En­sur­ing Olympic suc­cess – af­ter the Games

China Daily (Canada) - - VIEWS -

As the Olympic torch is be­ing passed to emerg­ing economies, it is time to come up with in­no­va­tive so­lu­tions and ap­pro­pri­ate cost con­trols to fi­nance the Games.

To avoid cost over­runs, the Repub­lic of Korea is host­ing the 2018 Win­ter Games in Pyeongchang, one of the small­est cities to host the Olympics since the Win­ter Games in Lille­ham­mer, Nor­way, in 1994. Nev­er­the­less, the ROK is ex­pected to have spent $13 bil­lion on the Games; nearly dou­ble the $7 bil­lion orig­i­nally pro­jected, which has again ig­nited pub­lic de­bate about Olympic Games cost over­runs.

In 2022, Bei­jing will co-host the Win­ter Olympics and be­come the first city to host both the Win­ter Games and the Sum­mer Games, hav­ing hosted the Sum­mer Olympics in 2008. Can the costs be con­tained?

Hefty price tags and cost over­runs have be­come all too com­mon for the Olympic Games. The $15 bil­lion spent on the Lon­don 2012 Sum­mer Olympics in­volved a cost over­run of 76 per­cent, and the $22 bil­lion Sochi Win­ter Olympics in­cluded a cost over­run of 289 per­cent. The costs of the 2016 Sum­mer Olympics in Brazil were pro­jected to be $10 bil­lion, yet re­port­edly dou­bled amid eco­nomic, politi­cal and se­cu­rity chal­lenges.

More­over, the Olympic build­ing frenzy has left too many cities with de­cay­ing sta­di­ums and empty tran­sit sys­tems, as ev­i­denced by Athens’s di­lap­i­dated venues and $11 bil­lion debt that partly con­trib­uted to Greece’s sovereign debt cri­sis; and the re­ces­sion that Nagano, Ja­pan, suf­fered af­ter host­ing the 1998 Win­ter Olympics.

Nev­er­the­less, there are pos­i­tive ex­am­ples as well. The Los Angeles 1984 Sum­mer Olympics showed that bud­get aware­ness can gen­er­ate ac­tual profit. Only a few hosts of the Sum­mer Games, in­clud­ing Bei­jing in 2008, have man­aged to keep cost over­runs rea­son­able.

The es­ti­mated bud­get for the Bei­jing 2022 Win­ter Olympics is $3.9 bil­lion, less than one­tenth of the money spent on the 2008 Sum­mer Olympics. That il­lus­trates the new ob­jec­tives.

Cost con­trol is the first eco­nomic pre­con­di­tion for Olympic suc­cess. In 1984, the Los Angeles Sum­mer Olympics com­mit­tee re­jected the idea of new sport­ing struc­tures and fo­cused on mod­i­fy­ing and up­grad­ing ex­ist­ing venues. Other suc­cess sto­ries in­volve new struc­tures that have been re­pur­posed af­ter the Olympics.

The sec­ond pre­con­di­tion is en­vi­ron­men­tal sus­tain­abil­ity. In 2014, the In­ter­na­tional Olympic Com­mit­tee in­tro­duced the Olympic Agenda 2020, which pro­motes sus­tain­abil­ity and cost con­trol to con­tain eco­nomic and en­vi­ron­men­tal dam­age. The quest for sus­tain­abil­ity re­quires new com­pe­ti­tion venues to be built with re­new­able tech­nolo­gies, as well as en­ergy sav­ing and en­vi­ron­ment friendly ma­te­ri­als.

The third pre­con­di­tion rests on suc­cess­ful me­dia deals to fi­nance the games. In 1984, the Los Angeles Olympics sought to make the games a TV event; an ob­jec­tive that was sup­ported by hold­ing the events in more than 40 venues in the metro re­gion. The con­ti­nu­ity across very dif­fer­ent lo­ca­tions helped to foster Olympic brand­ing.

Fourth, to pro­mote the sports econ­omy, China is rolling out a na­tional cam­paign to en­cour­age 300 mil­lion peo­ple to par­tic­i­pate in win­ter sports by 2022. The venues will be dis­trib­uted among three zones which will foster win­ter sports in and around Bei­jing af­ter the Olympics. If suc­cess­ful, this would be an im­por­tant in­vest­ment in pub­lic health and hu­man cap­i­tal.

Fifth, the Olympics can pro­vide crit­i­cal “seed fund­ing” to lo­cal tourism in need of sus­tained in­vest­ment. Even though the Sum­mer Olympics in Brazil suf­fered from cost over­runs, it did at­tract a record 6.6 mil­lion in­ter­na­tional tourists. To avoid wast­ing re­sources, lo­cal gov­ern­ments and prop­erty de­vel­op­ers should con­sider a sus­tained fo­cus on lo­cal tourism and in­fra­struc­ture, ac­com­mo­da­tion and en­vi­ron­men­tal pro­tec­tion.

The fi­nal pre­con­di­tion in­volves a last­ing legacy. Un­der a 1979 agree­ment, 40 per­cent of the sur­plus cre­ated by the 1984 Los Angeles Olympics stayed in South­ern Cal­i­for­nia. As the sur­plus amounted to $233 mil­lion, the lo­cal share was $93 mil­lion. Thanks to the great seed fund for the fu­ture, the LA84 Foun­da­tion has awarded more than $230 mil­lion in grants to youth or­ga­ni­za­tions since 1984.

In the fu­ture, there are three prob­a­ble sce­nar­ios for the Olympic Games: The dead-end sce­nario in which the Sum­mer and Win­ter Olympics con­tinue as be­fore in which case the his­tor­i­cal pat­tern of soar­ing costs and cost over­runs is likely to con­trib­ute to ma­jor eco­nomic losses, widen­ing social di­vides and en­vi­ron­men­tal dam­age; the cost-con­trol sce­nario where suc­cess­ful plan­ning, rig­or­ous cost-con­trol and the re­pur­pos­ing of the Olympic fa­cil­i­ties pre­vents the host cities run­ning up huge debts; and the re­gional sce­nario where the games would be held in mul­ti­ple coun­tries.

De­spite its best in­ten­tions, Pyeongchang 2018 has failed to achieve cost-con­trol, while Bei­jing 2022 seeks suc­cess in this en­deavor. The re­gional sce­nario could be the way for­ward in the fu­ture, es­pe­cially for emerg­ing economies. To­day, Olympics take place in sev­eral cities but one coun­try. Why not or­ga­nize the games in mul­ti­ple cities across borders? If coun­tries seek scale economies through re­gional trade agree­ments, why couldn’t they cel­e­brate sports re­gion­ally as well?

It is not the size of the sta­dium that mat­ters but the dar­ing of our dreams in our quest for ex­cel­lence.

The author is the founder of Dif­fer­ence Group and has served as re­search di­rec­tor at the In­dia, China and Amer­ica In­sti­tute (USA) and vis­it­ing fel­low at the Shang­hai In­sti­tutes for In­ter­na­tional Stud­ies (China) and the EU Cen­ter (Sin­ga­pore).

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