Officials visit the construction site of Parc des Champions (Champions Park) at the foot of the Eiffel Tower at the Trocadero for the upcoming Paris 2024 Olympic Games, in Paris on July 4, 2024.GEOFFROY VAN DER HASSELT/Getty Images
Moshe Lander is a sports economist and senior lecturer at Concordia University in Montreal.
Over the next two weeks, three billion people will watch the Summer Olympics in Paris. And French taxpayers will spend more than $11-billion to host what is little more than a two-week party and receive little-to-no net benefit.
Like with past such events around the world, purpose-built infrastructure will either be disassembled or retained for decades at tremendous cost in regular maintenance and upkeep for the occasional event that will use it but otherwise sit idle.
Maybe that $11-billion goes a long way? Governments bidding for hosting rights argue that benefits accrue not only during the Games themselves in the form of increased spending on the local food and beverage, hospitality and tourism industries, but also in the longer run from increased global exposure that will benefit these industries for years to come.
Sure: “You know, I had seen a photo of the Eiffel Tower before and I’ve watched Emily in Paris, but I never thought about vacationing there until I saw that poor Australian athlete turning green while swimming in the Seine.” That $11 billion – 25 per cent over the initial budget – is a lot of moolala for very little ooh la la.
Paris’s experience with Olympic finances, surely to be disastrous, is a crystal ball for Canada. Vancouver and Toronto are already on deck to co-host the next big global sporting event, the 2026 FIFA World Cup, and history will repeat itself.
Boosters of such events often apply a technique called the “multiplier effect” and estimate what an individual (usually a tourist) might spend while in the city or region and then multiply that amount by some arbitrarily chosen, outrageous factor to estimate the total effect on the local economy. They then present a too-precise figure to the public with the utmost confidence, arguing that only a fool would reject such an opportunity. Call me a fool.
While it is true that those industries do benefit from increased activity during the Games, the multiplier effect fails to capture the economic activity that the Games destroy. If locals attend the events, their disposable incomes have not changed, so any money they spend requires them to cut elsewhere.
PSG, the local football club, might hemorrhage season ticket holders (especially with homegrown, global megastar Kylian Mbappé dribbling his way to Madrid), escargot sales might plummet, haute couture might have less allure (here’s your opportunity, Joe Fresh!).
Better, then, that tourists attend the Games, right? Wrong. Hotel space in Paris, the world’s top holiday destination, is finite and already has some of the highest occupancy rates in the world, especially during the height of summer tourist season. The late Canadian comedian Michael MacDonald once said, “You’re late or not late; you can’t be more late.” Hotels are full or not full; they can’t be more full.
Net tourism levels won’t increase by much. For every Olympic tourist that Paris receives, it must be displacing another non-Olympic tourist who is now going to Italy or Greece. The net benefits of this Olympics-driven tourism are much less than what politicians claim.
And, even if you can manufacture space for extra tourists without adding to hotel capacity, say converting homes into temporary Airbnb places, what is the economic cost of that? How many locals will race out of town and how many businesses will close or advise their employees to work from home to avoid the traffic and security chaos that will engulf the blocks surrounding the stadiums?
Cost overruns are also a factor in these calculations. A recent S&P Global Ratings report said that these Games will come in “only” 25 per cent over the initial budget. Bravo!
What the report does not say is that these Olympics will be the sixth-most expensive Olympics ever, so the “slight” cost overrun is only because Paris set aside a huge amount to begin with, not because of its frugality and efficiency.
Another often-made claim by proponents is that hosting large-scale events can be the impetus to develop long-term infrastructure projects. Yet, if these projects are economically sound, they are sound independent of hosting a two-week event. The harsh truth is that such projects are often not economically sound.
Who thought that splashing out $300-million on an aquatics centre was money well spent? Who thought the facility would attract a lot of visitors once it was built in a neighbourhood that has one of the highest crime rates and is responsible for almost one in five drug offences in France?
On top of everything, security, climate events, protests and Donald Rumsfeld’s “unknown unknowns” still lurk and all levels of government will be responsible for ensuring that Paris does not embarrass the International Olympic Committee (the IOC does that itself, thank you very much). There is a great cost to that, all borne by the host. The IOC had Paris sign contracts assigning it 100 per cent of the responsibility for cost overruns and unanticipated costs. The Games have not even started and there is already chaos on the soccer pitch as Moroccan fans ran through security blockades onto the playing field to protest a late goal by Argentina.
Which brings us to Canada. In 2018, Toronto politicians estimated that it would cost $30-million to $45-million to host its portion of the World Cup, but as recently as February, their forecast had increased to $380-million. Even grocery bills have not risen that fast.
Vancouver thought it could pull off its portion of the event for $230-million in January, 2023. A little over a year later, it was hoping to keep it under $580-million. Let’s not forget that we are still two years out, so these costs are sure to continue to rise because the actual work on the stadiums and surrounding infrastructure has not been completed yet.
A smaller-scale soccer event, the Copa America, recently ended when fans and players rioted in the stands in Dallas and another group of fans (some without tickets) nearly caused a stampede in Miami as they rushed the entrance gates and climbed through ventilation shafts to access the stadium. I am sure that FIFA officials have already told Vancouver and Toronto organizers to increase their security budgets, numbers that have yet to register in the official costs. The only stampede that this country wants broadcast to the world is the one every summer in Calgary.
As for the infrastructure itself, improvements to BC Place and BMO Field are money wasted. FIFA insists on natural grass of the highest quality to support its pampered athletes and to ensure top performance. Understandable, but have any FIFA officials spent any time in Canada during the winter? What do they think will happen to that grass when the circus leaves town? Will it thrive in indoor and aging BC Place or under metres of snow in outdoor BMO Field? Or will it just get ripped out and replaced with the existing turf (BC Place) and lower-quality hybrid grass (BMO Field) that is already there?
The mayor of Vancouver, a recovering investment banker and private equity guy, sounds as delusional as his Parisian counterpart. Ken Sim said that hosting seven World Cup contests would be, “bigger than anything that we’ve seen in our city. We’re getting the equivalent of 30 to 40 Super Bowls.” Yet when pressed to explain, he backpedalled like a defender trying to keep pace with a Messi offensive push and said it was not his job to crunch numbers. (If it’s not his, then whose is it?) John Tory, the former mayor of Toronto, called it “a good investment [that would] put Toronto on the map.” Yeah. If not for hosting a few matches, the Greater Toronto Area would have remained one of those well-kept secrets, home to only 2.5 million immigrants coming from every corner of the Earth.
The only politician to analyze the situation correctly is the current mayor of Toronto, Olivia Chow, hardly the advocate for sound budgeting. She recently said, “I didn’t sign this deal … I’m saddled with it.” And therein lies the problem, whether in Paris or in Vancouver and Toronto. Once you sign on to host, it is humiliating to hand it back when you realize you are in over your head. It is the ultimate shell game, where you are promised one thing and given another. Only Denver, awarded the 1976 Winter Olympics, had the strength to hand them back.
That year, the Summer Olympics were held in Montreal, another global city home to a large immigrant population. Its politicians claimed that it would put Montreal on the map, generate billions in revenues and barely cost the taxpayer a cent. Almost 50 years later, its eyesore of an Olympic Stadium stands empty, unloved and essentially unused for the last 20 years, a testament to the true benefits and costs of hosting large-scale sporting events.
The current provincial government just approved a taxpayer-funded $870-million roof repair so that it can sit unused for the next 50 years. How did the politicians pull off that trick? Simple. They said it was worth it because of the billions in tourism and other (unnamed) economic benefits it would bring. As they say in Montreal or Paris, plus ça change; as I say to any city thinking of hosting a large-scale sporting event, caveat emptor.