Why Myan­mar Shouldn’t host the Games, ever

The Myanmar Times - - Sport -

AC­CORD­ING to Olympic leg­end, host­ing the Games is an eco­nomic boon for the cho­sen city and coun­try. In re­al­ity, the Games are more of­ten a boon­dog­gle, as Rio de Janeiro is find­ing out.

First, con­sider how the games are awarded to a host city. The In­ter­na­tional Olympic Com­mit­tee (IOC), an un­reg­u­lated global monopoly, con­ducts a bian­nual auc­tion whereby the world’s cities com­pete against one another to prove their suit­abil­ity. Busi­ness ex­ec­u­tives – of­ten from the con­struc­tion in­dus­try – who stand to gain from the Games’ prepa­ra­tion usu­ally lead a prospec­tive city’s bid­ding process. Among other things, cities will of­fer lav­ish sport­ing venues, os­ten­ta­tious cer­e­mo­nial spa­ces, newly built trans­porta­tion net­works, lux­u­ri­ous ac­com­mo­da­tions for ath­letes, and me­dia and broad­cast­ing cen­tres.

The out­come of this process is pre­dictable: Win­ning cities usu­ally over­bid. The cost of host­ing the Sum­mer Olympics these days runs from US$15 bil­lion to $20 bil­lion, in­clud­ing venue con­struc­tion and ren­o­va­tion, op­er­a­tions and se­cu­rity, and ad­di­tional in­fra­struc­ture. The to­tal rev­enue for the host city from its share of in­ter­na­tional tele­vi­sion con­tracts (roughly 25per­cent, with the other 75pc go­ing to the IOC), in­ter­na­tional and do­mes­tic spon­sor­ships, ticket sales, and mem­o­ra­bilia is $3.5-4.5 bil­lion. In other words, costs com­fort­ably ex­ceed rev­enues by $10 bil­lion or more.

Those vy­ing for their city to host the Games of­ten ar­gue that any short­term deficit will turn into long-term gain, be­cause tourism, for­eign in­vest­ment, and trade will grow, to say noth­ing of im­proved na­tional morale. Again, the em­pir­i­cal ev­i­dence does not sup­port this ex­trav­a­gant claim.

Con­sider tourism. Dur­ing July and Au­gust 2012, the num­ber of tourists vis­it­ing Lon­don, the host city for the Sum­mer Games that year, ac­tu­ally fell by 5pc. The shops, restau­rants, the­atres, and mu­se­ums around the event space in Pic­cadilly Cir­cus all re­ported next to no busi­ness dur­ing the 17 days of the Games.

As it hap­pens, ev­ery­day tourists avoid Olympic host cities dur­ing the Games, ow­ing to crowds, trans­porta­tion de­lays, in­flated prices and pos­si­ble se­cu­rity threats. As a re­sult, host­ing the Games does more harm than good for tourism, which thrives on word of mouth. If tourists are avoid­ing a city – or hav­ing a neg­a­tive ex­pe­ri­ence be­cause of the Games – they will have noth­ing good to re­port back to their fam­ily and friends.

Beyond tourism, no smart busi­ness makes in­vest­ment or trade de­ci­sions sim­ply be­cause a city has hosted the Olympics. If anything, the ex­pense to the city cre­ates fis­cal dis­tress, im­ply­ing a less favourable busi­ness en­vi­ron­ment in the fu­ture.

Another draw­back to host­ing the Games is the public scru­tiny a city re­ceives. Rio de Janeiro’s prepa­ra­tions to host this year’s Sum­mer Games did its in­ter­na­tional im­age no favours. A city once known for its nat­u­ral beauty and fun-lov­ing life­style is now known for cor­rup­tion, vi­o­lence, bad traf­fic, pol­lu­tion, po­lit­i­cal in­sta­bil­ity and the Zika virus.

One area where some host cities – but not all – can ac­tu­ally re­alise long-term gains is in in­fra­struc­ture spend­ing. In Rio’s case, one could ar­gue that the city will ben­e­fit from im­prove­ments to its in­ter­na­tional air­port and down­town port. But this is not a valid rea­son to be­come a host city; it is merely a con­so­la­tion prize. A bil­lion dol­lars of pro­duc­tive in­fra­struc­ture de­vel­op­ment does lit­tle to make up for the other $19 bil­lion spent on the Games, which will not im­prove the city for most of its res­i­dents or reg­u­lar vis­i­tors.

Con­sider the $2.9 bil­lion sub­way line (orig­i­nally bud­geted at $1.6 bil­lion) con­nect­ing the Games’ beach­side event space to Barra da Ti­juca, a wealthy sub­urb 10 miles away. This new in­fra­struc­ture will boost prop­erty val­ues in Barra da Ti­juca, while do­ing noth­ing to im­prove Rio’s hor­ren­dous street traf­fic. The bulk of Rio’s work­ers liv­ing north and west of down­town will have just as dif­fi­cult a com­mute as ever.

Ex­am­ples like this abound. The city built a new golf course on the pro­tected wet­lands of the Mara­pendi Nat­u­ral Re­serve, which will de­grade the ecosys­tem and con­sume vast amounts of water – a pre­ciously scarce re­source in Rio. It also built bus lanes that run be­tween Olympic venues, which will ease travel for IOC ex­ec­u­tives but only fur­ther con­gest the city’s now-nar­rower road­ways for every­one else.

Along with point­less and dis­rup­tive in­fra­struc­ture, the Rio Games have ex­acted a hu­man cost. To make room for the 32 sport venues, the ath­letes’ Olympic Vil­lage, the broad­cast­ing and me­dia cen­tre, and the cer­e­mo­nial green space, and to beau­tify the sur­round­ing land­scape, the Rio gov­ern­ment has evicted more than 77,000 res­i­dents from shan­ty­towns or fave­las since 2009, the year the city was awarded the Games.

Ul­ti­mately, host­ing the Olympic Games is a big eco­nomic gam­ble for any city. Less-de­vel­oped cities with in­ad­e­quate in­fra­struc­ture must spend more to meet the IOC’s trans­porta­tion, com­mu­ni­ca­tions, and hos­pi­tal­ity re­quire­ments; more de­vel­oped cities have the in­fra­struc­ture, but not nec­es­sar­ily the land, and risk dis­rupt­ing thriv­ing in­dus­tries to bring the Games to fruition. – Pro­ject Syn­di­cate

An­drew Zim­bal­ist is pro­fes­sor of eco­nom­ics at Smith Col­lege and the au­thor of Cir­cus Max­imus: The Eco­nomic Gam­ble Be­hind Host­ing the Olympics and the World Cup.

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