The economic impact of winning the Olympics
In July 2021, during the delayed 2020 Tokyo Olympics, the worst kept secret in international sport was announced. Brisbane (Australia) had been granted the rights to host the 2032 Summer Olympic Games.
Despite grumblings about Queensland Premier Palaszczuk travelling to Tokyo for the announcement that was considered a forgone conclusion, the reaction to the announcement was predictable. Politicians cheered and congratulated each other on a job well done, sports-mad fans gathered for celebratory fireworks and the Queensland media went crazy – trumpeting that the announcement was “A win for our athletes, a win for the community”.
For the politicians involved, legitimising the decision to bid for the right to hold an Olympic Games was also predictable. As with all these things there was a large amount of talk about all the economic benefits that would surely flow to the regions, the wider Queensland state economy and of course the national economy. For the Brisbane region and South-east Queensland more generally, everyone would be a winner.
The problem with mega-events like the Olympic Games is that they rarely live up to the hype that is used to legitimate them. Sure, there is a lot of money attached to the Olympics, but as we read here ‘The issue is that it tends to slosh upward into the pockets of those who are already rich’.
We read about the International Olympic Committee who rake in billions of dollars each Olympic cycle and whose:
‘Volunteer president who gets an annual “allowance” of US$251,000 (2016) and lives rent-free in a five-star hotel and spa in Switzerland’.
We also read about media companies who make record advertising revenue, and the local political and economic elites who are well-positioned and tied into public-private partnerships that are massively lopsided in favour of the private entities.
What we don’t read about are the small local businesses ‘making a killing’ or the disadvantaged local communities benefiting, despite what the politicians say. That is because many ‘benefits’ are grossly overstated.
Consider this. The last two significant mega-sporting events to be held in Australia were the 2000 Summer Olympics held in Sydney and the 2018 Commonwealth Games held in the South East Queensland city of the Gold Coast. Each of these were heralded as offering wide ranging economic benefits for the host cities, yet some assessments suggest otherwise.
Assessing recent mega-events
Giesecke and Madden suggest that in terms of measurable economic welfare, the Sydney Olympics came as a cost to Australians, reducing the present value of real private and public consumption by $2.1billion.
In a related media report the authors point out that the Sydney Olympics ‘failed to increase employment or meaningfully boost tourism’ and “…the studies … suggested that we were no more on the tourism map than we were before the Games.”
Similar stories emerged about the 2018 Commonwealth Games which was held in the Gold Coast. Looking at this report we learn that:
- 51% of businesses surveyed reported that their business was impacted very negatively;
- 23% somewhat negatively;
- 16% felt no impact; and
- 9% of respondents were somewhat positive with only 1% very positive.
The negative impacts, according to businesses were because of a change in customer numbers and a significant reduction in sales numbers. A far cry from what the hype around holding the game have suggested.
The gist of these findings is that sports fans are not the same as leisure tourists. As the authors of the report put it ‘they are not buying coffees in shopping precincts. Additionally, it was found that ‘a lot of locals left town during the event. Businesses got a double whammy in that they didn’t get the normal local trade and they didn’t get the tourism trade’.
So, if the economic hype doesn’t always add up and the money seems to flow up rather than trickle down, what about the benefits for the broader community? Does the average citizen benefit in significant ways?
There may, as this paper argues, be a ‘feelgood’ factor in hosting sporting mega events, but as others have pointed out “Simply put, working-class people do not benefit from the Olympics. They’re told that they’ll benefit from the Olympics when they’re in the bidding stage, in an attempt to get the local population on board, but the benefits are always overstated.”
The uneven outcomes often hit our most disadvantaged. There is plenty of evidence where disadvantaged communities have lost out as the result of hosting an Olympics.
Consider this:
- Some 1.5 million residents were displaced for Beijing 2008;
- Favelas were flattened for “white elephant” stadiums, which sit empty after events end, destroying the homes of 77,000 people and accelerating policing, ahead of Rio 2016;
- Residents were evicted to facilitate Olympic development in East London for 2012;
Time will on tell what the impact of the Brisbane Olympics has our local communities. Sure, the city will get some nice updated sports infrastructure, but in communities where families struggle to get by day-to-day it is difficult to see how they will even be able to afford a ticket to watch Olympic events at these new stadiums, let alone benefit in any real meaningful way.
Regardless, those pushing for the Olympics and other mega-events will try to legitimate them via a raft of statements about social and economic benefits for all.
There is no denying that hosting the 2032 Olympics might bring a lift to some unmeasurable metric like ‘national pride’, but more so seems like a magic trick – look at my right hand and ignore what my left hand is doing. While people are cheering, others are running away with the loot.
If politicians want to leave a legacy from their time in office, then they should start by addressing some of the seriously pressing social and economic issues that exist, rather than trying to hoodwink us with another sporting mega-event.
Author
Professor Scott Baum is a member of Griffith University’s Cities Research Institute and Policy Innovation Hub. He is trained in economics and sociology. His research focuses on understanding the economic and social outcomes of change across the settlement system. Most recently he has been involved in studying the impacts of local labor markets on the individual socio-economic outcomes.
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