In just a few hours, the world will be watching the opening ceremony of London’s third Summer Olympic Games. For 17 high intensity days, more than 10,000 athletes from over 200 countries will battle for the most prestigious awards in the athletic world. However, what will remain hidden in the shadows during the excitement and energy of the opening ceremony will be the story behind the Games – the larger implications of hosting the world’s biggest sporting event, and its stresses at the financial, societal, and environmental level. This story – which lasts long beyond the 17 days – remains unwritten as the after effects of hosting the London Olympics Games will not be felt for years to come.
In this three-part series, we will delve into the effects of hosting the Olympic Games. Our first segment will share background about London’s hope for “legacy” during and after the Games, plus, a look into the financial challenges incurred from hosting such massive festitivies.
Stay tuned for our second and third segments which will address London’s Games with regard to social issues and sustainability.
More after the break.
During the 2005 Olympic bidding process in Singapore, the International Olympic Committee awarded the 2012 Summer Games to London with a narrow 54-50 vote over Paris. London’s focus on providing a lasting sustainable legacy after the Games set its proposal apart from Paris, New York and Moscow, as the vision promised to maximize the sporting and cultural benefits of the Games in a sustainable manner.
Toward that end, London committed to challenging the conventional design of sports complexes by recycling and reusing facilities – almost 2/3 of the facilities were already existing within the confines of the city prior to the bid for the Games. And, at the urban level, London would reinvigorate a deprived area of Stratford in the city’s East End, turning former brownfield sites into viable facilities for the Games as part of an urban regenerative effort to maximize new development opportunities.
After the Games, the London Legacy Development Corporation will begin a $450+ million construction project to transform the Olympic site into the Queen Elizabeth Olympic Park as a way to manifest the social component of London’s desired legacy. The plan includes the replacement of temporary venues used during the Olympics with permanent structures, such as schools, and additional infrastructure, such as new roads and bridges, to unite the newly created Olympic Park with the rest of the city. It is projected that over 8,000 permanent jobs will be created by 2030 as businesses open to support the changing community, and residents will enjoy ample green space that will be retained from the original park.
The completion of phase one of the plan is projected for July of 2013 – exactly one year after the opening of the Games.
On paper, it seems as though London has drafted the perfect Olympic and post-Olympic scenario – a sustainable infrastructure that is flexible enough to wow Olympic viewers during the 17 days, and function as an appendix to the city afterward. But, if history offers any hint as to the challenges and the realities of what lies ahead, manifesting London’s legacy may not be as clear cut as it appears.
So, what are the financial implications of hosting these Games and seeing the legacy to fruition? The exact monetary value of what Londoners will have to pay is hard to calculate, as the Olympic expense is not only limited to the cost of the Games, but also the costs of bidding – estimated at $20 million – and the costs after the Games.
When London was awarded the Games, the budget was set around a respectable $4 billion. That budget has since grown more than 3 fold to $15 billion, and is estimated to rise to $19 billion – perhaps “not the greatest news for a recession-mired economy”. Adding to the cost of the Games, Prime Minister David Cameron doubled the budget for the opening and closing ceremonies, bringing it to about $125 million, in order for the ceremony to be on par with Beijing’s presentations.
But, all this debt is regarded as mere investment – the money that London invests into the Games will allow the city to reap future benefits. Culture Secretary, Jeremy Hunt, explained, “You can take two attitudes to the Olympics. You can say, these are times of austerity, and therefore we should pare them down as much as possible. Or you can say, because these are times of austerity, we need to do everything we possibly can to harness the opportunity.”
In 1992, Barcelona invested heavily to host the Games and was left with over $6 billion in debt. However, the complete overhaul of the coastal port teamed with an integrated Olympic Village has proven to keep tourist appeal elevated and residential interest heightened. And, similarly, Sydney still enjoys increased tourist revenue since their 2000 Games.
Yet, London is a bit different from its Spanish and Australian counterparts. For starters, London does not need this Olympics to enhance its appeal to tourists, thus negating the benefit of increased revenue from visitors. And, according to a poll conducted by Reuters, 23 of 27 economists think London 2012 will not provide any meaningful long-lasting boost to the UK economy. Bank of England economists say there will be little or no impact to the economy during London 2012, while Moody’s Investor Services said there will be no long-term benefit from hosting the Games.
“Overall, we think the Olympics are unlikely to provide a substantial macroeconomic boost to the UK in 2012. The impact of infrastructure developments on UK GDP has probably already been felt. The level of tourism may be higher as a result, although it is not clear to what extent tourism associated with the Games will displace some tourism that would have otherwise occurred,” said Moody’s.
If London’s tourist appeal will stay at a neutral level, does that put more stress on the success of the Olympic extravaganza to define London in a more progressive light? Or, even with this exorbitant investment, will the Olympic remains simply be added to London’s already exhaustive list of attractions?
Let us know your thoughts in the comments below, and be sure to follow the next installment of our series.