Olympics and World Cup Big Events Waste of Tax Payers Money

The FIFA World Cup is over and fans from around the world are analysing the results but will there be lasting benefits for the host nation South Africa which spent approximately $US4 billion on the event? Similar questions apply to the quadrennial summer and winter Olympic Games as well.

Big events like the FIFA World Cup and Olympic games have a “feel-good” effect for the host nation and its citizens but I think in the cold hard light of day the billions in public funds spent on these events rarely results in a net long term benefit for the host nation and delays or cancels spending on more pressing public health, education and transport projects.

The South African Government spent approximately $US 4 billion on the 2010 FIFA World Cup even though roughly 43% of the South African population live under the poverty line.

FIFA World Cup 2010 South Africa

The International Olympic Committee and Fédération Internationale de Football Association (FIFA) etc are parasitic, corrupt organisations which make a fortune from selling media rights and get treated like royalty through the bidding process and during the event.

Projected budgets for World Cups and Olympic Games almost inevitably blow out and in return the massive cost for events stadiums, infrastructure, transport etc is footed by the host nation who gets a temporary surge in tourism

In the aftermath there are always white elephant assets like stadiums and special purpose transport which can’t be used by most people or is flogged off to private companies in a fire sale.

sydney 2000 olympics logo

Forecasts of huge tourist influxes during and after big events can prove to be very costly, as the Chinese government learnt during the 2008 Olympics whose partially empty venues all too obvious to TV viewers.

Expensive infrastructure projects undertaken for the Olympics also generally contribute little to long-run economic growth. While the construction of modern airports, highways, and transit systems are vital for economic development, the specialized sports infrastructure required to host an Olympic Games cannot easily be converted to other uses.

The so-called Water Cube, the site of Michael Phelps’s golden achievements, is an architectural and technological wonder. But after the closing ceremony, Beijing will have little use for a state-of-the-art swimming facility that seats 17,000.
Boston Globe

“The price of the best Games ever is becoming clearer by the day,” argued The Sydney Morning Herald. “Despite the Government’s claims that the Games were paid for, resources were directed to them at the expense of other investments. Magnificent stadiums and sporting facilities (which have since struggled to attract users) were built for a fortnight of world’s-best-practice partying, instead of the money being spent on more humdrum things such as railways, roads, ports, schools and hospitals.”
Telegraph

One of the worst examples is Montreal which hosted the 1976 Summer Olympic Games and took 30 years to pay off the government loans to fund the games.

It is also commonplace for the host nation to “cleanse” the streets around venues by evicting homeless people to make sure they aren’t filmed by TV cameras or photo journalists. This has been documented many times including the 2010 FIFA World Cup, 2000 Sydney Olympics and Atlanta Olympics in 1996.

Governments often claim that small business with shops near event venues will benefit but in reality there are usually large exclusion zones which stop vendors selling their local food stuffs or craft items in order to “protect the rights of sponsors” like Macdonalds.

Corruption, Bribery, Much needed funds taken away from public health, education and transport and PR Spin to make cities look like there aren’t any poor or homeless people…

So do big events like the Olympics and FIFA World Cup sound like a great experience which countries should aspire to hold in their capital city? I don’t think so.

7 thoughts on “Olympics and World Cup Big Events Waste of Tax Payers Money”

  1. $US 4 billion on the 2010 FIFA World Cup is really expensive..But, Investment in South Africa growth well after fifa world cup…

  2. Neerav,

    You are right, in as much as any significant infrastructure investment has the potential to go wrong and lose significant amounts of money. The Cross City Tunnel or Lane Cove Tunnel in Sydney are great examples of this.

    But I think the overall premise of your post is wrong, large events like the World Cup or Olympics are enormously positive and transformative overall for the host cities. There are exceptions and you have highlighted them well in your piece.

    To speak to the specific questions you raise, like the stadums in Beijing being empty, is largely a consequence of the barriers the Chinese Government put up to travellers entering the country. As the World Cup in South Africa proved, if the doors are open, the tourists will come in record numbers.

    Having recently spent time in Vancouver, Canada, I can attest first hand to the kind of long term transformation that the focusing of community activity can bring to a city, Urban transformation occurs, new transport infrastructure is built, the city itself is branded and advertised to the world, and real business occurs.

    Similar experiences happened in Sydney, in Seoul and Barcelona, cities that really came of age as a result of hosting olympic games. Now the hosting of the games did not fix all the challenges that those cities faced and continue to deal with, but it dramatically changed the direction and future capability to manage and respond to them.

    The transformation that is going on in London for the Games is nothing short of amazing and will I think be an amazing legacy to the British people, not just a good 16 day junket for the Olympic family.

    Cheers
    Matthew

  3. I agree. Recently a town near where we live in Tucson paid boatloads of money for a new stadium. Then the economy soured. Now they have a big stadium with little money.

    I do believe Peter Uberroth (sp?) made money on the LA Olympics years ago, but mostly those things are big money sinks.

  4. There is a history of tax payers footing the bills for sports. It is a tragedy all the good that could be done to help better our world is spent in this manner. Let sports pay for themselves. Taxes should help the people, especially those in need.

  5. I think both Matthew and Neerav are right on this.

    In most cases these events are a waste of money however, if they are planned properly and form part of a bigger strategy.

    Where I disagree with Matthew is the examples where a major sport event has done well for the host city’s long term development are few and far between, most have been a colossal waste of money.

    The Sydney Olympics is probably the biggest tragedy, we had a heap of momentum running coming out of it but a combination of business indifference, public complacency and a lack of vision in both the Carr and Howard governments meant it was all wasted.

    Overall Neerav’s right – most of these sports events are a scam on the taxpayer, particularly when you see governments paying for Tiger Woods and David Beckham celebrity visits.

    The real sadness is that these funds could be better spent on addressing childhood obesity and promoting junior sport rather than giving them to the corrupt cronies of the professional sport organisations.

    EDITOR: thats an excellent point, I forgot to mention the lack of funds for grassroots community level sports because so much is spent on professional sports people and winning big events.

  6. The devil’s in the detail here. Sure, on face value it looks like a bad deal, and maybe it (Sydney) was. Maybe. I can’t get hold of the auditor’s report (too many broken links) but I suspect it won’t be the broad-based long-term assessment of benefits that it should be. It’ll be bricks-and-mortar cost + labour with returns focused on a few key, easily measurable result areas. You can indeed say from any simple analysis that Sydney didn’t capitalise on the Games – and blame who or whatever – but generally you are judging it on these relatively narrow investment and tourism growth numbers, possibly not fully corrected for extraneous factors like the world economy, the Y2K “bug” and the dot.com boom – and bust.

    We can’t wind back the clock and do a control here, we really don’t know what would have happened if we hadn’t had the Games. But I suspect we’ve done better by having them. It’s just that we forget that Sydney, the most international city in Oz, copped a massive downturn in 2000. The Olympics may have saved us, who knows? Governments got obsessed with balanced budgets for too long and stopped building other infrastructure as well. We could have done both and really benefited – but we were scared off by what may be next. And it did get scary in the IT world, that I can vouch for. Blame the practitioners of low-risk, low-ambition politics in Australia if you like, something that’s only gotten worse, or blame ourselves for lack of vision.

    That aside, I reckon that almost all of the people directly involved for the 5 years prior as well as during the Sydney Games made a personal “profit”. it wasn’t just a great party – it was hard work. Yes, I had a small role on the IT infrastructure side, and the impact on team morale was immense. The intellectual capital – the new skills and processes developed – invaluable. Many process and procedures, tools and skills – whilst updated – are still being used. That possibly uncalculated “return” is still being multiplied across all sponsors, the builders, the volunteers, the organisers, the government, grassroots sporting groups – everyone who felt the pressure of the deadlines and the relief when it all worked. And it really did work.

    From my personal sporting perspective it almost ruined road-based cycle racing in NSW – yet it also saved it in a way and brought it kicking and screaming into the next century. It’s another unmeasurable yet real effect of Sydney 2000. Prior to the Games it was a relatively simple affair to design a road course, get police consent and start a race. But the security and safety procedures that grew up from the Games made the whole task more onerous – indeed virtually impossible for a while. It forced administrators to adapt and it probably took 5 years to sort it all out. But when I look back the Games forced a change for the better. It may have happened anyway but it brought this change on years earlier. It made sports administration more professional, more responsible if you like. And I suspect it had similar knock-on effects in all sports and even in the wider community.

    And it wasn’t just about Homebush. It was Fairfield, Penrith, Bass Hill, you-name-it. There are facilities out there built for the Olympics that may have shrunk a bit since but have also grown and adapted. Again the Olympics brought about significant, long-term grass-roots improvement. It does matter.

    Add up all of these more intangible things – even the buzz and glow of a successful Games – and factor in the economic pressures that hit us in 2000. And maybe it wasn’t such a bad deal after all.

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