The Olympic Games Bleeding The People Dry

by cameron | Jul 10, 2012 | capitalism

Well it’s nearly Olympics time again and, as usual, the hype goes into overdrive. As usual it strikes me as a MASSIVE WASTE OF MONEY, particularly when most of the world is still suffering the effects of the financial crises.

The typical argument is that hosting an Olympics, while massively expensive and disruptive, drives long-term economic benefits so it’s a worthwhile exercise. Of course, you’ll see very little analysis of this argument in the media, because it wouldn’t be in their interests to actually ask hard questions about this particular topic. Why not? Because they benefit from the whole charade.

Even papers such as The Guardian are claiming that London will derive an economic benefit from hosting the Games. But how much of this is media hype to justify yet-another waste of public funds and how much of it stands up to a Cost/Benefit analysis?

Obviously many large corporations benefit from having an open faucet from the public Treasury, for example:

• Construction companies get big dose of public funds;
• Media companies get a bump in their advertising from an increase in viewership / circulation (hence their reluctance to criticise the whole affair);
• and Tourism-related businesses, hospitality, etc, get a short-term bump.

According to this report from Monash University, the Sydney Olympics Games actually cost the Australian public $2.1 billion.

According to Time.com, the Greek Olympics blew out big time:

It cost Greece about $11 billion, at least double what the Greek government had initially budgeted — and that doesn’t include the money the country has spent trying to maintain its rarely used Olympic facilities over the past eight years. It was forced — mainly by the U.S. and the U.K. — to spend $1.2 billion on security alone because of fears over terrorism, and in the months leading up to the opening ceremonies, Athens had to rush its schedule just to get construction projects completed on time.

For years, studies have shown that holding the Olympics often has severe negative economic effects on host cities, despite the temporary burst of tourism and global attention.

In 2005, Andrew Zimbalist, Robert Woods Professor of Economics at Smith College, wrote in Sports Business Daily:

Montreal’s 1976 Olympics left the city with $2.7 billion of debt that it is still paying off. The financing of the Moscow Olympics in 1980 is opaque.

The Los Angeles Games in 1984 left the organizing committee (LAOC) with a modest surplus of $335 million, but the LAOC got 67 percent of the TV money and spent little on infrastructure or new facilities. The physical legacy of the 1984 Games is close to nil.

The Barcelona Organizing Committee in 1992 broke even, but the public debt incurred rose to $6.1 billion.

Similarly, the Atlanta Organizing Committee in 1996 broke even, but the bottom line there is not encouraging. An econometric study using monthly data found that there was insignificant change in retail sales, hotel occupancy and airport traffic during the Games. The only variable that increased was hotel rates — and most of this money went to headquarters of chain hotels located in other cities.

In his paper “A Cost-Benefit Analysis of an Olympic Games”, Darren McHugh concludes that the “bottom line will be negative by hundreds of millions of dollars” (he analysed the Calgary and the Vancouver Games).

In their paper “Should Cities Go for the Gold? The Long-Term Impacts of Hosting the Olympics“, Stephen B. Billings and James Scott Holladay conclude:

Insignificant impacts for measures of population, real GDP per capita and openness is consistent with the theory that host cities bid away potential benefits in an effort to win the right to host the Games.  

I think the whole exercise is about corporations having yet another excuse to legally stick their snouts into the public trough and inhale deeply.  Instead of politicians spending those billions of dollars on education or healthcare, it goes into the pockets of the elite.

And don’t give me any nonsense about the actual sporting competition. That could be accomplished for a LOT less money and fuss, quietly, over the course of four years, in places with existing infrastructure (as many sporting events already do).

The whole exercise is another corporate capitalist scam, bleeding the 99% dry for the benefit of the 1%.