The economic benefits of hosting the Olympic Games have been rather dubious at bestIF you were a hard-core sports fan, you would have woken up at 4am to watch the opening ceremony for the London Olympics this morning. In which case you probably won’t read this until afternoon as you regain some sleep.
Yes, the long-awaited games are upon us and we wait again to see if someone will bring a gold medal home finally. I think our only chance is Lee Chong Wei in badminton who lost the last Olympics final to Lin Dan of China in 2008 and returned with a silver.
What continues to boggle the mind is the cost of the games and how it keeps on going up and up. For Britain, the injection of money into the economy as well as a slew of business opportunities the games must have thrown up must offer some welcome respite from the bad times and even a chance to stem the downturn in the economy.
As former British Prime Tony Blair put it at an event publicising the Olympics: “If you were to pose the question to (fellow bidders) Paris or Madrid or New York ... ‘Would you prefer to be putting on the Olympics right now?’ I’m sure they would say ‘Yes’.”
Well that’s his take on it. The cost of hosting the games is £9.3bil or a massive RM46.5bil. But what is telling is that the original estimated cost was just £2.4bil (RM12bil).
Blair helped to deliver the Olympics to London for 2012 in 2005 over other competitors which included Paris and New York, with Paris being the hot favourite. Given the traditional rivalry between the French and the British, the unexpected victory must have been sweet.
But not so the near quadrupling of the costs in hosting the Olympic games. This has been heavily criticised with people questioning loudly whether London would benefit from hosting the games with costs having increased so much.
Besides, London through its mayor Ken Livingstone, signed off considerable rights to the International Olympic Committee (IOC) which requires cities bidding for the games to sign the contract ahead of the awarding of the games to a particular city.
A lengthy article in Vanity Fair gives a glimpse of such requirements revealed by activist groups. Below is an extract:
“To comply with its terms, London must designate 250 miles of dedicated traffic lanes for the exclusive use of athletes and ‘the Olympic Family,’ including IOC members, honorary members, and ‘such other persons as may be designated by the IOC.’ (These traffic lanes are sometimes called ‘Zil lanes,’ alluding to the Soviet-era express lanes in Moscow reserved for the politburo’s favourite limousines.)
“Members of the Olympic Family must also have at their disposal at least 500 air-conditioned limousines with chauffeurs wearing uniforms and caps. London must set aside and pay for 40,000 hotel rooms, including 1,800 four- and five-star rooms for the IOC and its associates, for the entire period of the games. London must cede to the IOC the rights to all intellectual property relating to the games, including the international trademark on the phrase ‘London 2012.’ Although mail service and the issuance of currency are among any nation’s sovereign rights, the contract requires the British government to obtain the IOC’s ‘prior written approval’ for virtually any symbolic commemoration of the games, including Olympic-themed postage stamps, coins, and banknotes.”
One would be forgiven for thinking that London has surrendered its sovereign rights to the IOC for the period of the games!
Back to business. Lloyds Banking Group chief economist Patrick Foley meantime estimates that the Olympic Games will give a boost of £16.5bil (RM82.5bil), mostly through construction, to the UK economy although how he arrives at that is not clear.
That’s not a lot simply because the direct spend on the Olympics is already £9.3bil and unless such spending has the recurrent ability to reproduce income over many years, it is not justifiable.
Foley points that the bigger impact will be the regeneration of a neglected area of East London which became the Queen Elizabeth Olympic Park. However, it is naïve to think that the area would continue to be as lively after the Olympics and there would be the question of what to do with all that excessive infrastructure post the games.
At best, the benefits of the Olympics for the host city is dubious. At worst, one can argue quite cogently that all that money could have been put for better use in infrastructure and regeneration that would have been more sustainable than for providing facilities for a large and temporary influx of athletes, even if they were world-class, and others.
Meantime, Britain is making the best out of the Olympics. Prime Minister David Cameron just two days before the opening ceremony for the Olympics launched a high-powered attempt to woo global business at a conference to showcase Britain to the world.
Among those for whom the red carpet will be rolled out is a 30-strong delegation from China. Britain is wooing foreign investors in a real big way and using the Olympics to the hilt to do that.
And read what Cameron’s predecessor Blair said to Vanity Fair earlier: “If you said to David Cameron, or anyone involved with this, ‘If you could click your fingers, and the Olympics would be held in Paris instead of London, what would you feel: (a) relieved, or (b) Oh, my God, what did we give that up for?’ it would be b. What you make of the Olympics is in a way up to you. For a country like Britain, it’s a great thing for us to have the Olympics here. We can afford to do the Olympics. We’re Britain. We’re not some Third World country.”
Really? That’s almost a desperate attempt to try and get foreign investments in to help soothe the troubled waters that is the British economy smacks of what many Third World countries would have done to boost their own economies.