The economics of the Olympics

vivatifosi

Well, it's only every four years I get a chance to raise this as a discussion topic (ok pedants... two years with winter Olympics) and thought it would make a nice break from Brexit threads.

Is there ever a good economic reason to host the Olympics? There have been a number of articles published recently questioning the economic rationale of hosting "big sport", whether the Olympics or World Cup.

Last year, the Economist reviewed a book by Andrew Zimbalist, which showed that - while London should have been able to turn a healthy profit, the greed of the IOC makes it virtually impossible to do so:
http://www.economist.com/news/books-and-arts/21645114-hosting-olympics-and-world-cup-bad-citys-health-just-say-no

Per Said Business School, since 1960, no Olympics has come in on budget, with the average overrun at 156% in real terms:
http://www.cnbc.com/2016/08/04/rio-olympics-2016-economists-question-wisdom-of-hosting-olympics.html

The Washington Post has come up with a novel idea... stop moving the Olympics around the world and keep the Summer and Winter games in their own host city. They've suggested Athens. Could be good for the Greek economy if they could re-use their facilities and get a guaranteed bost every four years:
https://www.washingtonpost.com/opinions/stop-picking-different-cities-to-host-the-olympic-games/2016/08/02/55a3225c-58e3-11e6-9767-f6c947fd0cb8_story.html

Then there's Zika, bulldozing favelas, taking money from other economic imperatives and a whole host of other issues that arise when you build a games in Rio (or the World Cup in South Africa).

Personally I love the Olympics, but I don't like the greed of the IOC. Having a global games is a wonderful idea, but it doesn't have to have a new venue or the scope or scale of Beijing or Sochi. Is having the games in one place a better idea? Should they be scaled back? Are there social capital and health benefits that are more important? What do you think?

michaels

Do fat cats/shareholders in the IOC trouser the money or does it go into global sports development, dope testing etc etc?

Haven't read the links - how does one measure profit? Obviously a lot of the revenue comes to hotels and other local services not the games organisers and there may be ongoing revenue to the city an region from the publicity / profile raising - is any of this measured?

vivatifosi

michaels wrote: »

Do fat cats/shareholders in the IOC trouser the money or does it go into global sports development, dope testing etc etc?

Haven't read the links - how does one measure profit? Obviously a lot of the revenue comes to hotels and other local services not the games organisers and there may be ongoing revenue to the city an region from the publicity / profile raising - is any of this measured?

Don't know about the IOC which had done much work on its reputation, but there's certainly been a fair degree of "trousering" going on at FIFA, as many enquiries have shown. Apparently the number of cities willing to bid for the Olympics has dropped off markedly, to the point that only two bids are in the running for the 2022 Winter Olympics (Almaty and Beijing).

As for measurement, it looks as though there is some measurement, though sometimes it is knowing what to measure... for example, the CNBC article refers to research by ANZ which shows that growth of the country's stock market is another side effect. So it is certainly not all negatives.

globalds

I read about a rule change that may help athletes gain more funding from Olympic sponsorship.

As it seems the trickle down theory doesn't work in Olympic funding either

Rule 40 change
http://digiday.com/brands/what-is-rule-40/

globalds

It seems that the original plan means that someone like Nike gets to dominate the Olympics by paying a huge slab at the top.

But some small guy in Tanzania who might well be sponsored by Tanzanian Trainers gets told he can't because it infringes Nikes blanket coverage.

This change is supposed to allow some exposure ..But the system that has been built up over years to get (A) Maximum funding to the IOC and (B) The most bang for their buck for advertisers is not going to be broken very easily ..And the facts that the sport suffers ,athletes suffer and small advertisers who might want to do their bit locally suffer is not of any great importance to the Olympic machine.

It appears social media ..athletes tweeting or Facebooking etc makes it pretty hard to stop a bit of surreptitious product placement and is probably the reason this Olymipcs has some second tier advertisers.