Budapest withdrew their bid for the 2024 Olympic Games. Its citizens didn’t see the benefits of organising such a mega event. Durban, in South Africa, saw their bid to host the Commonwealth Games of 2022 overturned by the organising committee. South Africa "was not in a position to make huge financial commitments given the current competing socio-economic needs and global economic down turn to stage the Commonwealth Games", it said.
The Organising Committee of the Olympic Games in Rio de Janeiro is about to be relieved from its duty but it still has a debt of about US$250 million to settle. According to the Chicago Tribune (April 2017) they have suggested to pay off their debt by offering ‘stuff’, like air conditioners, portable energy units, electric cables, etc., to suppliers.
Since 1960 the average cost of organising the Olympics have overrun by 179%. But it’s not just the Olympics. Events like the Football World Cup are also being organised at a loss.
The mega-event syndrome
Martin Muller wrote a fascinating article about the planning process for large scale events called: “The Mega-Event Syndrome: Why so much goes wrong in mega-event planning and what to do about it”.
He identified 7 symptoms. These symptoms, according to Muller, are at the core of [financial] mismanagement of these events. It starts with overpromising of the benefits of the event (creating jobs, legacy, etc.) and is followed by an underestimation of actual costs. Sounds familiar, doesn’t it?!
The third symptom is ‘event takeover’. In the planning stages the overarching idea is that after the event the community will benefit from what has been created. However, in actuality, the event becomes the reason for planning applications, not the community.
The fourth symptom is called ‘public risk taking’ and can best be described by a line from the article. Muller says, “contractors know that the government is obliged to finish the project regardless of price”. I’m sure you remember the news articles about stadia not being finished in time that occur in every newspaper for every Olympic Games organised.
‘Rule of exception’ is the fifth symptom. Laws and regulations are changed to accommodate the event. Tax laws are changed, building regulations are softened and so on. The World Cup in Brazil cost the taxpayer US$250 million in missed tax revenue.
The sixth symptom is called ‘elite capture’ but could as well be called corruption.
The last symptom was named ‘event fix’. It’s about politicians using these mega events to push a certain agenda. Think redevelopment of certain areas and using the event to get funding for it. Quite often the event takes over (symptom 3) and as a result the community do not benefit from the redevelopment.
A great article to read and it makes you wonder whether host cities and host nations actually conduct a proper cost-benefit analysis! So I’ll put the question out there: are mega-events too expensive to organise?