The Olympics: Too big for democracies?

A few weeks before the opening of the Olympic Games in London, this is an opportune moment to reflect on the size of this unique example of international cooperation.

In fact, the last 20 years has seen a substantial increase in the size of the Summer and Winter Games, making them increasingly difficult to stage and greatly reducing the number of cities capable of hosting them. 

Great Britain, in a period of strict austerity, is struggling with London 2012, Greece owes part of its colossal debt to Athens 2004 and the new Italian Prime Minister has cancelled the Rome 2020 bid. Questions about the size of the Games were already being asked in 1972 when I went to my first Olympics, in Munich. “Gigantism” was the term the Germans used to describe the Games and the expression has been part of Olympic jargon ever since. 

The current president of the IOC, Jacques Rogge, demonstrated his awareness of the problem when, immediately after his election in 2001, he set up an Olympic Games study commission. 

Presented two years later, the commission’s 117 recommendations for reducing the size of the Games have been applied progressively but to no significant effect. The problem has, in fact, become worse, with the number of accredited persons at the Games increasing from 196,000 for Sydney 2000 to 223,000 for Athens 2004, and to 349,000 for Beijing 2008. 

Although the number of athletes has remained stable since 2000 (around 10,500), the number of journalists, radio-television personnel and sponsors has exploded, as has the organization committee’s workforce (mostly volunteers). 

The number of Olympic sports (28) has also remained stable since 2000. The number has actually been reduced to 26 for London 2012 due to the removal of baseball and softball, which will be replaced by golf and rugby 7s at Rio 2016. 

However, this number is not really a determining factor for the size of the Games, as the seven Olympic team sports involve many more athletes than many individual sports, for example, modern pentathlon and archery (where only 36 men and 36 women compete in each discipline). 

Complex venues, increased revenues
The sophistication of installations is a more critical factor for the size and therefore the cost of the Games because it is much more expensive to create an artificial canoe slalom course or a harbor for sailing than it is to build a gymnasium for taekwondo or fencing. 

What is more, canoe courses and harbors are less likely to be regularly used after the Games. In addition, even if the number of Olympic-medal events remains fixed at 300, some federations have replaced traditional events with disciplines such as BMX and marathon swimming that require extra facilities. 

Fortunately, the revenues produced by the Summer and Winter Games have increased by more than 40% from one Olympiad to the next. Revenues of almost US$5.5 billion for the period 2005-2008 (Turin 2006 and Beijing 2008) have jumped to over US$8 billion for 2009-2012 (Vancouver 2010 and London 2012). 

In order of importance, the revenues for this later Olympiad are composed of broadcasting rights paid by television networks (US$3.9 billion), commercial rights paid by domestic (US$2.5 billion) and worldwide (US$1 billion) sponsors, ticket sales to spectators (US$800 million) and licenses awarded to Olympic souvenir manufacturers (US$185 million).

More than half of these revenues go to the IOC, which distributes most of this sum to national Olympic committees, international sports federations, the World Anti-Doping Agency and the Court of Arbitration for Sport. The remainder goes to the Organizing Committees for the Olympic Games (OCOGs). These revenues enable the OCOGs to cover their operating budgets but they are by no means sufficient to finance the construction of the infrastructure or sports installations needed. The balance is provided from the public purse. 

Ambitious legacy objectives for London 2012 
The total budget for London 2012 has been estimated at US$14.7 billion (£9.3 billion), most of which will be provided by the British government. However, some observers believe that this sum does not reflect the true cost of the Games, and part of this expenditure, especially the security budget, is an operational cost that leaves little in the way of legacy. In fact, the physical and spiritual legacy of the Olympics is supposed to compensate for the enormous cost of staging the Games.

The London OCOG and the British government have set themselves ambitious objectives in this respect, most notably in terms of regenerating East London and increasing participation in sport in Britain. 

This later objective has not yet been achieved and has little chance of being so, as there is no evidence (once again) that hosting a major sports event increases participation in sport. In fact, decreases in participation have been noted for some Olympic sports. 

On the other hand, the Olympic Park in East London has positively transformed the area for future generations even though the subsequent use of installations such as the Olympic stadium has still not been finalized. In marked contrast to Athens 2004, the physical legacy situation for London 2012 seems quite positive, as it was for Sydney 2000. The effect of the image of London 2012 – which is part of the Games’ intangible legacy – will largely depend on how well the Olympics are staged and on public opinion.

Great Britain is playing for high stakes in this regard. Although public opinion is less negative than it was for Athens, it remains lukewarm, or even slightly hostile.

In addition, for the first time in Olympic history some Games sponsors have been seriously contested, both in Britain and elsewhere. The most notable example is Dow Chemical, which has been criticized for its ownership of a factory in Bhopal, India, where an industrial accident killed thousands of people (even though Dow only bought the factory several years after the accident).

Criticisms have also been leveled at Coca Cola and McDonald’s for exposing their customers to the risk of obesity, Rio Tinto for the working conditions in the mines that produce the metal for the Olympic medals, and British Petroleum for its environmental management performance. These behaviors do not fit well with the idea of Games promoting sustainable development and social responsibility.

In terms of the Games’ economic impact, which is frequently put forward as an argument in favor of staging the Olympics, all specialists in the field maintain that it is very small compared with a host country’s GDP. The ratings agency Moody’s recently confirmed this assessment for the London Games, even if they are likely to provide a fillip for the tourist sector (together with the Queen’s jubilee).

A cost-benefit analysis for the Games would be more appropriate than economic impact studies: is the total cost lower than the total benefits, including intangible benefits (which economists are now able to monetize)? Or, more perniciously, would the money have been better spent on other things? Or, even, who has really benefited from the Games?

Political rather than economic success
However, the success of a Games is often measured more in political terms than in economic terms, as many countries see hosting the Olympics as a way of marking their arrival or return on the international scene. 

This was the case for Japan in 1964, Germany in 1972 and Korea in 1988. Today, it is the case for the BRICS countries. After China, with Beijing 2008, Russia will host Sochi 2014, and Brazil will stage Rio 2016. South Africa and India may join the ranks for 2024. Turkey is also showing great interest for 2020. 

Due to their strong economic growth, these countries have substantial financial resources, which may be enough to keep the Olympic fire stoked for a number of years to come. However, they place the bar so high it will be difficult to step back. 

London 2012 will inevitably be compared with Beijing 2008, for which the Chinese provided an unlimited budget (although they came close to a media fiasco over the issues of human rights and Tibet). 

Only three cities bid to host the 2018 Winter Olympics and similar reticence is being shown in bids for 2022. Switzerland, a country with a strong economy, is only prepared to host the Olympic Games at Davos and St-Moritz if they are reduced to a more human scale. 

In contrast, six cities have bid for the 2018 Summer Youth Olympics, which are much easier to stage than their big brother. Unless their size is reduced, soon it will be possible to award the Olympics only to rich and authoritarian regimes. Which would be extremely damaging for the Olympic ideal!