Current weather

  • Scattered clouds
  • 54°
    Scattered clouds

Rising costs bring questions about value of Olympic games

Posted: Sunday, August 01, 2004

ATHENS, Greece By almost any measure, the Olympics flunk basic economics.

The bidders spend lavishly and make costly promises. The winning city opens the vault to build stadiums, venues and villages that may have questionable value after the games. Local commerce is disrupted for years. Then there's skyrocketing costs for payroll and security.

And it all happens with the knowledge that the whole venture will probably end up losing lots of public money.

But cities keep slugging it out to play host. Five are in the running for the 2012 Summer Games. Some cities are even gearing up bid for the 2014 Winter Olympics.

''On paper it doesn't make sense,'' said Larry Hadley, a University of Dayton expert in the economics of sporting events. ''But with the Olympics there are many other factors than just the bottom line.''

Perhaps it's the seduction of being in the world spotlight for more than two weeks to promote local attractions, culture and talents.

Or maybe it's the work of developers, political ladder-climbers and other civic chieftains who stand to benefit from the Olympics. There's also the still-solid faith in the Olympics as a springboard for the local economy and image.

''You need to keep it in perspective. Compared with a country's total economic output, the Olympics cannot be the savior that some people believe,'' Hadley said. ''But nothing about the Olympics seems to be kept in perspective.''

Look no further than Athens.

The final price tag for the 2004 Olympics may approach $12 billion, including a record of at least $1.5 billion for security. The tally nearly double estimates a few years ago could haunt taxpayers for at least a decade, some analysts predict.

The massive upgrades needed for the Olympic homecoming gave Greece one of Europe's fastest growth rates. But a post-Olympic slowdown looms. How steep and deep is what everyone is wondering.

''We are going to bankrupt Greece so big companies and big interests can get rich off the Olympics,'' said Nana Vafidi, a leader of Athens' small anti-Olympic movement. ''This is the real Greek tragedy.''

But it's not just about the money, others insist.

The Olympics gave Athens what it desperately needed: a reason and deadline to fix the messy and ill-planned urban sprawl under the Acropolis. The city now has a suburban rail that links the city and airport and its first tram line since the old tracks were dug up in the early 1960s.

There's another thing Greece's boosters hope to change: the country's reputation as a sunny but backward corner of Europe.

''We need to change perceptions of Greece to a place that's modern and dynamic,'' said Greece's deputy finance minister, Petros Doukas.

Greek officials and commentators draw parallels with the 1992 Barcelona Games, which used its Olympic moment to full public relations advantage. But at a cost: a $20 million debt that was a drain on the Spanish economy for years.

''The Olympics, for some reason, seems to throw rational thought out the window. I call it the 'goose bump effect,''' said Helen Lenskyj, a University of Toronto sociologist professor who has studied Olympic costs and other fallout. ''The Olympics is built on this sentiment: 'I had goose bumps being at the games, competing in the games and so on.' It trumps all rational arguments.''

Blame it on LA.

The 1984 Los Angeles Olympics is considered a watershed. It turned the Olympics from a sports celebration to a perceived economic engine. The reason was a record $225 million profit.

Olympic watchers note that Los Angeles was unusual because few new projects were undertaken. Also, the bar was set low. After the U.S. boycott of the 1980 Moscow Games, the Olympics were in danger of becoming a causality of the Cold War.

''LA changed everything,'' said Evan Osborne, who teaches sports economics at Wright State University in Ohio. ''Suddenly, the Olympics were seen as a potential bonanza.''

This opened up a new age of competition among cities. Bids grew ever more extravagant and spectacular. So did the costs. The International Olympic Committee did little until recently to put the brakes on the promises.

''We call it the 'winner's curse,''' Osborne said. ''The cities that win the bid for the Olympics are the cities that most overestimate what they are worth.''

The result, experts say, is often fancy venues that become money-draining memories that can actually hold back economic growth.

Montreal, host of the 1976 Summer Games, was stuck with a public debt worth lost billions in today's dollars.

In Atlanta, which hosted the games 20 years later, a hotel and other buildings have sprouted around the downtown Centennial Olympic Park site of the bombing that claimed one life. But other Olympic venues, including a shooting site and beach volleyball, lost their luster once the games left town.

Even the highly praised Sydney Games four years ago have left a fiscal hangover.

The New South Wales sports minister, Sandra Nori, said last Monday it could take a decade for some venues to break even. Her comments came after the Sydney Morning Herald reported that taxpayers are forking over about $32 million a year to prop up underused venues from a bankrupt SuperDome to a rowing center more popular with dog walkers.

This is a classic case of post-Olympic troubles, said Robert Baade, an economic professor at Lake Forest College in Chicago and an expert in sports mega-events.

''Do the Olympic venues fit in the local economy and work to spur development?'' he said. ''Almost always the answer is no ... There's this impression that the circus is coming to town and, with it, lots of people willing to spend lots of money. That's just not the reality.''

If the Olympics look bleak on spreadsheets, they tend to bring something intangible: civic enthusiasm and a chance to showcase local talents.

''For Sydney, some of the benefits almost appear to be spiritual, and I don't say that in a religious sense,'' said Harry Gordon, Australia's top authority on the games. He called it a ''coming together in such a spirit of joy and unity that I haven't seen on such a scale outside of wartime.''

Athens wants even more.

The chief organizer of the Athens Games, Gianna Angelopoulos-Daskalaki, has said it hundreds of times: ''We want to show Greece's modern face.''

''But at what cost? Did we have to break the bank to do it?'' Greek political commentator Nikos Dimou asked.

''The average Greek suddenly sees that he is going to have to pay a lot of money for the next 10 or 20 years in order to cover the costs,'' he added. ''So most people see this Olympics not as theirs. To them, it's just Gianna's party.''

There's no question that the Olympics bring in money and spur some projects. A PricewaterhouseCoopers survey, commissioned by the New South Wales government in 2001, offered a list of positive fallout from the Sydney Games, including $2.1 million in new business activity and $4.2 million in added tourist revenue.

But John Lucas, a professor emeritus at Penn State University and a specialist on the modern Olympics, also sees the games increasingly operating on two tiers: spilling red ink on taxpayers while pumping profits to selected developers and other insiders.

''In short, hosting the Olympic Games as an economic development strategy for the host city simply doesn't work in the vast majority of cases,'' he said. ''On the other hand, individual entrepreneurs can make a great deal of money at the Olympic Games. Some, in fact, have become millionaires.''

In early July, the IOC promised to tackle the Olympic Goliath.

It backed more than 100 recommendations to curb spending and combat ''gigantism,'' including cutbacks in venues, credentials and limiting the torch relay. Some of the measures will be tried as early as 2006 at the Turin Games. The full effect if any shouldn't be felt until the 2010 Winter Games in Vancouver and the 2012 Summer Games. Five candidates remain: New York, London, Paris, Moscow and Madrid, Spain.

The duels are already under way.

In Vancouver a highly organized Olympic opposition force is challenging backers' predictions that the games may generate $10 billion in economic activity.

In New York, there's majority support for the games but not if tax dollars are used, according to a June poll by the Quinnipiac University Polling Institute.

Its director, Maurice Carroll, summed up the findings: ''So let the games begin, voters say, as long as we don't have to pay for it.''



CONTACT US

  • 150 Trading Bay Rd, Kenai, AK 99611
  • Switchboard: 907-283-7551
  • Circulation and Delivery: 907-283-3584
  • Newsroom Fax: 907-283-3299
  • Business Fax: 907-283-3299
  • Accounts Receivable: 907-335-1257
  • View the Staff Directory
  • or Send feedback

ADVERTISING

SUBSCRIBER SERVICES

SOCIAL NETWORKING

MORRIS ALASKA NEWS