The tumult over bids for the Olympic and Olympic Winter Games should have subsided after the selection of Milan-Cortina to host the 2018 Olympic Winter Games last June. But just weeks later, it’s back in full swing, at least in the Australian state of Queensland.
There, the government is intrigued by the idea of bringing the Games back to Australia for a third time, after Melbourne’s 1956 hosting and the Sydney Games of 2000. Queensland includes the cities of Brisbane and Gold Coast, where the 2018 Commonwealth Games was successfully staged. But the central issue has become – as you would expect – costs.
What will it cost to host the Games? Who pays for it? What assurances are there that it won’t be a disaster? These are the questions that have been asked over and over.
Far from behind discussed behind closed doors, the debate is quite public.
On 5 August, an opinion piece from Shane Wright, the senior economics correspondent of The Age and the Sydney Morning Herald appeared in the Brisbane Times, titled “Olympics – what are they good for?”
He quite correctly asked the question this way: “let’s work out whether this investment will be a huge white elephant that will leave future generations with old ticket stubs on the fridge and a hole in their wallets.”
Wright went through the litany of possible Games problems: existing venues which may or may not be in shape in 2032, an economic lift that is always short-term, little evidence of a permanent boost in tourism and the opportunity cost of spending money on Olympic projects instead of needed civic infrastructure and programs. He concludes that “all that is left for the locals is a $15 billion-sized hole.”
On 16 August, the reply came from John Coates, perhaps the second-most influential member of the International Olympic Committee (to President Thomas Bach of Germany), also in the Brisbane Times.
His opinion piece – “The new case for staging the Olympics: an infrastructure legacy with no cost burden” – emphasized the changes in bidding requirements from the IOC, emphasizing existing venues and spreading the event beyond a single host city.
Wrote Coates (costs are in Australian dollars):
“This is what makes the proposition for Queensland so attractive. At least 85 per cent of venues for a prospective 2032 Games already exist or are already scheduled for construction. In the cases of Paris and Los Angeles, which will host the 2024 and 2028 Games respectively, the use of existing and temporary facilities sits at more than 90 per cent.
“A Queensland Olympic Games in 2032 should be at least cost neutral, if not turn a surplus for the legacy of sport. With operational costs expected about $5.3 billion, based on the IOC contribution to the 2028 Los Angeles Olympic Games, the IOC has indicated it would contribute a minimum $2.5 billion, with the remainder generated by sponsorship, tickets sales and the commercial program.”
That’s fine for the costs of operating a 2032 Games, but not the infrastructure cost of stadiums, roads, accommodations and so on. He noted that “For Queensland, there is the opportunity for long-term urban and infrastructure development for south-east Queensland – jobs and economic growth. Improved road and rail infrastructure linking the Gold Coast, Brisbane and the Sunshine Coast is a pressing priority now and is not Games-driven. The report by Infrastructure Australia released this week points to the need for immediate action to reduce current and future congestion.”
And there is where the issue really sits. What public costs will be associated with a 2032 Games in Queensland? Wright mentions a $15 billion (Australian) figure without any basis for it. The Queensland government has commissioned a study to determine the projected costs of a possible 2032 Games, to be completed sometime in early 2020.
A group of city Mayors from the southeast Queensland area did its own study and suggested a cost of A$5.3 billion to upgrade some venues and build at least one new site.
Countered Wright: “An Oxford University/SAID Business School study in 2016, which compared every summer and winter Olympic Games since 1960, found any community taking on the event pays through the nose.
“‘All Games, without exception, have cost overruns,’ it noted.”
Unfortunately for Wright, that study conveniently omitted the IOC’s new-found paradigm – adopted more than 30 years late – for the Olympic Games: Los Angeles in 1984. Somehow that 2016 study (here) managed to miss the one example where an organizing concept was right … on the money. In short:
● Los Angeles taxpayers voted, in 1978, to prohibit the City from expending any funds on the 1984 Games “unless the direct and indirect costs to be incurred … do not exceed the direct receipts received or to be received no later than June 30, 1985 by the City in connection with said 1984 Olympic Games.”
● The Los Angeles Olympic Organizing Committee was formed and staged the Games at no net cost to the City of Los Angeles or the State of California, reimbursing both for the security services rendered that were related to the Games. The contribution of the U.S. government was limited to a one-time grant of $50 million for security equipment and staffing.
● The Games were held on a budget of $546 million, but realized revenues of about $779 million, with the final surplus at $232.5 million after all of the after-Games receipts came in. Those funds went to the United States Olympic Committee (60%) and to what is now the LA84 Foundation (40%), which has been investing in local youth sports ever since.
Those of us who worked on the Games in 1984 – I was in charge of Press Operations and was editor-in-chief of the Official Report afterwards – have been continuously baffled why future host cities wasted so much money on an event that need not have been that expensive. The IOC contributed to a lot of this nonsense, but the crisis in bidding finally led to the recent reforms by which new bidders are encouraged to use existing facilities and to have the “Games fit the city” rather than the other way around.
In the latest set of reforms which was passed by the IOC membership in June, a Coates-chaired IOC working group recommended that “cities interested in hosting the Games should hold referendums before submitting official tenders to avoid having to withdraw their candidacy at a later date.”
It worked for us in Los Angeles in the run-up to 1984. Inside the organizing committee, waste was chased, hiring was delayed as long as possible and everyone understood that the Games must pay for itself. Los Angeles has a wealth of facilities, far more than almost any other city, but not more than an entire region, such as Queensland.
It can be done; I saw it happen in Los Angeles and again when working with the Salt Lake City organizers in 2002, where the Olympic Winter Games realized a surplus that paid back the state of Utah for its investment in facilities for the Games.
Coates was right in his working group’s recommendations that were approved by the IOC in June and Wright makes the point that the question of opportunity cost – where money could otherwise be spent – must be considered.
It’s great that Queensland is having “the [Olympic] talk” before its bid is actually made. Next year’s report will showcase the projected issues and costs.
Then, Queensland, as Coates so rightly stated, can vote on it. Simple, right?