PERSPECTIVE-The Olympic Games have been devolving for many years into a grotesque spectacle of over-spending, if not virtually pushing some cities and nations towards bankruptcy.
The Athens Games exacerbated Greece’s already strained economy in 2004 with a loss of $14 billion and produced a landscape dotted with crumbling facilities.
Beijing left China with little usable infrastructure to show for its $44 billion outlay.
Russia’s $50 billion spectacle in Sochi fared better than Beijing’s games in the sense it resulted in lasting capital improvements, but one has to wonder whether the location will ever pan out into a popular destination, one worthy of the massive investment. It’s a lot to spend on a city of only 300,000 people far removed from the rest of the country. It does not help that Putin is doing what he can to isolate Russia from the rest of the developed world.
The two most successful Games in history were held in the United States – Atlanta and Los Angeles, although Atlanta’s was marred by an act of domestic terrorism.
The Los Angeles 1984 Games succeeded beyond any standard of achievement, making $250 million on an investment of around $500 million. It was the first Summer Games to turn a profit since 1932 when they were held in…Los Angeles.
The only new sporting venues – the velodrome and aquatic center – were heavily financed by corporate sponsors.
The legacy of these games was not unsightly ruins and Olympic-sized debt, but an endowment that still thrives today. I’m talking about LA84.
But times are different.
The cost of security alone would be a budget-buster for many host cities and their national governments.
Also, the IOC has done nothing to discourage the senseless splurge by some governments who view the Games as a testimonial to their autocratic and corrupt regimes.
Boston, the United States entry for the 2024 Summer Olympics, seemed to be heading down a path to financial suicide, but an alarm rang in the mayor’s office when the city had to sign a contract that would make it liable to pay for any losses. Give Mayor Martin Walsh a gold medal for having the courage to walk from the deal.
Considering the history of excessive and unconscionable costs, should Los Angeles dare fill the void left by Boston?
If any city in the United States can stage a successful and affordable Games, it is Los Angeles.
Record-breaking revenue would seem to be certain. The location, pleasant climate, diverse entertainment venues and beaches will likely attract a record number of visitors, including many from Olympic powerhouse China, a nation which made its debut at the Games in 1984. Back then, it was impossible for Chinese to travel abroad in any significant numbers. I would expect an armada of charter and scheduled flights carrying PRC citizens will land here this time around.
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A surplus would almost be certain, too, if we insisted on managing the event our way, and not the IOC’s.
Just as in 1984, corporate sponsors will come through. Various government entities would have to provide most of the security and transportation control, for which they should be reimbursed off the top of receipts. Security for London 2012 came to an equivalent of $800 million and ticket sales were around $1 billion.
Don’t forget about our share of television money, which may also set a record. NBC’s current contract to cover the Games runs through 2020, so a bidding war will be likely among the major networks. Existing production facilities and available technicians in Los Angeles should create efficiencies that translate to lower production costs, a consideration which will not lost on the bidders.
To assure a surplus, the Los Angeles organizers must stand firm against constructing new facilities. If our stadiums and arenas are good enough for UCLA, USC, MLB, NBA and NHL, they are good enough for the rest of the world.
Any costs related to sports infrastructure should be limited to clearing deferred maintenance and any technology upgrades to manage the events on the field or in the water. Temporary facilities will have to be constructed for certain sports and enhancements made to college dormitories to house the athletes, although the trend has been for many teams to stay in private facilities.
Our message to the IOC should be about financial sensibility. Given the immense money pit forming in Rio de Janeiro, the IOC may be more receptive to the concept. If not, there will be fewer and fewer bidders for the Games in the years to come.
(Paul Hatfield is a CPA and serves as President of the Valley Village Homeowners Association. He blogs at Village to Village and contributes to CityWatch. The views presented are those of Mr. Hatfield and his alone. They should not be construed to represent the opinions of the VVHA or the residents of Valley Village, individually or as a group. He can be reached at: [email protected]. )
–cw
CityWatch
Vol 13 Issue 65
Pub: Aug 11, 2015
