Economics of London Olympics


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Economics of London Olympics

  1. 1. London Olympics will exceed 1850 Billion in Sri Lankan currencyBy Maxwell RanasingheLondon Olympics will cost a staggering amount of money .The estimate is £9.2 Billion. In Sri LankanCurrency it would be around Rs. 1850 Billion. It is more than our nation’s total budget expenditure forthe year of 2012, projected at Rs. 1640 Billion. It is spent on developing sports pavilions, stadiums,developing an Olympic Park well over 2.5 sqr. Km, conducting the game, catering to vast number ofparticipants, security and numerous other expenses related with the games. The British expect to makea surplus of at least £ 2 Billion in the year 2012 itself and further earn from the facilities in the futureevents. In addition all other countries will spend enormous amounts of money in training, preparationand travelling to London. This article will attempt to make an observation of the different opinions madeby critiques as to hosting mega events of this nature at a time the whole world, especially the WesternWorld having severe financial crisis.London to focus on gaining lost gloryThe camp who supports hosting Olympics in London advocates that staging the Olympic Games andParalympics Games in 2012 for the UK is an opportunity to bring about positive change on a massivescale. The Games would not only add to British nation’s sporting heritage but also enrich communities,boost its economy and celebrate the diversity of its capital. It is a unique chance to showcase the best ofLondon to the world and would generate huge benefits for all those who live or work in the city. In otherwords, it is a fine opportunity to bringing back the lost glory the UK.Major contracts are awarded to UK companiesThousands of UK companies, small and large will be needed to deliver the Games i.e., construction,manufacturing, catering, merchandise, services etc, creating valuable procurement opportunities. TheUK companies have been able to get majority of the contracts and it amounts to well over £6 Billion andwould create about 50000 additional jobs.Boost for Tourism in LondonIn addition the supporters of the event says that London’s tourism industry will receive a significantboost, not just for the duration of the Games but in the run up to and long after the Games. A LondonGames would also provide many new learning opportunities for Londoners to train and develop theirskills.British will do well in OlympicsAbove all they say that hosting the world’s greatest sporting event – given the passion, excitement andinterest likely to be generated – would boost Government initiatives to promote participation in sportand physical activity at all levels. In support of that they show statistics of medal won by the hostingnations. For example, Korea won 12 gold’s in Seoul 1988; compared with 6 in LA 1984, Spain won 13
  2. 2. gold’s in Barcelona 1992; compared to just 1 in Seoul 1988, Australia won 16 gold’s in Sydney 2000;compared with 9 in Atlanta 1996.Olympics gone beyond sustainabilityOn the other hand, critics of such mega events states that the staggering amount of money and hugeamount of resources of the world have been wasted for such events mainly when every hosting nationtries to do better than the previously hosted nation to showcase their country and its glory. The wisdomof such spending at a time where the world is having enormous problems to grapple with will pose animportant question of sustainability of such events at the levels they are held. Massive amounts arespent on stadiums, opening and closing ceremonies and most of the money spent will go only to bigtime construction companies and event management companies. They do not get distributed to thenation as a whole or at least for all the tax payers who bear the ultimate cost. Further they questionabout the overall economic benefits that would be gained from such an event although the supportersclaim that a surplus would be created from the income. They point out specifically to the experience ofother host nations like Canada ( Montreal have suffered financially) and even they say that hugeexpenditure done on Barcelona Olympics was one of the reasons that has contributed to the collapse ofeconomy of Greece.Big companies to gainThe major income is expected from sponsors. They in turn will have their products advertised to thewhole world and also will have exclusive rights to sell their products in the Olympic venues. For example,it is said that in London Olympics, only certain food and drinks will be allowed. An article in ProspectMagazine in London indicates that “The only water you are allowed to buy is Coca-Cola. The only foodyou can buy is McDonalds. These companies will have massive outlets and an extensive distributionsystem in the Olympic venues. The critics say that it is an irony that a nation fighting obesity and relatedillnesses will have such products that are proven to be creating obesity.White ElephantsMany host nations of Olympics have to saddle with huge amphitheatres of sports which cease to have apurpose once the games are over. Except for an Olympian event, such facilities are not required andmaintaining them in future would be a real problem unless they are used for commercially viableprojects.TrafficDuring the Olympic period, London will definitely have a traffic chaos. There would be major delays onnarrow roads in London, in addition the expected 30 miles of game lanes for use by the “Olympic family”will also have big burden on traffic. The exclusive lanes are supposed to be for Olympics only and it is tobe used by 4000 BMws and 1500 coaches ferrying around Olympic VIPs, athletes, sponsors and themedia. It has already created anger among Londoners as it has given preferential treatment for
  3. 3. Olympians than the ordinary Londoners. On top of that any other person using the lane withoutauthorization will be fined heavily as per the media. That would further aggravate the impendingproblem.SecurityThe security issue is unfathomable. From the entry points to London and in and around the city wouldbe a major concern for security in face of world terrorism and other political groups who would attemptto make this event a stage for their terror or political propaganda and activities. In addition, certain nonsponsors also will try to do guerrilla marketing activities to make their products and brands known tothe world over the publicity they get by doing some activity within the Olympic venues. So you willexpect a heavy handed security in Olympic venues that are not in line with the spirit of sports.IOC has a responsibilityIt is true that Olympics is an event that has to be organized in mega scale as it is a world event where allthe nations participate. However, the way that the events are held and the amount of resources suchevents consume have to be analysed wisely and appropriate action should be taken by the InternationalOlympic Committee as to sustainability of future Olympic events. They will have to device innovativeevent holding methodologies to bring down the total cost and pressure on one nation in holding a megaevent of Olympian magnitude. One simple way that IOC can do is holding events in different countrieswho have had hosted Olympics already. This would make use of the already created facilities andexperience of such host countries and reduce the cost and burden on one country. The world ischanging and why not Olympics?