By Jack Fairey
This piece first appeared as a featured article in volume 95, issue four of Pelican. You can view our print archive here.
Much is said about sporting events as cultural hallmarks and memories that last long beyond their closing ceremony. I’m sure we all have at least some faint memories of Sydney in 2000, and Cathy Freeman’s iconic win, even if very few students today were alive as she lit the Olympic Torch and won the 400 metre.
In terms of the economy, environment, host city, and cultural impact, do the Olympics really stack up? The Commonwealth Games already struggles to find hosts, and the Olympics faces increasing backlash year-on-year as its host cities step on their citizens’ toes in the scramble to create the perfect games.
Victoria wanted to host the Commonwealth Games, up until they got the bill and found costs could spiral up to $7 billion dollars – a cost unlikely to be directly recouped by the games themselves. Only Birmingham managed to break roughly even, at around a billion pounds, but that’s with infrastructure already suited to the games. Without preexisting stadiums and accommodation systems, and without the superstar appeal of the Olympics, there’s little to no hope of the Commonwealth Games being financially viable. Additionally, local populations have little attraction to the games, unwilling to burden themselves with debt to finance vanity projects or to suffer congestion on the roads and overcrowding in accommodation.
The Olympics is a far greater beast than the Commonwealth Games, with a far more sweeping narrative of international unity and boasting every superstar of the athletic world. However, it also boasts humungous costs, demanding construction programs which generally require a huge debt burden, only for these buildings to later go to waste.
Tokyo spent $15.4 billion on the 2020 Olympics and upset their residents by holding the games during a COVID outbreak. They thought it would create a legacy effect of $104 billion, and although hopes were dampened by the lockdowns that held off tourists, it wasn’t a total failure. In the uniquely stagnant investment environment of Japan, construction serves as a stimulus, and the games pushed a lot of business owners to renovate and invest in their businesses in anticipation. The athletes’ village became apartments, and the metropolis is left with new stadiums.
The benefits are present, but some question the necessity of investments in ‘white elephant stadiums’ – like Beijing’s Bird’s Nest which has been largely unused since 2008 – and why investments into housing or transport can only come under the guise of a vanity project.
Additionally, the debt is often a more visible burden, than the difficult-to-quantify benefits. Montreal went billions over budget hosting the 1976 Olympics which took until 2006 to pay off. Greece overspent when on the brink of bankruptcy, contributing to its eventual financial crisis. And whilst some infrastructure improvements are welcome (Sochi benefited from waste and public systems spending, and Los Angeles will finally invest in public transport to host in 2028), some involve demeaning suppression of the poor. Brazil demolished slums to make way for building works, and Paris student apartments have been rather infamously ‘reallocated’ to staff needed for the games. Far from being an equity and investment project, it ends up being an exercise creating an image at the expense of the residents.
One rolling behemoth with a slightly better image is Formula One, which rolls around the world yearly, often on street circuits. Although not devoid of its own controversy, it comes at a price of around $1 billion over 10 years to run a street race, and less on a purpose-built track (though a big drawcard is running it right past your best landmarks). In direct revenues, $1.3 billion for the Las Vegas Grand Prix arguably justifies the huge investment of creating a new race.
Its superstar element, tourist draw, broadcast rights, and repeatability year-on-year mean Formula One offers a greater return on investment, whilst still providing most of the benefits usually associated with large sporting events.
There’s a lesson there for other events. Finding a way to lower the cost of events, making repeatability on a focus, and going through a round table selection of host cities could make the Olympics profitable to host again, though ultimately the Commonwealth Games might only be saved in a single host city.
Sports behemoths inspire people, they’re a spectacle, a vanity project, a unifier and a divider, but if the economic case doesn’t stack up, they might become visions of the past as voters vote to return to a duller world.