Games but you could add one more word to that: “costlier”.
JACQUES ROGGE, IOC PRESIDENT (2001-2013) : As in every competition, however, there can only be one winner.
Cities around the world are out-bidding each other to catch the eye of the International Olympic Committee.
The Sochi Olympics, like all before offer the host country a valuable moment in the spotlight and maybe a chance to profit in the long-run.
But history shows, profits have been a myth and the spotlight isn’t always positive. Make you wonder: why would anybody want to host the Olympics?
Thirty years ago the 1984 Los Angeles Summer Games cost around $546 million – about 1.2 million in today’s dollars. The bill of Sochi? Fine upward of 50 billion – an Olympic record.
Ski Jump, Ice Skating, Curling, Skeleton – if you break it all down, each one of the 98 events will, on average, cost $510 million.
Mega-sporting events are often billed as a boon to the host city, a two week blitz of tourism and TV face-time and a few Olympic Games have been a financial success: 1996 in Atlanta, 1992 in Barcelona, and 1984 in Los Angeles.
VICTOR MATHESON, ECONOMICS PROFESSOR, COLLEGE OF THE HOLY CROSS: “After the success of the Summer Olympics in Los Angeles where the event organizers actually ran quite a big profit, lots of cities say “We want to get into that and we want our chance at those riches.” The problem is that in 1984 in Los Angeles, LA was the only bidder for the games and therefore they could dictate the terms to the IOC. Nowadays when you have five, ten, fifteen countries from all around the world all trying to put their hat in the ring, that means the IOC is the one who is dictating the terms.
Economists like Victor Matheson question whether increased exposure means increased trade and tourism. And those Olympic tourists are often just replacing the ones that stayed away to avoid the crowds. Beijing actually saw a drop in hotel bookings during its summer games.
The IOC argues that host cities benefit from all the new infrastructure that gets built. Sochi will be left with better roads and transportation and a bunch of new sports venues.
VICTOR MATHESON, ECONOMICS PROFESSOR, COLLEGE OF THE HOLY CROSS: Countries are also hoping to be left with a big tourism legacy. Certainly Sochi is banking on that; essentially we’ve built a resort community in the middle of nowhere where none was before. Unfortunately the branding has probably not been so good so far for Russia.
So why host? It took Montreal thirty years to pay off its Olympic debt. It’s the Olympic spirit for one…for another, people who live in these places like to celebrate their cities.And here’s one more: over the past ten Olympics the host nation has, on average, won 54 percent more medals than when it was not hosting. That’s an Olympic bottom line.
Source: nytimes

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