Big Tournaments – Just who wins and who is left counting the cost?

At a cost of $51 billion, the Winter Olympics held at the coastal city of Sochi in Russia will be the most expensive ever in the history of summer or winter games. In fact, that figure is believed to be more than the combined total of ALL previous winter Olympics. And like all other major tournaments, the hosts will come out of it all the poorer.

By Michael Marnewick

Sochi's $51 billion Olympics
Sochi’s $51 billion Olympics

Russia budgeted $12 billion for the costs when they were awarded the games in 2007, but a variety of reasons have pushed that figure into the realms of the incredible and unbelievable, with corruption one of the biggest factors mooted (think Nkandla, but on a much greater scale). By contrast, Beijing’s summer games in 2008 were $10 billion cheaper.

Other concerns plaguing the 2013 Winter Olympics are the disappearance of all the stray dogs and the locking up of demonstrators (one for swearing in public and one for resisting police orders after trying to report car damage and sentenced without a trial, lawyer or witnesses). And then there is the Russian anti-gay stance towards visitors who don’t measure up on the heterosexual scale.

So what exactly is the benefit to the host nation to have the games? Or a World Cup?

Sydney’s Olympic stadium is a fair trip out of the city centre and has limited attraction. Like most event-specific stadia, the development came at a great cost and the sustainability is questionable.

And if Olympics are expensive to host, then consider soccer. FIFA’s legacy plan has ended and the South African host cities no longer receive a grant, but must now find ways to make their stadia profitable – or at least viable.

In most cases, in most countries (not only in South Africa), they have failed to do that. Moses Mabhida Stadium in Durban is trying to persuade The Sharks to move there from Kings Park, although the rugby side claim that a multi-purpose pitch is not conducive to rugby (or soccer) viewing, nor was there any consultation with the Union to make sure there were enough suites. Western Province are similarly being courted to move to the Cape Town Stadium but are reluctant to vacate the historically significant Newlands Stadium.

Built at a cost of R3.4 billion, depreciation and running costs added up to a loss of R151 million in the 2012/2013 financial year for the iconic Durban stadium and R121 million the previous financial year . The operational costs are around R90 million per year and the city has failed to find an anchor tenant (Amazulu play there, but contribute nothing financially) while few sporting or other spectator-friendly events are hosted there.

In short, it is a white elephant, much like most of the other purpose-built stadia around the world.

Beijing’s National Stadium (‘Bird’s Nest’) will be given a boost to its sustainability with a shopping and entertainment complex added on. Built between 2003 and 2008 at a cost of $428 million, it is rather cheap compared to Montreal’s 1976 games showpiece. Ongoing problems with designs, changes and falling concrete meant the stadium in Montreal could only be used in 1987 for the first time – 11 years after the games.

In 2006, 30 years after hosting the Olympics, Montreal finally paid off the $1.5 billion cost to host the games. A special tax levy on tobacco helped them to achieve this feat, but it all points to one thing – hosting an Olympics is all about ego first and cost later.

USA hosted the 2004 Soccer World Cup with a predicted benefit of $4 billion. However, the overall net costs to the US host cities’ economies was calculated at over $9 billion.

The 2010 Soccer World Cup in South Africa – the most profitable of all World Cups – generated billions in profit for FIFA while South Africa continues to haemorrhage from capital costs, ongoing running expenses, infrastructure maintenance and debt servicing. The South African Public Service Commission put the total costs to the South African tax-payer at $3.5 billion.

SWC 2010 accounted for 87% of FIFA’s total revenue between 2007 and 2010. They made R30 billion.

Clearly there is just one winner in it all.

 

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