Hosting the Games is too expensive
Nobody wants to let the Games begin.
On Oct. 1, Oslo withdrew its bid for the 2022 Winter Olympics, making it the fourth city — after Stockholm, Lviv and Krakow — to have second thoughts about hosting the Games. With only Beijing and the Kazakh city of Almaty left in the running, the International Olympic Committee now faces the difficult task of choosing between two undemocratic nations with less-than-stellar human-rights records. But Norway’s decision suggests that if the IOC hopes to stem the tide of unwilling hosts, it faces an even more difficult task: reforming itself.
Why doesn’t anyone want the Olympics? Price is a good place to start. The $448,000 cost of the first modern Games, held in Athens in 1896, wouldn’t cover a single Danny Boyle–choreographed opening ceremony these days. The total bill for Vancouver’s 2010 Winter Games came to $6.4 billion, while London’s summertime turn in 2012 cost over $14 billion. Sochi, whose venues and infrastructure had to be built pretty much from scratch, rang in at an anomalous but no less heart-stopping $51 billion.
Those kinds of numbers help explain why even a wealthy nation like Norway would reconsider its candidacy. Although Oslo budgeted a comparatively sober $5.4 billion, and even though the ruling Conservative party initially backed Oslo’s bid, concerns over ballooning costs grew strong enough to chip away at the government’s support. Speaking to the press on Wednesday, Prime Minister Erna Solberg confirmed that her government would not continue to pursue the Games.
“We’ve received clear advice and there is no reason not to follow the advice,” Solberg told the press. “A big project like this, which is so expensive, requires broad popular support and there isn’t enough support for it.”
Those same concerns were echoed in Sweden earlier this year. “The city of Stockholm needed time to investigate whether the estimated costs were realistic,” says Markus Jonsson, press officer for the Moderate party in Stockholm’s city hall. “But there wasn’t enough time.”
Lviv dropped out because of the unstable conditions in Ukraine. But for the other wavering contenders, including St. Moritz and Munich, which as late as November 2013 was still weighing a 2022 bid, a growing awareness of the true costs of hosting the Games played an important role in their decisions not to compete. And on top of concerns over cost, there were fears over benefits too.
“People used to think ‘We can get sports arenas paid for by American TV revenues, so why not?’” says Harry Arne Solberg, sports-economics professor at Norway’s Trondheim Business School. “But that’s never been the case. Now they’re more realistic.”
Although the IOC contributes some funds and politicians frequently dangle the promises of jobs, tourist dollars and brand-new infrastructure in front of their constituencies, the Olympics rarely deliver that kind of return on their investment in developed nations. According to the European Bank for Reconstruction and Development, the Games typically create anywhere from 50,000 to 300,000 jobs, but most of those jobs are temporary and go to people who already have work (only 10% of the 48,000 jobs created by the London Olympics, for example, went to previously unemployed people). In a country like Norway, where unemployment is currently just 3.4%, that effect is mitigated even more. “The work and analysis that were done concluded that there would have been benefits,” says Ingunn Olsen, communications director for the Oslo2022 campaign. “But they would not have balanced the cost of the Games.”
Indeed, hosting the Games may only make economic sense these days for developing economies that can benefit from the very specific kind of boost that an Olympics can offer. “The real cost of the Games — the operating expenses, the upgrade to existing facilities — that will be paid off,” says Holger Preuss, professor of sports management at Johannes Gutenberg University in Mainz, Germany. “But the infrastructure costs will not. If you need new sports facilities, if you need new roads and railways, then it’s O.K. But if you don’t need general infrastructure, you shouldn’t bid. The Olympics are not about making money. If you want to make money, invest in an oil platform.”
The IOC did not hide its displeasure with Norway’s decision. “Senior politicians in Norway appear not to have been properly briefed on the process and were left to take their decisions on the basis of half-truths and factual inaccuracies,” said IOC executive director Christophe Dubi in a press release issued in response. “For a country of such means, full of so many successful athletes and so many fanatical winter-sports fans, it is a pity that Oslo will miss out on this great opportunity to invest in its future and show the world what it has to offer.”
But some Norwegians, among others, suggest that the IOC is in no position to be pointing fingers. On the same day that the Norwegian Prime Minister announced her government was withdrawing its support for the campaign, Norwegian paper VG ran a story that detailed the IOC’s hospitality requirements as outlined in its contract. In the fiercely egalitarian country, the headline “IOC Requires Free Liquor at the Stadium and a Cocktail Party With the King” was sure to ruffle feathers among a population that, polls showed, was already predisposed against the Games. “Many of the requirements of the IOC do not harmonize with the Norwegian way of thinking and living,” says Oslo2022’s Olsen.
The IOC has come under increased scrutiny in recent years for both its perceived extravagance and its lack of transparency. Although governments contribute financially to its coffers, it remains a private organization whose accounting remains off the public record and whose members are appointed rather than democratically elected. In 2008, the British think tank One World Trust rated the IOC the least transparent of 30 international organizations, including NATO and Goldman Sachs.
IOC bosses also set the standards for who makes what from the Olympics. “If you look at the 1980s, TV rights were auctioned by the local host, which kept 90% of the revenues,” says Solberg. “Now 68% of sponsorships and TV revenues are kept by the IOC.”
Solberg believes that fewer host competitors will pressure the IOC to change. In fact, Thomas Bach, IOC president for just a year, has promised to do just that. In December, the committee is expected to vote on a package of changes that would make the bidding process easier and the sports program more flexible. It would also lower the cost of hosting the Games.
But that won’t come soon enough for sober Norway. Although Bach said at a press conference on Oct. 2 that the IOC would not reopen the bidding, he couldn’t hide his disappointment at being left with two less-than-ideal candidates. “All this shows that this was very much a political decision,” Bach he said. “This why we are feeling so sorry for sport in Norway and the athletes.” The same could be said for the Olympics as a whole.