International Olympic Committee (IOC) President Thomas Bach has recently said that India is among the aspiring countries to host the Olympics in 2036, 2040, and beyond. Olympics in India? Sounds fascinating — be it in Mumbai, Delhi, or Ahmedabad — in 2048 as a part of the centenary celebration of the Independence, or even before.
Hosting the first Asian Games in New Delhi in 1951 was certainly a glorious statement for the newly independent nation. However, India’s experience of organising the 2010 Commonwealth Games is not quite inspiring, for sure. Quite often, hosting mega multi-discipline events like the Olympics is an exhibition of the capacity of the host nation. Japan wanted to portray the 1964 Tokyo Games as a narrative of its miraculous recovery from the War. China treated the 2008 Beijing Olympics to showcase its stature as a big global power.
The primary argument behind hosting mega multi-discipline events, however, is that the host city becomes enriched with civic infrastructure at a rapid pace in addition to the state-of-art sports facilities. A boost in tourism is also desired, but historically the impact of the Olympics on tourism is mixed — as the security, crowding, and higher prices that the Olympics bring dissuade many visitors.
Barcelona was a success story in terms of tourism, it rose from the eleventh to the sixth most popular destination in Europe after the 1992 Olympics. Sydney in 2000 and Vancouver in 2010 both experienced slight increases in tourism, while the impact of Olympics on tourism in London in 2012, Beijing in 2008, and Salt Lake City in 2002 were negative.
The cost factor
The cost of hosting the Olympic Games has snowballed. Even bidding and lobbying are quite expensive. In fact, in 1972, Denver became the first and only chosen host city to reject its Olympics after voters passed a referendum. The skyrocketing costs of staging the Olympics dissuaded many countries in recent times. Cities such as Oslo, Stockholm, Lviv, and Krakow had dropped out of the race for hosting the 2022 Winter Olympics, and Boston, Budapest, Hamburg, and Rome also withdrew their efforts for the 2024 Summer Games.
Los Angeles in 1984 and Barcelona in 1992 are the two financially successful Olympics in recent history, as pointed by American economist Andrew Zimbalist in his 2015 book ‘Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup’.
In fact, the 1984 Games kick-started the era of corporate sponsorship in the Games, and the television rights were also sold for almost thrice the amount of 1980. Barcelona made a $10 million profit in 1992 to become the poster-child of success in Olympics hosting.
Subsequently, of course, Atlanta in 1996 and Beijing in 2008 registered healthy profits, and London in 2012 reported no-profit-no-loss, but Sydney in 2000, Athens in 2004, and Rio de Janeiro in 2016 all experienced huge losses. Critics such as Miles Wray pointed out that any attempt to host the biggest, grandest Games can be compared to “a family shoving themselves into bankruptcy by insisting their dinner party have silk napkins, a private chef, gold-speckled sundaes.”
And Zimbalist writes: “Much of the alleged legacy comes in the form of qualitative gains, and the rest comes over very long periods of time.” It’s certainly quite easier to host Olympics with existing infrastructure. With LA scheduled to host the 2028 Olympics, it would be using infrastructure that is already in place.
In a 2018 working paper in Harvard Business School, Isao Okada and Stephen A Greyser discussed the so-called ‘white elephants’, or expensive facilities that, because of their size or specialised nature, have limited post-Olympics use. Sydney’s Olympic stadium now costs the city $30 million a year to maintain. Similarly, Beijing’s famous “Bird’s Nest” stadium costs $10 million a year to maintain, and sits unused.
Almost all the facilities built for the 2004 Athens Olympics, whose costs contributed to the Greek debt crisis, are now derelict. Okada and Greyser revealed key factors to prevent Olympic sites from becoming ‘white elephants’ from the viewpoints of venue sustainability and Olympic legacy — such as reducing capacity after the Olympic Games, continuous selective meaningful re-investment after the Olympic Games, etc.
The so-called “implicit costs” include the opportunity costs of public spending that could have been spent on other priorities. The 1976 Montreal Olympics became a symbol of the financial risks of hosting, saddling the city’s taxpayers with $1.5 billion in debt that took three decades to pay off. Greece’s billions in Olympic debt was the catalyst to bankrupt the country.
And the debt and maintenance costs in the Sochi 2014 Winter Games will cost Russian taxpayers nearly $1 billion per year for the foreseeable future. And we now learned about the impact of viruses on hosting the Olympics as well. The 2016 Rio Games had to contend with concerns about the Zika virus. More recently, the pandemic-hit one-year-delayed Tokyo 2020 became the most expensive Games in history. About 80 per cent of Japanese were in favour of either cancellation or further postponement of it.
However, the decision to cancel the games lies ultimately and unilaterally with the IOC — as per the agreement of the IOC with the host. The agreements for future events should take care of such loopholes. Overall, personally, the prospect of holding the Olympics in India is quite exciting.
Could India emulate the models of LA and Barcelona Games eventually? Never easy though. However, the experience from the previous Games might help to make it more economically viable.
The writer is Professor of Statistics, Indian Statistical Institute, Kolkata