Olympic officials insist that bigger is not necessarily better when it comes to planning for the games. As construction crews scramble to complete a huge development effort in time for the Aug. 13 opening ceremonies of this year’s Summer Games in Athens, it is hard to say whether the message is getting through.
“For years and years we have been encouraging cities not to build something that they don’t need afterwards,” said Dick Pound, a member of the International Olympic Committee. “We’ve encouraged planning right from the very beginning to make sure costs are kept to a reasonable minimum.”
A commission headed by Pound last year offered 119 suggestions for fighting Olympic “gigantism,” ranging from measures intended to avoid costly “white elephants” to eliminating fine dining in the media center.
Yet the very process of organizing a successful Olympic bid takes a massive cooperative effort bringing together political leaders, business executives and opinion makers. Anyone audacious enough to try to pull it off is likely to be a dreamer, inspired by the possibility of using the games as a centerpiece for major economic development.
“I think that there is a certain seduction of our elected officials that goes on here,” said Philip Porter, an economist at the University of South Florida who has written about sports “mega-events.” Many politicians, particularly at the local level, are anxious to leave a tangible legacy of their tenure, and the more monumental the better, he said.
“What elected official wants to leave office and say, ‘I spent four years in office and nothing went wrong’?”
The upcoming games in Athens should serve as a cautionary tale for would-be Olympic host cities. Even if every event comes off flawlessly, the games long will be remembered as a nightmare of planning — far behind schedule, way over budget and clouded by security concerns.
Greece’s finance minister recently put the cost of staging the games at more than $7 billion, well over the original $5.5 billion budget, and some reports say the final tab could go far higher, saddling the small country with debt that will take a decade to repay.
Yet the Greek drama has done nothing to cool the ardor of civic leaders around the world who hope to take the torch from Athens. Just take a look at the cities still in contention for the 2012 games, which will be awarded a year from now: New York, London, Paris, Madrid and Moscow.
The inclusion of such top-tier cities testifies to an Olympic allure that goes far beyond even the optimistic cost-benefit studies unfailingly trotted out by bid proponents.
In fact, as the Greek experience demonstrates, the Olympics attract bidders because the two-week convergence of thousands of the world’s best athletes can spur years of massive development, literally reshaping the city.
Dick Yarbrough, communications director for the group that hosted the 1996 games in Atlanta, is writing a book on whether the games were worthwhile for the city, and he said his verdict is likely to be mixed.
“It was worth it for some and not worth it for others — and probably a lot of in-between,” he said. But he was most proud of the $500 million of infrastructure left behind, including a new stadium for the Atlanta Braves and student housing for Georgia Tech and Georgia State University.
“The Olympics themselves are still the magic,” said Pound. “That’s why these cities want them. They want them for the prestige, for the magic and for the opportunity it gives to develop the infrastructure.”
In Athens that infrastructure includes a light rail line to the new airport, a partly completed tram from the city center to the port, more than 100 miles of new roads and highways, several hundred buses and ambulances, and an advanced network of high-resolution security cameras.
Not all of the investment was strictly required to host the Olympics, but much of it would never have been completed were it not for the games.
“The end result is going to be to transform the city and make it into a modern European capital,” said Robert McDonald, a freelance writer who specializes in Greek business and economic affairs.
But the huge Olympic-inspired investment is a gamble for the country of 11 million people — the smallest to host the Summer Games since Finland in 1952. Economic projections say increased tourism and business prospects could add $10 billion in economic activity over the next decade, but there is considerable nervousness over venues and systems that will be virtually untested when the games begin.
“Everything will depend on whether they carry it out successfully,” McDonald said. “If there is anything disastrous they will have lost their bet.”
Economists who have studied the issue question whether the Olympics and other huge sporting events bring lasting economic benefits to the host city. The Olympics essentially are a unique industry demanding specialized facilities that take up valuable real estate and are rarely used, argues Rob Baade, an economics professor at Lake Forest College.
“When it comes to town it doesn’t mesh well with the economic system you already have in place,” he said.
He dismisses economic analyses generated by bid planners, saying the benefits inevitably are overstated and many costs are overlooked. Economic forecasts omit the impact of the many people who either leave town or avoid going out during large sporting events for fear of getting caught in traffic, he pointed out. Years of construction in Athens have been more than an inconvenience for shopkeepers, some of whom have reported losing 90 percent of their business.
“To me there is no doubt that professional sports and mega-events have some positive economic impact, but the economics of it are not what people say they are,” Baade said. Because the Olympics are unique and occur only once every two years, the IOC is able to extract “monopoly rent," he said. That allows the IOC to dictate terms to bid cities, including a required government guarantee against any cost overruns. And economic theory holds that multiple cities bidding for a single available event will raise their offers until they receive a benefit that approaches zero, Baade said.
“The sheer size and scope of the Olympics may well blind the suitors for the games to the substantial financial risks,” Baade said in a recent paper.
Because of Greece’s small size, the risks may be greater than usual, said Morritz Kraemer, director for European sovereign ratings for Standard & Poor’s. Over the past decade and a half Greece has worked hard to improve its financial standing in the world community.
Nonetheless it still has the lowest credit rating in the 12-nation Euro zone, with its inscrutable public financing system and a national debt equal to the gross domestic product. The games probably never would have been awarded to Athens were it not for the regular cash infusions Greece gets from the European Union.
“The city is much more organized than it used to be — we see some of the benefits already,” Kraemer said. “I think it’s been positive from that point of view. The question is whether the price tag is too high.”
Olympic proponents argue that the games bring benefits that are hard to capture in a simple cost-benefit comparison.
“The Olympic Games are unique in a city’s life,” says New York Deputy Mayor Dan Doctoroff, who is spearheading the city’s Olympic bid.
“I think when you do look back on the Athens experience five, 10 or 20 years from now, the single greatest benefit of the Olympic Games will be that they acted as a catalyst for the achievement of truly historic changes in the city,” he said. “Those changes would not have occurred in anywhere near the timeframe that they did if it had not been for the Olympics.”
Critics say that often the Olympics become the tail that wags the civic dog, diverting public funds that might be spent on more beneficial projects. Hundreds of businesses and thousands of residents have been displaced by the games in cities including Atlanta, Beijing and Seoul, South Korea, said John Fisher, a New York activist leading an effort to keep the games out of his hometown.
But even after years of scandal over the doping of athletes, corruption of judges, and bribery of Olympic officials, the games hold a powerful attraction for civic leaders.
“It can be a very positive experience for a city,” said Brian Hatch, former deputy mayor of Salt Lake City. He said the games allowed Utah to speed up worthy projects that had been languishing. “We really got a tailwind in 1995 and just a much more intense level of cooperation at all levels, particularly the federal level.”
The scandal surrounding the city’s bid hurt its reputation, but that was far outweighed by the global recognition the city received. “I think if you would ask Salt Lakers if they would do it again they would do it in a heartbeat because it was an overall positive experience,” he said.
