The Olympic Effect: The Aftermath of the Olympic Games

The Olympic Effect: The Aftermath of the Olympic Games

In my last article, I looked at the costs and benefits of the Olympics as they happen and evaluated the immediate effects of hosting the games. But what happens years after the Olympics? We know that the revenue comes nowhere close to covering the costs, but perhaps the use of the old stadiums and venues can still gain more money for the city; or maybe after gaining so much media exposure, tourism would increase and bring the city more revenue. The sad truth is that cities are more often left worse off after hosting the games as compared to their economic standing beforehand. Most of the brand new glowing stadiums that receive all the spotlight during the Olympics end up collecting dust and going on unused. The Olympics require a large set of highly-specialized venues, such as cycling tracks and kayak courses for the Summer Olympics, and bobsled luges and curling stadiums for the Winter Olympics. In addition, planners must make these venues large enough to sufficiently meet the high demand for spectators. However, it's tough to fill those seats after the Olympics simply because nothing compares to the ultra-large scale of the Olympics. Because of this, many of the stadiums are left abandoned and rotting, unable to fulfill the purpose they once did. In fact, in many scenarios, it is more financially sustainable to knock down the stadium or repurpose it for a different use. For example, Beijing repurposed its Olympic Aquatics Center into a indoor water park for the public to use. Many other stadiums are not as lucky though. Similarly, in Beijing, the famous “Bird’s Nest” cost a whopping $460 million to construct and $10 million a year going forward to maintenance it, even though it remains largely unused. Additionally, the Beijing kayaking, baseball, and BMX venues have not been touched since 2008, and rather than being utilized in a functional way, they lie deserted and covered with graffiti.

Greece also encountered many of these problems to an even higher degree after they hosted the 2004 Summer Olympics in Athens. The newly constructed stadiums and athletic complexes added to the debt crisis in Greece in 2010, contributing an additional $14 billion to the already-massive amount of debt that country owed at the time. According to Christopher Rhoads at the Wall Street Journal, many Greeks are upset with the way their country handled their post-Olympic assets. They believe that after years of vacancy, the government should have at the very least converted some venues into public parks, since so many of the them line the coast of the sea.

As I noted in my last article, a significant reason why Los Angeles actually turned a profit after hosting the 1984 Olympics was largely due to a lack of any pressure to build new arenas and sports complexes to fit the needs of the IOC. Since they were the only city to post a bid that year, the IOC had no choice but to choose them regardless of whether they wowed them with plans of sparkly new buildings. Without a legion of new venues to maintain or repurpose after the games, Los Angeles did not run into the same problem with vacant facilities.

Even though Olympic venues do not provide any benefit after the games are done, one would believe that a successful Olympics would bring an influx of tourists. After hosting a world-class event, it would make sense that the host city would see a huge upward trend in tourism as a result. However, the impact of the Olympics on tourism is a mixed bag. After hosting the 1992 Summer Olympics, Barcelona saw a huge increase in visitors, moving up from the eleventh to the sixth most popular destination in Europe. Unfortunately, many other past host cities do not experience the same phenomenon. For example, both London and Beijing saw a decline in tourism in the years of their Olympics. On the other hand, Sydney and Vancouver did experience slight increases in tourism, but the benefits from the increased tourism does not outweigh the massive costs. It is believed that the intense overcrowding during the Olympics deters potential new visitors to cities after they have hosted the games.

Amid all the negatives of hosting the Olympics, there are still positives in the long run after the games. In order to support and transport the masses of people who come to the Olympics, many host cities are forced to update and expand their infrastructure. China spent over half of its total budget updating infrastructure, such as rails, roads, and airports, for the games. Similarly, Sochi spent 85% of its $50 billion budget on building up new infrastructure from nothing. Undoubtedly, new and updated roads and railroad systems will have a lasting effect for those residing in and around the host city. The Olympics is simply accelerating the process for some much-needed infrastructure updates.

Overall, the debt that Olympic hosts incur typically takes years and years to pay off. Montreal took three decades to pay off their massive debt. Greece went into bankruptcy and never sufficiently paid off their Olympic debt. Russian taxpayers are expected to pay nearly $1 billion every year for the foreseeable future. Rio de Janeiro is also currently struggling with their debt, paying off the $20 billion bill that they incurred from the Olympics. Debt is a common struggle that host cities must cope with and overcome after they host the Olympics.

Although it is impossible to fix all the problems in the aftermath of the Olympics, one potential solution to help mitigate some troubles is to establish fixed Olympic parks owned by the IOC that would host every iteration of the Olympics. Arenas and stadiums therefore can be reused every four years, and in between they can act as training grounds for aspiring athletes. By having one area for the summer games and one for the winter games, it takes the burden off of international cities to host the Olympics in a successful yet economically-sound way. Although this solution takes away from the cosmopolitan atmosphere of the Olympics, so many of the financial stresses and debt we have seen in the past would be avoided completely.

Yet, as things exist now, the Olympics leave host cities worse off than before in both the short run and the long run. Although the Olympics may be exciting and spectacular, they are certainly not the best financial decision for a city to go through with.

 

Sources:

Baade, Robert A, and Victor A Matheson. “Going for the Gold: The Economics of the Olympics.” Journal on Economic Perspectives, 2016.

Byrnes, Mark. “Beijing's Olympic Ruins.” CityLab, 31 July 2015.

Fowler, Geoffrey A., and Stacy Meichtry. “China Counts the Cost of Hosting the Olympics.” The Wall Street Journal, Dow Jones & Company, 16 July 2008.

McBride, James. “The Economics of Hosting the Olympic Games.” Council on Foreign Relations, Council on Foreign Relations, 19 Jan. 2018.

Rhoads, Christopher. “The Newest Wonder of the World: The Ruins of Modern Greece.”The Wall Street Journal, Dow Jones & Company, 17 June 2010.

Valera, Stephanie. “China's Olympic Stadium Transformed Into Water Park (PHOTOS).”The Weather Channel, 28 Oct. 2013.

 

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