The Olympics: worth the glory?

How costly is the Olympics to the nations that host it?

Marvin Vestil

Economics | Asia, East Asia

1 November 2019

As the world prepares for another Summer Olympics, some people are yet again questioning how the benefits of hosting the Games outweigh the glaring costs, Marvin Vestil writes.

Amidst the turbulent political storm enveloping the region this past year being swept along by an unpredictable American President, many people forget that the Tokyo Olympics are less than a year away.

There are those, however, that haven’t forgotten; in fact, they’re prepared to take the games head-on. The prize for some is not a gold medal or a place on the podium but rejecting an international event that leaves financial ruin for its hosts in its wake.

For many, the Olympics are a way to unite and share in the competitive spirit of sport, a chance to leave political and social anxieties at the door, even for a fleeting moment.

At least that’s how they used to be.

Recent demonstrations in Tokyo highlighted concerns of cost overruns, corruption, and displacement of city residents in the lead up to the games. The most recent figures suggest the Tokyo Olympics will end up costing US $25 billion, four times over the initial estimates made when the city won the bid in 2013.

But the hit to the public purse isn’t the only problem. In March last year, the head of the Japanese Olympic program Committee announced his resignation in the wake of bribery allegations.

It, unfortunately, isn’t atypical for corruption to surround the Games though. Ongoing allegations of steroid use and state-run sports camps by China and others raise the larger question of whether the games are as fair as they say. There’s big money to be made during the Olympics, and many want to get their fingers in that pie.

More on this: Mottainai: A Japanese approach to food waste

Concerns for the displacement of locals are another recurring issue when constructing Olympic villages and infrastructure to support these events. Many believe the money funding these programs should instead be put into developing infrastructure and helping residents of each city in meaningful ways, rather than constructing sports facilities that will later fall into disrepair, famously documented in Beijing.

That was also a problem in Rio, where billions were spent in constructing the facilities that now stand abandoned.

What is most alarming, however, is the nature of hosts repeating the same costly mistakes.

Analysis by University of Oxford students measured the habit of games running over their initial estimates; “For a city and nation to decide to stage the Olympic Games is to decide to take on one of the most costly and financially most risky type of mega project that exists, something that many cities and nations have learned to their peril,” the study noted.

The decline in global viewers of both the Summer and Winter Games also sparks debate about whether the events will make the substantial returns on investment needed for the games’ financial backers.

Although the games organisers acknowledge the decline in viewership, not much has been planned to reverse the decline besides communicating with E-sports leaders about possible Olympic recognition. E-Sports, after all, has the biggest following in Asia, especially in Japan and South Korea, and dwarfs Olympics’ viewership.

The question then is, why attempt to host the Games at all?

There are those like me, who question the efficacy of the Olympic games, asking whether the immense spectator sports program can stay relevant despite mounting and recurring cost overruns, declining viewership, and the persistent use of performance-enhancing drugs in a supposed clean environment.

My hometown of Los Angeles will be hosting the Games in 2028, and the sentiment against the project from Angelenos is fierce.

For many in the city, mounting congestion issues and a housing crisis are more glaring issues to solve than hosting historically problematic games that bring just one summer of fame.

The LA games program recently reported a third budget increase of US $700 million, making the grand total just shy of $7 billion, with eight more years to go.

Going for the gold never seemed so gilded.

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