Here we go again: olympic financial disaster in Brazil

As reports continue to arrive about the ever-expanding costs of the upcoming 2016 Olympics in Brazil, one has to wonder how long this farce can go on. When will governments learn that hosting these games, and other similar large scale sporting events such as the World Cup, is not worth it? Ever since the disastrous 1976 summer Olympics in Montreal, the Olympics have proved more often than not to be a boondoggle for host countries  and have created  lasting headaches for them, including long term debt.

The Montreal games left the city with a $1.6 billion debt which it could not pay off for 30 years. The Olympic stadium was plagued with problems throughout its life and now, after the sale of the professional baseball team to Washington D.C., sits empty and unused.

 

the-ski-jump-itself

Let’s look at some other recent Olympic games. The 1992 Olympics in Barcelona, Spain cost $11.4 billion and had a cost overrun of 417 percent. The 2000 games in Sydney cost $6.5 billion, created no new surge of international tourists, and showed little or no long term benefit to citizens of that beautiful city.

 

Greece Olympics Abandoned Venues

 

The 2004 Olympics in Athens were fun to watch, but the effect of the games on Greece’s financial condition was disastrous. Today, just ten years after the games, Greece continues to be mired in severe depression. The cost of the games doubled from initial budgets and projections, and final costs ranged from $11 billion to over $32 billion, depending on whose figures you believe. Security alone cost the country $1.2 billion, with 70,000 police roaming the venues and the skies above the city of Athens. Today, most of the facilities built solely for the games sit either completely abandoned or underutilized and in disrepair.

The 2008 games in Beijing cost somewhere around $40 billion. This was a new record, far exceeding any previous games. The famous ‘Birds Nest’ stadium now sits unused for most of the year. The Chinese government claims they ‘only’ relocated 6,000 residents for Olympic construction projects, though independent research organizations say that number is closer to 1.5 million.

The original projections for the London games of 2012 were in the neighborhood of $4 billion. The final cost was between $15 billion and $19 billion, depending on the source. The recent winter Olympics in Sochi, Russia cost the Russian government at least $50 billion, with some estimates going as high as $66.7 billion.

The final costs are always difficult to calculate, as governments often fudge the numbers, as all governments are wont to do. Additionally, it becomes difficult to establish what to classify as strictly a cost item for the games(operating cost)  as opposed to necessary infrastructure projects undertaken to prepare the city for the influx of hundreds of thousands of visitors (capital costs) . These large infrastructure improvements are not typically included in the final tally of the games, but their costs often make the final expense  of the games balloon extravagantly. New airports, new terminals, new subways, trains, roadways and sidewalks do not come cheap.

Over the last 50 years, host cities for the Olympics have averaged cost overruns of 179 percent, or $5.7 billion. So, how’s it looking for Brazil in 2016? It’s amazing to me that Brazil would attempt to host the World Cup and the Olympics within 2 years. Just hosting one of these events is a mighty logistical and financial challenge, especially for a country like Brazil which has only recently become a major economic power. As the country scrambles to get ready for the start of the Cup this summer, things are not looking good.

 

sarajevo-1984-olympics-venues-20

The country erupted into protests last year, with millions in the streets protesting the extravagant money being spent on these mega events/spectacles while the masses of Brazil continue to grapple with subpar housing, medical care, and public transportation. According to some recent figures I read, Brazil is attempting to build 12 new stadiums, overhaul its transportation infrastructure, expand 12 airports and build new ports. Whether all, or even most, of these projects will be completed before the opening ceremonies in 2014 and 2016 is very much an open question. The final tab for capital expenditure in public works could exceed $1 trillion.

Meanwhile, the government of Brazil, taking a cue from their Chinese autocratic brethren, are busily bulldozing the houses of people who are inconveniently located in  a site which is to be developed for the games. According to recent figures, 1.5 million persons are scheduled to be relocated.

 

Brazilian-protests

But hey, uprooting communities, bulldozing houses, fleecing the government on no-bid contracts, constructing white elephant stadiums, and bankrupting entire economies all goes with the territory when we are talking about the Olympics. Thank goodness the Brazilian people have woken up and are protesting this gargantuan scam. They understand that they will receive no benefit from all this chaotic spending and building. Governments always claim that the games will bring ‘prestige’ and ‘beneficial publicity’ to the host country and city. I’m sure the average worker on the street who can’t even afford to buy a ticket to see an Olympic event is impressed with such high sounding talk.

I love the idea of the Olympics, but it has now morphed into a monster. These wholly corporate owned extravaganzas are just a place for multi-nationals to sell advertising and to squeeze money from corrupt  local politicians. Why does it cost $40 billion to gather some athletes together to see who can run the fastest, jump the highest and leap the furthest?

1)    http://en.wikipedia.org/wiki/2008_olympics#Costs

2)  http://en.wikipedia.org/wiki/2004_olympics#Costs

3)  http://www.cbc.ca/news/canada/winner-s-curse-the-economics-of-hosting-the-olympic-games-1.1186962

4) http://www.businessweek.com/articles/2012-08-02/how-the-2004-olympics-triggered-greeces-decline

5) http://olympics.time.com/2012/07/09/amid-economic-turmoil-some-greeks-look-back-at-2004-olympics-as-losing-proposition/

6) http://thinkprogress.org/sports/2013/07/02/2236331/brazil-world-cup-olympics-economic-nightmare/

7) http://www.investopedia.com/stock-analysis/streetauthority/112013/bankruptcy-looms-bric-nation-heres-what-avoid-pbr-vale.aspx

2 thoughts on “Here we go again: olympic financial disaster in Brazil”

  1. These days, a lot of calls for Vietnam to cancel the plan for organising Asiad Games 2019. Hope the government can hear that voices. Crazily for us, even Singapore, South Korea or oil-rich countries do not want to held that event

  2. Wonder if the olympic people will fo;;ow the new union moves of college football players? Can you imagine the participants negotiating with the banks and the corporations or the won’t compete? Judges won’t show without a contract. Well most of them already do have contracts but you all know what I mean. Unfortunately I can believe such things coming to be without a great streach. Let’s hope the Hunger Games don’t become the next 1984.

Leave a Reply

Your email address will not be published. Required fields are marked *