Europe News

Olympic Cities: Booms and Busts

Olympic Cities Booms and Busts

CNBC_Olympic_Cities_Cover_Slide.jpg
Now only six months away, excitement is ramping up for the London 2012 Olympics. Yet aside from putting on enjoyable Games, the spectacle, the sporting glory and the number of gold medals team Great Britain can win, London must contend with the legacy the Olympics leaves behind. This cannot be measured purely by cost alone but by the benefits or problems for the city the Games leave in their wake.The finest Olympics revitalize rundown districts, inspire young people into sport and leave a city w
Photo: Anthony Charlton | Olympic Delivery Authority | Getty Images

Now only six months away, excitement is ramping up for the London 2012 Olympics. Yet aside from putting on enjoyable Games, the spectacle, the sporting glory and the number of gold medals team Great Britain can win, London must contend with the legacy the Olympics leaves behind. This cannot be measured purely by cost alone but by the benefits or problems for the city the Games leave in their wake.

The finest Olympics revitalize rundown districts, inspire young people into sport and leave a city with fantastic sites and a healthy profit; Barcelona is a good example of this. The worst leave nations crippled by debt and half-dead venues – look no further than Athens.

The Olympic legacy London hoped for when it won the bid in 2005 was to inspire a new generation of sportsmen and women and to regenerate a rundown area of East London, without the facilities being a drain on public finances. Prime Minister David Cameron told a recent press conference he expected the Games to generate at least $1 billion for British businesses.

So far six out of the eight Olympic venues have secured their future, but the prospects for the centerpiece of the 2012 games - the Olympic Stadium, which cost an estimated $760 million to build - remain uncertain. This is also true for the Olympics Press and Broadcast Centre.

Whether the games will boost young people’s participation in sport is less clear. The Chairman of the British Olympics Association, Colin Moynihan, recently told the Observer newspaper that since the UK won the 2012 bid politicians have failed to honor pledges to drive through a national sporting revolution and unless there was a last minute change in policy, the games would spur little improvement. As for the cost, it is looking increasingly likely that London will breach its $14.3 (£9.3) billion budget because of rising transport and security costs.

It is too late now for London to learn from the experiences of previous host cities, but the lessons are clear to see. Click ahead to see some examples of winter and summer Olympic booms and busts.

By Bianca Schlotterbeck

Posted 19 January 2012

Vancouver, Canada (winter, 2010)

CNBC_Olympic_Cities_Vancouver.jpg
Boom or Bust? Bust Hosting the Winter Olympic Games in 2010, Canadian athletes won a record of 14 gold medals. However the city of Vancouver did not feel quite so lucky when left with a   The cause of this has been the Olympic Village (pictured here), which was financed by the city after the project’s developer ran into trouble because of the credit crunch. The government hoped it was backing what would become one of the greenest, most sought-after residential areas in North America.Yet two year
Photo: Ron Watts | Getty Images | First Light

Boom or Bust? Bust

Hosting the Winter Olympic Games in 2010, Canadian athletes won a record of 14 gold medals. However the city of Vancouver did not feel quite so lucky when left with a nasty financial hangover.  The cause of this has been the Olympic Village (pictured here), which was financed by the city after the project’s developer ran into trouble because of the credit crunch. The government hoped it was backing what would become one of the greenest, most sought-after residential areas in North America.

Yet two years on the city is still trying to recover its costs by selling the luxury condos in the 16 buildings that make up the village (renamed Millennium Water). When the debts rose to  $730.2 million (C$743 million), the project was pushed into receivership. Now under the auspices of Ernst and Young, it has begun filling up the empty suites and the debt will reduce with future sales. However the $170 million owed on the land purchase   will probably never be recovered.

Beijing (Summer 2008)

CNBC_Olympic_Cities_Beijing.jpg
Boom or Bust? BoomAlthough the Beijing Olympics were the most expensive games on record, costing approximately $40 billion, they did not leave the country in debt as China had enough capital to pay for the new stadiums, subways and roads to make the Games a success. Beijing benefited the most from these improvements to its infrastructure. New highways, subways and an airport terminal as well as public spaces and parks brought much-needed investment to the city without leaving it in a financial m
Photo: Feng Li | Getty Images

Boom or Bust? Boom

Although the Beijing Olympics were the most expensive Games on record, costing about $40 billion, they did not leave the country in debt. China had enough capital to pay for the new stadiums, subways and roads to make the Games a success. Beijing benefited the most from these improvements to its infrastructure. New highways, subways and an airport terminal as well as public spaces and parks brought much-needed investment to the city without leaving it in a financial mess.

Most of the Olympic venues in Beijing went on to have long-term use. For example, one facility was dedicated to the China Agricultural University and another to the Beijing Science and Technology University, ensuring their continued benefit to the city. However, the landmark Bird’s Nest national stadium (pictured here), remains largely empty from little use.

Turin, Italy (Winter, 2006)

CNBC_Olympic_Cities_Torino.jpg
Boom or Bust? BoomThe Italian city of Turin hoped the Winter Olympics would revitalize a lackluster local economy that had been damaged by the collapse of the Fiat car empire. But the lead-up to the Games was rife with corruption scandals, construction problems and financial woes that led to the near declaration of bankruptcy before the Games had begun. The Olympic Committee was left with a $3.2 million deficit, 2 percent of its $1.58 billion operating budget. Nevertheless the Games left a posit
Getty Images

Boom or Bust? Boom

The Italian city of Turin hoped the Winter Olympics would revitalize a lackluster local economy that had been damaged by the collapse of the Fiat car empire. But the lead-up to the Games was rife with corruption scandals, construction problems and financial woes that led to the near declaration of bankruptcy before the Games had begun. The Olympic Committee was left with a $3.2 million deficit, 2 percent of its $1.58 billion operating budget. Nevertheless the Games left a positive legacy for Turin with the Olympic venues being put to immediate use after the event and boosting tourism and the self-image of a city that had felt in permanent decline before the Olympic spotlight shone on it.

Athens, Greece (Summer, 2004)

CNBC_Olympic_Cities_Athens.jpg
Boom or Bust? BustAlthough Athens put on successful Games, they went badly over their $4.6 billion budget and many believe that the debt accrued, $14-15 billion according to Stephen Wenn, Professor of Sport History and Olympic studies at Wilfrid Laurier University, .  In the months after the Games the shortfall was estimated to be around 50,000 euros for each Greek household but no official figure for the cost has ever been published.Athens lost the chance to change the face of the city, by fail
Photo: Yiorgos Ventouris | WireImage

Boom or Bust? Bust

Although Athens put on successful Games, they went badly over their $4.6 billion budget and many believe that the debt accrued, $14-15 billion according to Stephen Wenn, Professor of Sport History and Olympic studies at Wilfrid Laurier University, contributed to the country’s financial crisis.In the months after the Games the shortfall was estimated to be around 50,000 euros for each Greek household but no official figure for the cost has ever been published.

Athens lost the chance to change the face of the city, by failing to keep up the modernization started by the Olympics. Many of the venues lie vacant and rotting; the Independent newspaper reports as many as 21 out of 22 are unused. Promised parks never materialized, new transportation infrastructure has caused problems like flooding and increased traffic. The Socialist government decided to finance the full cost of the Olympic venues out of the public investment budget, without developing a strategy for post-games use. Wenn says Olympic “success comes to those who most fully grapple with the issue of legacy and remain firmly fixed on what their city hopes to achieve.” But for Athens this does not seem to have happened.

Salt Lake City, USA (Winter, 2002)

CNBC_Olympic_Cities_SaltLake.jpg
Boom or Bust? BoomThe Salt Lake City Winter Olympics was one of the most expensive of all time, coming close to the cost of hosting the summer Games, at $2 billion (including $500 million for security). However organizers claimed a $100 million profit as a result of lucrative television deals and the legacy of the games was to bring dozens of new faster lifts and thousands more hectares of skiable terrain to the region. Traffic on the slopes was up by 37 per cent in the six years after the Games
Photo: Olivier Morin | AFP | Getty Images

Boom or Bust? Boom

The Salt Lake City Winter Olympics was one of the most expensive of all time, coming close to the cost of hosting the summer Games, at $2 billion (including $500 million for security). However organizers claimed a $100 million profit as a result of lucrative television deals and the legacy of the games was to bring dozens of new faster lifts and thousands more hectares of skiable terrain to the region. Traffic on the slopes was up by 37 per cent in the six years after the Games, turning Utah skiing into a $1-billion industry.

Sydney (Summer 2000)

CNBC_Olympic_Cities_Sydney_Stadium.jpg
Boom or Bust? BustAlthough Sydney put on very well organized and popular games, the benefits of the Olympics to the city have been small. The organizers of the Sydney games overshot their budget in a familiar Olympic fashion, which almost tripled to $3.8 billion before the competition had begun, for which the public ended up paying about 30-35 per cent.According to reports by The Independent newspaper, Sue Holliday, the former chief planner for the Sydney Games, told a conference that the host c
Photo: Phillip Hayson | Getty Images

Boom or Bust? Bust

Although Sydney put on very well organized and popular games, the benefits of the Olympics to the city have been small. The organizers of the Games overshot their budget in a familiar Olympic fashion: It almost tripled to $3.8 billion before the competition had begun, for which the public ended up paying about a third.

According to reports by The Independent newspaper, Sue Holliday, the former chief planner for the Sydney Games, told a conference that the host city should have focused more broadly on a legacy program for the Olympic site. “Sydney is now paying the price,” she said. The centerpiece for the Games, the Sydney Olympic Park, became yet another white elephant, with a plan for its use not made until 2005. Studies have also shown that the Olympics did not do much to attract tourists to Sydney or boost participation in sports.

Nagano, Japan (Winter 1998)

CNBC_Olympic_Cities_Nagano2.jpg
Boom or Bust? BustThe full cost of the Nagano Winter Olympics will never be known as the documents accounting for money spent on the Olympic bid were   Yet it is clear that it went vastly over budget and new infrastructure to make the Games work in this small Japanese city cost up to $10 billion. As a result, Nagano entered recession, with the debt on Olympic projects roughly $30,000 per family and growing. It is estimated that these debts will take until 2015 to pay off. Just the Olympic arenas
Getty Images

Boom or Bust? Bust

The full cost of the Nagano Winter Olympics will never be known as the documents accounting for money spent on the Olympic bid were burnt on the orders of the Olympic Committee vice-secretary general, Sumikazu Yamaguchi. Yet it is clear that it went vastly over budget, with new infrastructure to make the Games work in this small Japanese city costing up to $10 billion. As a result, Nagano fell into recession, with the debt on Olympic projects roughly $30,000 per family and growing. It is estimated that these debts will take until 2015 to pay off. The Olympic venues alone cost $22 million per year in upkeep, and their rental income brings only one-tenth of that amount.

Although Nagano is working hard to stop the Olympic venues turning into rotting white elephants, the cost of their upkeep is not easy for the city’s finances. Today it still costs $2.5 million a year alone to maintain the M-Wave (pictured here), where local school children take skating lessons on a high-speed 400-metre rink in winter. The installation of a high-speed bullet train during the Olympics also posed problems for the local hotel industry as more skiers came on day trips rather than spending the night and locals are more inclined to go on shopping days to larger cities.

Atlanta (Summer 1996)

CNBC_Olympic_Cities_Atlanta.jpg
Boom or Bust? BoomAlthough the games were at times chaotic, marred by transport problems, a pipe bomb that killed a visitor and criticized for being overly commercial, Atlanta has one of the strongest Olympic legacies.The commercial sponsorship of the games, which cost around $1.8 billion, meant that Atlanta broke even and was not left with large debts. The two arenas that were constructed for the games were developed with their after use in mind and are now home to Atlanta’s baseball teams, the
Photo: Andrea Pistolesi | Getty Images

Boom or Bust? Boom

Although the Games were at times chaotic, marred by transport problems, a pipe bomb that killed a visitor and criticized for being overly commercial, Atlanta has one of the strongest Olympic legacies.

The commercial sponsorship of the Games, which cost around $1.8 billion, meant that Atlanta broke even and was not left with large debts. The two arenas constructed for the Games were developed with their after-use in mind and are now home to Atlanta’s football and baseball teams, the Falcons and the Braves.

But it was how the Games regenerated Atlanta’s inner-city areas that left the biggest mark. Centennial Olympic Park (pictured here), was built in what was a rough part of town and is now a centerpiece of downtown Atlanta’s revitalization, with several major high rises, museums and attractions built on its periphery and 20 percent of the tax generated going to poorer areas. The Olympic Village is used by Georgia Tech University as dormitories, and investments by the city to the area around it have revitalized what was a downtrodden neighborhood. Dahshi Marshall, a transportation planner with the Atlanta Regional Commission, told The New York Times: “The games served as a catalyst for Atlanta’s urban renaissance that is still going on today.”

Albertville, France (Winter, 1992)

CNBC_Olympic_Cities_Albertville.jpg
Boom or Bust? BustAlbertville hosted the Winter Olympic Games hoping to boost an ailing economy and stimulate flagging tourism in the French Savoy Alps. However because various towns in the region wanted a piece of the action, the 57 Olympic events were spread out over 13 locales and 620 square kilometers, which produced a logistical nightmare. The French government spent $1.1 billion on regional infrastructure. Another $189 million was invested in building or upgrading sports facilities.Organiz
Photo: Nathan Bilow | Getty Images

Boom or Bust? Bust

Albertville hosted the Winter Olympic Games hoping to boost an ailing economy and stimulate flagging tourism in the French Savoy Alps. However because various towns in the region wanted a piece of the action, the 57 Olympic events were spread out over 13 locales and 620 square kilometers, which produced a logistical nightmare. The French government spent $1.1 billion on regional infrastructure. Another $189 million was invested in building or upgrading sports facilities.

Organizers declared a loss of $67 million. An expected boost in tourism did not materialize for Albertville, which instead found itself saddled with a huge deficit caused by cost overruns. Other towns in the region suffered the same fate, while some places, such as Courcheval and Val d’Isere (pictured here) prospered from the improved transport links.

Barcelona, Spain (Summer, 1992)

CNBC_Olympic_Cities_Barcelona.jpg
Boom or Bust? BoomBarcelona remains a model for not only how to stage a successful Olympics, but how to use the opportunity to create a great legacy and modernize a city. The 1992 Games are widely credited with not just transforming the landscape of Barcelona itself, but also with rebranding a city that has become one of Europe’s most popular tourist destinations.Barcelona spent about $9.4 billion on its games, which was a record at the time; however the money paid off, most especially that whic
Photo: Alvaro Leiva | Getty Images | age fotostock RM

Boom or Bust? Boom

Barcelona remains a model for not only how to stage a successful Olympics, but how to use the opportunity to create a great legacy and modernize a city. The 1992 Games are widely credited with not just transforming the landscape of Barcelona itself, but also with rebranding a city that has become one of Europe’s most popular tourist destinations.

Barcelona spent about $9.4 billion on its games, which was a record at the time; however the money paid off, most especially that which was used to regenerate the city and a $5 million profit was reported to have been made. As part of a huge modernization program, the Olympic village was built and two miles of beach installed. Since then another mile of beach has appeared and the number of restaurants built to feed bathers has rocketed from seven to 70. A new port was also created and some of the most photogenic venues in Olympic history (pictured here is architect Frank O. Gehry’s fish sculpture). The Games transformed the city’s image as a center for commerce; in one annual report Barcelona shot from 11th to fourth of the best European cities to do business in.

The other great legacy of the Barcelona Games has been their effect on Spanish sport. After a string of sporting victories, including Rafael Nadal becoming the World Tennis number one, the National football team winning the European championship and the 2010 World Cup and the Carlos Sastre winning the Tour de France. Many trace these successes back to Barcelona, which not only inspired would-be winners but left an infrastructure of world-beating facilities and top class coaching.

Calgary, Canada (Winter, 1988)

CNBC_Olympic_Cities_Calgary.jpg
Boom or Bust? BoomThere was a lack of transparency about the cost of the Calgary Winter Olympics. Under pressure not to be the second Olympics in Canada to make a loss, after the financial disaster that was the Montreal 1976 (see slide 16), the organizers claimed that the Games made a profit of between $90 and $150 million. This came undone after a private investigation by the Toronto Star revealed that Calgary’s organizing committee omitted the costs of building sports facilities from its figur
Photo: Jonathan Utz | AFP | Getty Images

Boom or Bust? Boom

There was a lack of transparency about the cost of the Calgary Winter Olympics. Under pressure not to be the second Olympics in Canada to make a loss, after the financial disaster that was the Montreal 1976 (see slide 16), the organizers claimed that the Games made a profit of between $90 and $150 million. This came undone after a private investigation by the Toronto Star revealed that Calgary’s organizing committee omitted the costs of building sports facilities from its figures as well as $461 million in government subsidies. With this money added in, the Games made a financial loss. Nevertheless the Calgary Winter Olympics delivered a substantial sporting legacy, state-of-the-art sports facilities, most notably the Olympic Oval-the world’s first fully enclosed speed skating rink, which would produce a steady stream of future Canadian Olympians.

Seoul, South Korea (Summer, 1988)

CNBC_Olympic_Cities_Seoul.jpg
Boom or Bust? BoomThe Seoul games cost approximately $4 billion but what it gained in legacy was much greater. Although the Games were seen as an opportunity to legitimize the authoritarian regime of Chun Doo-hwan, the start of political demonstrations in 1987 and the wish not to jeopardize the Olympics with military dictatorship and riots contributed to the June 29th declaration which issued President Chun out of power and led to direct elections in December 1987. Therefore, the Olympics served
Photo: Dave Cannon | Getty Images

Boom or Bust? Boom

The Seoul games cost approximately $4 billion but what it gained in legacy was much greater. Although the Games were seen as an opportunity to legitimize the authoritarian regime of Chun Doo-hwan, the start of political demonstrations in 1987 and the wish not to jeopardize the Olympics with military dictatorship and riots contributed to the June 29th declaration which issued President Chun out of power and led to direct elections in December 1987. Therefore, the Olympics served as a catalyst for South Korea’s transition to democracy. The money that flowed into the city from the Games (which was profitable) from television networks and multi-national sponsors did not dry up when the athletes went home; businesses flocked to Seoul, helping to make Korea the third largest economy in Asia.

The Olympics also brought South Korea a sporting legacy previously unheard of. Training programs improved and sports leagues blossomed. Since the Games, South Korea has rarely been absent from the top ten medals table; it appeared there only once before 1988. “Before hosting the Olympics, Korea’s international sports competition was quite low. Its goals were quite humble,” Yoon Kang-ro, a Korean sports diplomat told the Korea Times in 2007. "After hosting the Olympics, the goals became much higher."

Los Angeles (Summer 1984)

CNBC_Olympic_Cities_LA.jpg
Boom or Bust? BoomAfter the financial disaster that was Montreal, Los Angeles can be credited with changing the way the modern games were run and became the first Olympics since 1932 to make money. Under the business savvy of Peter Ueberroth, the head of the LA organizing committee, Los Angeles did not pump money into new stadiums which would send costs through the roof but made adjustments to existing ones; only the velodrome and the aquatics centre needed to be built especially for the Olympic
Getty Images

Boom or Bust? Boom

After the financial disaster that was Montreal, Los Angeles can be credited with changing the way the modern games were run and became the first Olympics since 1932 to make money. Under business savvy Peter Ueberroth, the head of the organizing committee, Los Angeles did not have to pump money into new stadiums, but made adjustments to existing ones. Only the velodrome and the aquatics center needed to be built especially for the Olympics. Although the Games cost around $546 million, the taxpayer did not bear the burden. Corporate sponsorship, television rights and ticket sales allowed the Games to make a $222.7 million profit, 40 percent of which was channeled into youth sports organizations. The wider economic impact of the Games on Southern California has been put at $3.3 billion.

Lake Placid, USA (Winter, 1980)

CNBC_Olympic_Cities_Lake_Placid.jpg
Boom or Bust? BustThe Winter Olympics of Lake Placid was hit by a number of problems. Poor planning of ticket sales (people could not buy unsold tickets as they needed a ticket to get to the ticket sales area) and transportation and accommodation difficulties meant that there was a narrowly missed catastrophe in getting visitors to the Games. A state of emergency had to be declared and more buses and drivers imported to shuttle people to the Olympic venues. However this was not the only bailout
AFP | Getty Images

Boom or Bust? Bust

The Winter Olympics of Lake Placid was hit by a number of problems. Poor planning of ticket sales (people could not buy unsold tickets as they needed a ticket to get to the ticket sales area) and transportation and accommodation difficulties meant that there was a narrowly missed catastrophe in getting visitors to the Games. A state of emergency had to be declared and more buses and drivers imported to shuttle people to the Olympic venues. However this was not the only bailout needed. The Games ended with an $8.5 million deficit and the Lake Placid Olympic Committee drafting bankruptcy papers; only a last minute intervention from the State of New York saved it from financial disaster.

Montreal, Canada (Summer, 1976)

CNBC_Olympic_Cities_Montreal.jpg
Boom or Bust? BustOne of the most infamous busts, the 1976 Summer Games in Montreal had the legacy of taking three decades to repay its debts and deterring many other countries from bidding for the Olympics for many years. Before the Games the city’s mayor, Jean Drapeau, declared: “the Olympics can no more have a financial deficit than a man can have a baby.” But the debt on the Olympics rose to $1.5 billion dollars and it took Quebec until 2006 to pay off, by which point the Olympic stadium (pi
Getty Images

Boom or Bust? Bust

One of the most infamous busts, the 1976 Summer Games in Montreal had the legacy of taking three decades to repay its debts and deterring many other countries from bidding for the Olympics for many years. Before the Games the city’s mayor, Jean Drapeau, declared: “the Olympics can no more have a financial deficit than a man can have a baby.” But the debt on the Olympics rose to $1.5 billion dollars and it took Quebec until 2006 to pay off, by which point the Olympic stadium (pictured here) had been given the nickname “The Big Owe”.

Construction on the Olympic stadium was not completed by the time the games begun due to problems with the unusual design and strikes by the workers. During the games and for 11 years afterwards the stadium did not have either a tower or a roof, which were finally completed in 1987. The problems did not end there. In 1991, a 55-tonne chunk of roof fell after support beams snapped – luckily, no one was injured. A second section of the roof collapsed in the winter of 1999 as workers were setting it up for an auto show.