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

Ebola Death Toll Nears 5,000 as Virus Advances

West Africa bears heaviest burden; Mali toddler’s death raises new fears More

Jordan’s Battle With Islamic State Militants Carries Domestic Risks

Despite Western concerns that IS militants are preparing a Jordanian offensive, analysts call the kingdom's solid intel a strong deterrent More

Asian-Americans Assume Office in Record Numbers

Steadily deepening engagement in local politics pays off for politicians like Chinese-American Judy Chu More

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.
Talks to Resume on Winter Gas for Ukrainei
X
Al Pessin
October 25, 2014 4:21 PM
Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Talks to Resume on Winter Gas for Ukraine

Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video Comanche Chief Quanah Parker’s Century-Old House Falling Apart

One of the most fascinating people in U.S. history was Quanah Parker, the last chief of the American Indian tribe, the Comanche. He was the son of a Comanche warrior and a white woman who had been captured by the Indians. Parker was a fierce warrior until 1875 when he led his people to Fort Sill, Oklahoma, and took on a new, peaceful life. As VOA’s Greg Flakus reports from Cache, Oklahoma, Quanah’s image remains strong among his people, but part of his heritage is in danger of disappearing.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.

All About America

AppleAndroid