News / USA

    Big Sports - Big Cost

    World sporting events such as the Olympics and World Cup require billions of dollars of investment and years of planning. But do the investments pay off, helping the local or national economy?

    Vancouver's Olympic Village at night
    Vancouver's Olympic Village at night

    The 2010 Winter Olympics call Vancouver, British Columbia, home.  The 2010 World Cup takes place across South Africa in July.  These events attract hoards of spectators, bringing construction projects, jobs, money for businesses and tax revenues for local governments.  Countries compete fiercely to host such events.

    But are these premiere sporting events usually a net benefit to the host country?  

    "If you look at the economics of the large projects they fall into two categories," says Fariborz Ghadar of Pennsylvania State University.  "For example in the Olympics, you have the costs of actually running the operation, and then you have the costs of building the infrastructure to house it.  Generally, both of them are underestimated."

    Ghadar cites this year's winter Olympic games in Vancouver as an example.  Originally, city officials estimated the costs of preparing for the games at around $2 billion.  However costs have already topped $4.6 billion, and may ultimately top $5 billion or $6 billion, according to Ghadar. 

    "And on the benefit side, they (host cities) always seem to exaggerate the benefit.  In Vancouver they think they're going to make $9 billion, but in reality they will be very lucky if they even make $1 billion."

    World Cup matches will be played in the new stadium in Durban, South Africa, February 2010
    World Cup matches will be played in the new stadium in Durban, South Africa, February 2010

    George Mason University's Tony Samara says it is not often clear how host cities calculate revenues from major sporting events, because bookkeeping can vary from one city to the next.  

    "A lot of money is generated by private companies that have contracts either through the governing body or through the city," says Samara.  "For example, beverage concessions for tourism packages - those companies often are not domestic, so a lot of that money may actuallly leave the country."

    Increasingly, the cost of security is a major issue that can offset, in a big way, financial gains an event might bring.  Notes Fariborz Ghadar.  "I mean for example, in Canada, the orginal estimate for security was $200 million.  But it's going to cost about $1 billion."

    Huge sporting events are great for the local hotels, restaurants, retailers and construction firms.  And there is little doubt that world sporting events create jobs and a demand for skills, but construction employment related to building sports event infrastructure often ends once the games are over.

    Recently South Africa was rocked by a nationwide strike, as some 70-thousand workers stopped constructing stadiums and buildings for the World Cup.  Tony Samara points out that workers there were unhappy with the labor conditions.  "(They were) asked to work in timelines, asked to speed up construction, which some felt made working conditions unsafe." 

    Samara and Ghadar agree that in most cases, host nations are not likely to recoup the costs of events such as the Olympics.  Still, the Olympics and World Cup are widely prestigious events, and analysts say cities will continue to compete strongly to win the right to host them.

     

    You can watch this, and all of Philip's "Money In Motion" reports here.

    You May Like

    Escalation of Media Crackdown in Turkey Heightens Concerns

    Critics see 'a new dark age' as arrests of journalists, closures of media outlets by Erdogan government mount

    Russia Boasts of Troop Buildup on Flank, Draws Flak

    Russian military moves counter to efforts to de-escalate tensions, State Department says

    Video Iraqis Primed to March on Mosul, Foreign Minister Says

    Iraqi FM Ibrahim al-Jaafari tells VOA the campaign will meet optimistic expectations, even though US officials remain cautious

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Immigrant Delegate Marvels at Democratic Processi
    X
    Katherine Gypson
    July 27, 2016 6:21 PM
    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video Immigrant Delegate Marvels at Democratic Process

    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video A Life of Fighting Back: Hillary Clinton Shatters Glass Ceiling

    Hillary Clinton made history Thursday, overcoming personal and political setbacks to become the first woman to win the presidential nomination of a major U.S. political party. If she wins in November, she will go from “first lady” to U.S. Senator from New York, to Secretary of State, to “Madam President.” Polls show Clinton is both beloved and despised. White House Correspondent Cindy Saine takes a look at the life of the woman both supporters and detractors agree is a fighter for the ages.
    Video

    Video Dutch Entrepreneurs Turn Rainwater Into Beer

    June has been recorded as one of the wettest months in more than a century in many parts of Europe. To a group of entrepreneurs in Amsterdam the rain came as a blessing, as they used the extra water to brew beer. Serginho Roosblad has more to the story.
    Video

    Video First Time Delegate’s First Day Frustrations

    With thousands of people filling the streets of Philadelphia, Pennsylvania for the 2016 Democratic National Convention, VOA’s Kane Farabaugh narrowed in on one delegate as she made her first trip to a national party convention. It was a day that was anything but routine for this United States military veteran.
    Video

    Video Commerce Thrives on US-Mexico Border

    At the Democratic Convention in Philadelphia this week, the party’s presumptive presidential nominee, Hillary Clinton, is expected to attack proposals made by her opponent, Republican presidential nominee Donald Trump, to build a wall along the U.S.-Mexico border. Last Friday, President Barack Obama hosted his Mexican counterpart, President Enrique Peña Nieto, to underscore the good relations between the two countries. VOA’s Greg Flakus reports from Tucson.
    Video

    Video Film Helps Save Ethiopian Children Thought to be Cursed

    'Omo Child' looks at effort of African man to stop killings of ‘mingi’ children
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Calm the Waters: US Doubles Down Diplomatic Efforts in ASEAN Meetings

    The United States is redoubling diplomatic efforts and looking to upcoming regional meetings to calm the waters after an international tribunal invalidated the legal basis of Beijing's extensive claims in the South China Sea. VOA State Department correspondent Nike Ching has the story.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.

    Special Report

    Adrift The Invisible African Diaspora