By Simon Kuper
Russia is learning that playing host is a dubious honour and requires new tacticsIn July 2007 the International Olympic Committee gathered in Guatemala City to choose a host for the 2014 Winter Olympics. Pyeongchang in South Korea was expected to win. But when Russia’s president Vladimir Putin strode into the IOC’s hotel, the entire lobby and floor above gawped. To general surprise, Mr Putin opened Sochi’s presentation in touchingly poor English. Visibly, the man was trying. When an IOC member asked the Russians whether Sochi would have enough snow, Mr Putin stood up and promised snow. Sochi was named host. Mr Putin got credit for the victory but told Russians the IOC’s vote was “a judgment of our country”.
Days before Sochi’s games start next Friday, he is sounding less triumphant. Foreign media reports are focusing on Olympic cost and waste, notably the 48km-long, $8bn road-and-railway, which for that price could have been coated in Beluga caviar. With a total bill of about $50bn, Sochi is the most expensive Olympics. And Russia’s games have also become a lightning rod for western anger over Moscow’s homophobic policies.
Other hosts of big sporting events are suffering, too. Brazilian protesters poured into the streets last June to protest (among other things) about the expense of this year’s football World Cup and the Rio Olympics of 2016. Qatar has experienced multiple embarrassments since being awarded the 2022 World Cup, including reports of mistreated workers. Hosting has rapidly lost much of its prestige.
Why has public opinion shifted, and how should international sporting bodies and hosts reinvent hosting?
Before the 1990s hosting was usually a low-key affair. Los Angeles was the only bidder for the 1984 Olympics. It funded its games almost entirely with private money, as largely did Atlanta in 1996. Most football World Cups were played in scarcely renovated older stadiums.
But globalisation and new television channels showing sport changed that. Each new host raised the bar, with spiffy new sporting facilities. Politicians, needing to justify the rising cost, claimed that hosting would boost the economy. They invoked hordes of shopaholic visitors, the free advertising of host cities and the long-term benefits of the roads and stadiums that would be built. When Tokyo was named host of the 2020 Olympics, Shinzo Abe, Japan’s prime minister, said: “I want to make the Olympics a trigger for sweeping away 15 years of deflation and economic decline.”
Yet these claims of economic bonanza are false. Most economists agree that hosting big sporting events is an economic strain, says Stefan Szymanski, economics professor at the University of Michigan, with whom I have co-authored a book.
This is largely because the things a country buys for a sports tournament – stadiums, roads to the stadiums, extensive security – are rarely the things it needs for daily life. Often the venues become white elephants the moment the tournament ends. That happened in South Africa after the World Cup of 2010, and is forecast to happen to many Brazilian stadiums after this year’s tournament. London’s Olympic stadium eventually found a tenant, West Ham United Football Club, but the state is paying most of the costs of revamping the venue.
In addition, the much-touted shopaholic visitors rarely materialise. Some people do come for the tournament but others who would otherwise have visited the country stay away to avoid the high prices and frenzied atmosphere. Greece estimated that tourism fell 10 per cent during the Athens Olympics of 2004, as vacationers chose other summer destinations. The South African World Cup also drew far fewer visitors than forecast.
Worse for the hosts, the income from these tournaments – chiefly from TV rights and sponsorship deals – mostly goes to the IOC and Fifa.
Admittedly, the costs of hosting are usually small in the scale of government budgets. The estimated price of Brazil’s stadiums for the World Cup has ballooned since 2007 to about $3.5bn. That is not much alongside the $400bn-plus that the country plans to plough into its ageing infrastructure in coming years. It also seems a small price to pay for the national glory that politicians in host nations typically promise. When Rio was awarded the 2016 Olympics, Luiz Inácio Lula da Silva, then president, said the “victory” showed that Brazil was becoming a “first-class” country.
Yet worldwide the political pendulum is swinging from national glory to issues of the pocket. For western countries, this is the age of austerity. The sight of governments spending billions on a fortnight of sport can be offensive. In referendums last year, the citizens of Munich and Vienna voted against bidding to host the Olympics.
“Anti-stadium movements” have popped up across the US. Local politicians in Minnesota and Atlanta have recently not let residents vote on tax-funded stadiums for sports teams, presumably for fear of No votes.
Citizens of developing countries such as Brazil or Russia can think of other things their governments could spend money on. Brazilian protesters have demanded “Fifa-standard” schools and hospitals.
It is no longer even clear that hosting increases national glory. Instead, it can highlight a host’s flaws. Munich and Atlanta emerged from staging the Olympics with battered reputations.
Now Qatar is taking a beating. Almost all publicity about its prospective World Cup has been about the country’s brutal heat, immigrant construction workers dying in accidents, and allegations that Qatar, in the phrase of Jérôme Valcke, Fifa’s secretary-general, “bought the WC [World Cup]” – something that Qatar denies.
Likewise, when Bahrain hosted a Formula One race last year, F1’s boss Bernie Ecclestone, said: “The government here are stupid to put this race on. It is a platform for people to use protesting.”
In the past, a smooth tournament was taken as proof of the host country’s efficiency and knowhow. But the South African World Cup of 2010 changed perceptions.
South Africa, not exactly known for smooth delivery of public works, pulled off a flawless World Cup. But instead of reflecting well on the country, the lesson many took away was that Fifa and the IOC had become so experienced at organising these tournaments that they can stage them almost anywhere. The host country just needs to follow the guidelines – and pay up.
In this new hostile climate, host governments are on the defensive. Mr Putin said recently that Sochi’s games would cost the Russian government only $7bn – about a seventh of the sum that Dmitry Medvedev, his prime minister, admits to.
Rising costs and diminishing glory will put some countries off hosting. Fifa and the IOC therefore need to change tack. One temptation for them is to give tournaments to dictatorships that do not care much what their inhabitants think. As Mr Valcke lamented about Brazil: “Sometimes less democracy is better for organising a World Cup.” The dictatorships of Angola, Gabon and Equatorial Guinea have hosted recent African Nations Cups in football.
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But even leaving aside ethics, anointing authoritarian regimes is problematic. Mike Wragg, head of market research at Repucom, an industry monitoring group, notes that “public interest and awareness levels broadly speaking are down” for the Sochi Olympics. More people than usual worldwide do not know these games are happening.
Mr Wragg says this is largely because western sponsors have done little advertising around the games, in part perhaps for fear of associating themselves with Mr Putin’s government.
The IOC understands the growing scepticism about hosting and seems to be trying a new strategy: to scale down the Olympics. It chose Tokyo for the 2020 summer games partly because the city promised a relatively modest event, using many existing venues. An Olympics there seemed likely to do less economic damage than in smaller rival bidding cities Madrid and Istanbul. And a cheaper games need not mean a less popular games. Most people watch the Olympics for the sport, not the facilities.
Uefa, Europe’s football association, is trying a more radical strategy. Michel Platini, its president, uneasy about white elephants left behind by previous European Championships – notably Euro 2004 in Portugal – decided not to name a single host for Euro 2020. The burden would have been too great, especially in these tough economic times, explained Gianni Infantino, Uefa’s general secretary. Instead Uefa will choose 13 host cities in different countries.
Governments that still want to host need a new strategy, too. Instead of promising economic benefits, they should tell their citizens the truth: hosting a tournament is like hosting a party. You do not throw a party to make money. You do it to have fun.
And hosts do seem to have more fun. When Prof Szymanski and Georgios Kavetsos of the London School of Economics studied European hosts of football tournaments, they found that inhabitants’ self-reported happiness rose after the tournament.
Likewise, British happiness rose slightly after London’s Olympics despite the economic crisis. Especially in developed countries, happiness is a good argument for hosting. An “economic bonanza” is not.
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