Last Wednesday (November 22, 2023), the Tory government in Britain released their fiscal update known…
Just when we were meant to be waving our national flags, standing to attention at the medal ceremonies and enjoying the Olympic Games from our various states of lockdown or in my case (day 12) quarantine, Professor Scott Baum sends me his latest guest blog telling us how bad the Games are. What a spoilsport (sorry). So, today, Scott from Griffith University, who has been one of my regular research colleagues over a long period of time, brings the wet blanket to wreck our fun, and just as Victoria (where I am holed up in quarantine at present) comes out of lockdown. Over to Scott …
And the winner is Brisbane… well kind of… or maybe not
Amongst all the noise emanating from the Japanese capital about the long delayed 2020 Olympic Games, there was the announcement that Brisbane Australia (the region I live in), had been granted the rights to host the 2032 Summer Olympic Games.
Despite the complete sham of the Olympics that sees rich nations throw buckets of money into creating an uneven playing field vis-à-vis poorer nations (see Bill’s alternative Olympics medal count to see what happens when you account for income per capita or GDP) the reaction to the announcement was predictable.
Politicians cheered and congratulated each other on a job well done, sports-mad fans in Brisbane gathered together for a celebratory firework display and the media went crazy as this article (July 21, 2021) – ‘A win for our athletes, a win for the community’: Qld rejoices after 2032 Olympics decision – exemplifies:
A win for our athletes, a win for the community’: Qld rejoices after 2032 Olympics decision (July 21, 2021).
For the politicians involved, legitimising the decision to bid for the right to hold an Olympic Games was also predictable.
As with all these things there was a large amount of talk about all the economic benefits that would surely flow to the region, the wider Queensland state economy and of course the national economy more generally.
There was talk of all the jobs that would be created, all the flow-on to sectors outside those directly associated with hosting and running a spectacle of such large proportions, there was talk about all the shiny and new “essential” infrastructure the region would gain and how all of Queensland would benefit.
The problem with mega events like the Olympic Games is that they rarely live up to the hype that is used to legitimate them.
The Olympics is not the only mega-event; Football (Soccer) World Cup, the Rugby World Cup, Asian Games and Commonwealth Games are all up there.
In general, as this academic research report (September 13, 2017) – Who Wins? Outcomes of Olympic-sized Events – teaches us, these mega-events:
… require substantial investment by their hosts and attract considerable media attention. In addition to their scale, defining features of mega events are that they move from place to place, last for a fixed duration, attract a large number of visitors, have a large mediated reach, come with high costs, and have significant impacts on the built environment and the population.
This article (August 1, 2016) – The great Olympic budget blowout – talks about mega-projects which:
These are huge, complex, multi-billion-dollar investment projects, from China’s high-speed rail network to Sydney’s Opera House, beloved of politicians but with a well-deserved reputation for costing far more than expected.
Don’t worry it will be cost-neutral
Any criticism of the costs of hosting an event such as the Olympics or talk about cost blow-outs is washed away with comments such as the games being cost-neutral being offset by payments from the International Olympic Committee, ticket sales and television rights.
In relation to the announcement that Brisbane had won the rights to host the Olympics, the media went into overdrive spouting the political messaging from the Government – for example (July 22, 2021) – (paywall).
Ms Palaszczuk, the Queensland Premier, was busy driving home the cost-neutral message, reminding people:
… that there would be a 50 per cent contribution between the state and the federal governments and of course the councils (of southeast Queensland) are putting in money as well.
But we learn from the – Australian Government’s Budget Review 2021-22 – that:
In practice, international experience suggests that the host country budgeted costs for the Olympic Games are usually dwarfed by their final actual costs and cost overruns are prevalent.
So even the federal government, who has stumped up to finance 50 per cent, acknowledges that there may well be a financial blow-out.
We also learn from this academic paper – Regression to the tail: Why the Olympics blow up (published September 15, 2020) – that the extent of blow-outs in past Olympics games has been in many cases significant.
The following graph shows that cost blow-outs have ranged from 720 per cent for the 1976 Montreal Olympics to a 2 per cent cost-overrun at the Beijing Olympics in 2008. The average sat at 213 per cent.
The conclusions that the authors draw are:
Judging from these statistics it is clear that large risks of large cost overruns are inherent to the Olympic Games … cost overruns are statistically overwhelmingly manifest for the Olympics.
We learn from this blog post – The Australian government is not akin to a household (February 16, 2015) – that there is no financial problem for the Federal Government if there is a 50 per cent blows-out.
Such a blow out might signify poor project design or management but the major issue from the perspective of the federal government might be the moral question of who has benefited from the cost blow-out, although I doubt this comes into their thinking.
There is, as we know, no fiscal constraint on government outlays, only a real resource constraint and hence a blow-out is not problem, even though those in power will argue the contrary and critics, on the hunt for cheap political points, will talk about a waste of taxpayer’s money.
For State and Local Government officials and city organisers any budget blow-out has to be funded from elsewhere.
See the blog post – When governments are financially constrained (September 17, 2010) – for more discussion of this point.
Unlike sovereign currency issuing governments, state and local governments have to fund their expenditure just like you and me.
As a consequence, any blow-out will need to be paid with borrowings, local taxes, through shifting funds from elsewhere or through selling off assets.
We have seen plenty of examples where governments have seen fit to spend up on big ticket items only to cut public services later in the name of sound fiscal management.
The outcome is unlikely to be the legacy proponents of the Olympic Games promised.
The city/region that was going to benefit so much from hosting the games gets an unfavourable financial legacy they didn’t plan on.
The potential for austerity measures to bridge the gap and all the damage that goes with them become an unhappy proposition.
Everyone’s a winner
Another furphy used to legitimate hosting the games is that the benefits are widely distributed. This is the everyone’s a winner argument and is simply the usual neo-liberal game of telling those in the most vulnerable positions that they will benefit from some form of trickle-down.
In terms of the Olympic Games, we read in this Jacobin article – The Olympics Is a Racket (July 19, 2021) – that:
There’s a lot of money sloshing through the Olympic system. The issue is that it tends to slosh upward into the pockets of those who are already rich.
This analysis (August 6, 2016) – Rio Olympics 2016: Bosses live in luxury as athletes struggle – reports that the International Olympic Committee rake in billions of dollars each Olympic cycle and whose:
volunteer president who gets an annual “allowance” of US$251,000 (2016) and lives rent-free in a five-star hotel and spa in Switzerland.
And we read about the big media companies who make record advertising revenues.
And we read about the:
… local political and economic elites who are well positioned …[and tied into] … public-private partnerships that are massively lopsided in favor of the private entities.
As for the rest of the so-called beneficiaries of host-city status:
Simply put, working-class people do not benefit from the Olympics. They’re told that they’ll benefit from the Olympics when they’re in the bidding stage, in an attempt to get the local population on board, but the benefits are always overstated.
And then there are the findings from more focused assessments.
The last two significant mega-sporting events to be held in Australia were the 2000 Summer Olympics held in Sydney and the 2018 Commonwealth Games held in the South East Queensland city of the Gold Coast.
Each of these were heralded as offering wide ranging benefits for the host cities, yet the assessments suggested otherwise.
From this academic research study (published May 23, 2011) – Modelling the Economic Impacts of the Sydney Olympics in Retrospect – Game Over for the Bonanza Story (paywall) – we learn that:
… in terms of measurable economic welfare, the Sydney Olympics came as a cost to Australians, reducing the present value of real private and public consumption by $2.1billion.
In a related media report (June 1, 2021) – Is hosting the Olympics Games worth the investment? – it is noted that the Sydney Olympic Games:
… failed to increase employment or meaningfully boost tourism … All the studies we did after the Games suggested that we were no more on the tourism map than we were before the Games.
Similar stories emerged about the 2018 Commonwealth Games which was held in the Gold Coast (part of the same region that will host the 2023 Olympics).
This report from Griffith University in Brisbane (published June 2019) – Business and the Gold Coast 2018 Commonwealth Games (2019) – outlines the way businesses were impacted from that event:
At the broadest level, half of respondents (51%) reported that their business was impacted very negatively; 23% somewhat negatively; 16% felt no impact; and 9% of respondents were somewhat positive with only 1% very positive.
The preeminent factor identified for the negative impact on businesses was a change in customer numbers (57%), with reduced sales volume coming a close second (52%).
The Report’s co-author wrote an Op Ed follow-up (June 1, 2021) – Is hosting the Olympics Games worth the investment? – and argued that:
Sports fans don’t act like leisure tourists … They are not buying coffees in shopping precincts. What we also found in our study of the Commonwealth Games is that a lot of locals left town during the event. Businesses got a double whammy in that they didn’t get the normal local trade and they didn’t get the tourism trade … In the early bidding days, the rhetoric is that everyone’s a winner, whereas, realistically, there are going to be wins in some areas and a lot of people who are disrupted and won’t do well …
And it doesn’t end with small businesses loosing money.
The uneven outcomes often hit our most disadvantaged.
This Jacobin magazine article (July 20, 2021) – Abolish the Olympics – focuses on the abhorrent treatment of residents and the environment of many past Olympic host cities:
Some 1.5 million residents were displaced for Beijing 2008. Favelas were flattened for “white elephant” stadiums, which sit empty after events end, destroying the homes of 77,000 people and accelerating policing, ahead of Rio 2016. People are still being evicted over lies related to Olympic development in East London for 2012, and most can still recall the civil rights fiasco of Sochi 2014, where homosexuality is still criminalized and where, before the games, suspected LGBTQ residents were attacked and disappeared by the local government – leading to no condemnation by the IOC, which stated that the only human rights protections in the Olympic Charter are for athletes and members themselves. An ancient forest, considered sacred by many South Koreans, was eviscerated for Pyeongchang ’18 to make way for a ski run that would be used twice.
No wonder the authors were calling for the abolition of this grotesque event.
Much needed critical infrastructure
The final piece of hoodwinking that is trotted out by politicians is that hosting the Olympics will provide new and upgraded critical infrastructure for the city or region.
There is nothing a politician likes better than announcing a big bit of infrastructure to boost their political legacy.
I noted in this Op Ed (October 20, 2020) – Hi-vis haute couture impossible to miss, but not always the ideal fit – the way politicians wearing hi-visibility vests has become a commonplace campaigning strategy.
Critical Olympic infrastructure can mean many things-new stadiums, public spaces, transport improvements and athlete housing.
Some of this might be useful and there are some examples where infrastructure built for the Olympics has gone on to be used post-games. But there is also international experience suggests that there is plenty of scope for these projects to become white elephants and that is in addition to the afore mentioned cost-blowouts.
This academic research study – Avoiding white elephants? The planning and design of London’s 2012 Olympic and Paralympic venues, 2002-2018 (published July 1, 2019) – notes that:
White elephants’ are particularly associated with the cities that have hosted some of the most recent Games of the twenty-first century, as reflected in accounts of the ‘uncertain legacy’ of Sydney’s Stadium two years after the 2000 Games, Athens’s struggles to generate viable reuses for its venues, Beijing’s largely empty ‘bird’s nest’ stadium, and of numerous hoarded or boarded-up venues in Rio, Sochi and beyond.
But it is also not just about white elephants.
It would seem reasonable that if a state or federal government wanted to invest in critical infrastructure, then they and the constituents they represent would be much better served being provided with efficient public transport that helped move people where they wanted to travel, high quality health facilities, good schools etc.
This is doubly important for some of our most disadvantaged communities who are very unlikely to benefit from the infrastructure spend associated with a mega-event like the Olympics.
What might be critical to the Olympics might not be critical to those living in far flung suburban communities away from the action.
Those pushing for the Olympics and other mega-events will try to legitimate them via a raft of statements about cost neutrality, broad social and economic benefits and the provision of critical infrastructure for the benefit of all.
There is no denying that hosting a mega-event like the Olympics might bring a lift to some unmeasurable ‘national pride’, but this is like the classic magic trick-look at my right hand and ignore what my left hand is doing.
While the people are cheering, others are running away with the loot.
If politicians want to leave a legacy from their time in office, then they should start by addressing some of the pressing social and economic issues that exist, rather than trying to hoodwink us with a sporting mega-event.
Note from Bill: Alternative Olympic Games Medal Tally
After all that, let’s get into what is important – the Medal Tally! (-:|
Since the 2000 Olympics, I have compiled an alternative set of Olympic tallies to take into account size of population, economy and income per head.
This provides a rather different slant on the medal hauls of the big rich countries who use their dominance as a statement of the veracity of their ideological positions.
You can follow the latest counts (which are updated each day) – HERE.
That is enough for today!
(c) Copyright 2021 William Mitchell. All Rights Reserved.