High costs barrier for Paris
Paris, Sept. 13: With Paris set to be awarded the 2024 Olympics, one of the organisers’ biggest challenges will be to keep within budget — a challenge that has defeated so many of their predecessors.
The French capital has set a relatively modest budget of 6.6 billion euros, but London in 2012, Athens in 2004 and Sydney in 2000 all saw their budgets for hosting the Summer Olympics at least double from the time of their bids to the final bill.
The budget-busting reached its peak with the 2008 Beijing Games for which costs ballooned to a vertiginous 32 billion euros, more than ten times the original budget.
Vladimir Andreff, a sports economist at Paris’ Sorbonne university, described Olympic budget inflation as “the curse of winning an auction”.
“In theory, the winner of an auction is the most optimistic participant and the one prepared to outbid everyone else,” said Andreff, one of three experts who contributed to a financial impact study commissioned by the Paris bid team.
“And when there are a lot of competing cities, the winner is trapped.”
‘UNDERESTIMATING COSTS’
In an attempt to impress the International Olympic Committee in the bidding process, candidate cities have a habit of underestimating certain costs — as London did for the 2012 security bill — and overestimating potential economic benefits.
After evaluating the Paris bid in July, the IOC said in its report that while costs for security, preparing venues and installing temporary infrastructure “may be understated”, they “could be offset by potential expenditure reductions in other areas”.
Jean-Pascal Gayant, economics professor at Le Mans University, is sceptical. “I find it very hard to imagine that the bill for 2024 will be below that for Athens and London,” he said.
The official cost of the London Games rose to 8.77 billion pounds at today’s exchange rates, from an initial bid estimate of around half that figure. Andreff, the Sorbonne economist, estimates the actual bill for London was almost 10.9 billion euros.