Hosting major Sports Events: Hidden Costs and Policy Dilemmas

The recent wave of protests in Brazil may have started with transport issues but it was soon clear that even that most prized cultural asset, football, was drawn into the mix of factors provoking the rioters. The country was playing host to a select number of foreign teams playing a pre-World Cup test event called the Confederations Cup. It was the rising costs of hosting the former, which was seen as less important than other social issues, that was in the mix of factors. However, as Paul Mason wrote for the BBC, the Brazil riots reflected a wider malaise: “today capitalism is becoming identified with the rule of unaccountable elites, lack of effective democratic accountability, and repressive policing.”

I would argue that hosting major sports events such as the Olympics and World Cups have for some time been representative not just of that malaise, but of the success of top-down policy making supported by myths of widespread benefits. When one starts to unpick the evidence of hidden costs, one is left with strategic policy dilemmas: whether Governments should bid for Games, whether the public should support or resist them, and whether being a consumer can be considered ethical. We are often told that events are economic and community benefits. However we can consider four aspects that undermine that perspective

First is the forcible relocation of people and businesses to make way for the new infrastructure. Just before the 2008 Beijing Games, the Geneva-based Centre on Housing Rights and Evictions reported that over 2 million people have been forcibly displaced due to the Olympics with the worst examples being 720,000 for the 1988 Games in Seoul and 1.25 million for Beijing. The research Centre also argued that the worst affected sections of the population are those on the margins: ethnic minorities and the homeless. A subsequent report on the 2010 Delhi Commonwealth Games claimed that over 250,000 people lost their homes as a direct result of hosting the event. To return to Brazil, critics point to forced relocations in the region of 1.5 million and heavy-handed governmental interventions in the flavelas. The relocation of businesses, such as happened in the East End of London to make way for the Olympics, can be damaging to owners, employees and customers. This is unfair and elitist, as Jessica Blumert recently wrote: “most benefits gained from hosting the Olympics are dispensed to a few while the losses can be imposed upon many.”

Second is the lack of long-term ‘fit’ of the infrastructure with local needs after the event is over. Examples abound from most Games to show that the main facilities such as the Olympic stadium are not continually used for sport thereafter. One reason is that a lack of demand for athletics events outside of the Olympics – not even international level events can attract the crowds required to sustain a stadium. In some cases, like in Cape Town, a stadium was built in a location suitable to a one-off event and tourist-related strategy but not to sustainable use by local teams. In London, the stadium’s capacity will be reduced to 60,000 and handed over to the professional club West Ham United, but that process was not clearly planned from the outset. In Beijing, the iconic Bird’s Nest stadium is a tourist attraction rather than a sports venue.

Third are the unjustifiable costs involved: $43bn for Beijing 2008; £11bn for London 2012; $11bn for the Brazil World Cup; £33.5bn for the Sochi 2014 Winter Olympics. Not that such examples are new. When Montreal had to find CDN $2bn to host the 1976 Games, it took a tax on tobacco and 30 years to pay off the debt. Perhaps more problematic is the regularity with which host countries under-estimate the costs to sell their proposal to local populations and to the relevant sports authorities. London initially costed the Olympics at around £2.4bn; most events run approximately 3 or 4 times the original budget. Once the commitment has been made, the funding has to be found despite changes to the economic conditions. Quite where that money is sourced varies: some countries over-rely on the private sector, others use Government funding that has to come from other departmental budgets. Moreover, poor planning often leads to quick-fix costly procedures in the run-up to the start date, and corrupt practices have been identified in specific cases such as the Sochi Games. There is a lack of transparency among the key organisations that inhibit investigation of payments made, reasons for under-budgeting, and so on.

Finally, is the short-term legislation brought into force during an event that impacts upon several areas. There is a requirement that all marketing associated with the event is controlled and thus local businesses are not able to exploit the opportunities associated with it. Also, security arrangements can include increasing surveillance and intelligence-gathering, restricting access to specific spaces, and enhancing police control measures: all in the fear of any attack on fans or athletes. And lastly, tax laws have been altered such that athletes’ earnings are not taxed by the host nation.

All of which brings us to consider the positions adopted by policy stakeholders. Many Governments see benefits arising from winning and hosting major sports events, such as additional investment, tourism, and infrastructure development. However, it does seem that the ‘aura’ of sports events and the prestige involved can over-ride a rational cost-benefit analysis in the bid stage. The public are not always fully aware of budgets or planning processes, and it seems that Brazil is the latest example where things have gone awry. Yet, the public are rarely consulted on the question of whether they want to see their tax monies spent on high-profile, one-off sports events. The consumerism around sports events is global, but the vast majority of spectators are not too interesting in off-field circumstances and focus their attention on the days of the event itself. Ethical consumerism and major sports events do not go hand-in-hand.

It remains interesting as to the dislocation between the spectacle and the experience of local citizens. Hosting events is not really a democratic process and it perhaps no accident that countries of a less democratic nature are keen to host events and to spend lavishly on them. The next two football World Cup are predicted to cost $20bn (Russia 2018) and £220bn (Qatar 2022) which includes a staggering £30bn for air-conditioned stadia – an unnecessary expense and environmentally unfriendly.