Race to hold the Olympics dwindles as cities count the cost of the games

It is supposed to be the greatest honour you could bestow on a city: the chance to showcase the splendour of your sites, and welcome the world to your home.

But hosting the Olympic Games is increasingly being seen as an unnecessary burden and, with a decision on the 2024 games made later this year, some are beginning to wonder whether there will even be a real contest.

Three cities are vying to host the sporting spectacle: Budapest, Paris and Los Angeles. Hamburg, Rome and Boston have already abandoned their bids.

And the 2024 shortlist could drop down to only two this week, if the Hungarian government listens to the 260,000 people who signed a petition against hosting the Olympics in their capital.

The ever-more muted enthusiasm is part of a trend. Ten cities submitted bids to host the 2008 games, which eventually went to Beijing. The next round of bids was smaller: in 2012, London had to see off eight rivals.

The following contest was smaller still: six cities challenged Rio for 2016. The most recent contest, for 2020, featured only three – Tokyo, Madrid and Istanbul.

In Hungary a local political movement, Momentum, has gathered enough signatures to force a referendum on the matter, which has grown increasingly unpopular among Hungarians, according to a recent opinion poll.

Istvan Tarlos, the mayor of Budapest, told a news conference that if a referendum was called, he would "seriously consider" a proposal to withdraw the bid.

Of most concern, unsurprisingly, is cost.

Russia is thought to have spent $50 billion on the Sochi Winter Olympics - the most expensive in history. China is believed to have spent at least $40 billion on the 2008 Beijing games.

A 2012 study for the Saïd Business School at the University of Oxford looked at the sports-related cost and cost overrun for most Olympic games since 1968. From 1968 through 2010, the games had an average sports-related cost of $3.6 billion, inflation-adjusted. Then, all of a sudden, things took off. The last two Olympiads had an average cost of $16.2 billion.

In that time frame not a single Olympic games hit their budget: they had an average overspend of 167 per cent.

The cost overrun when Athens hosted the games in 2004, plus the debt it took on to cover it, played a role in weakening the country’s economy, which to this day is in deep crisis.

It took Montreal 30 years to pay off the debt it took on to finance the huge cost overrun of the 1976 games.

Proponents of the games point out a boost to tourism, and lasting improvements to infrastructure.

But the Athens, Rio and Sydney games all show how Olympic sites can fall into disrepair.

And while the benefits host cities can capture from broadcast rights, domestic and international sponsors, ticket sales, and licensing are significant - Vancouver made $1.58 billion in 2010, and London earnt $3.27 billion in 2012 – the are dwarfed by the costs of hosting. Vancouver paid $7.56 billion, while London’s games cost $11.4 billion.

Los Angeles is promising that the 2024 games would boost local economic output by as much as $11.2 billion and create more than 74,000 full-time jobs.

“LA is an ideal, low-risk host for the 2024 Games, and that we have the right plan in place to make sure that a winning bid brings a lasting Olympic legacy back to our city,” said Eric Garcetti, mayor of the city.

But an economics professor who has compared impact reports from previous Olympics with subsequent data warns that predictions usually fall short.

“When we go back and look, a good rule of thumb is to move the decimal point one place to the left,” said Victor Matheson, an economics professor at the College of the Holy Cross in Massachusetts.

LA’s bid team believe their games will cost $5.3 billion, a total they believe would be covered by revenue from sources such as broadcast rights, corporate sponsorships and ticket sales. Savings are being made by using existing infrastructure.

“I think the big issue boils down to how much they need to invest in infrastructure and facilities that may or may not pay off in the future,” said Robert Kleinhenz, executive director of research for Beacon Economics, which produced a report into the costs. “For LA 2024, there’s such limited amount of investment required up-front.”

Paris believes their games would cost $7 billion – they too are using existing infrastructure, having learnt from the costly mistakes of Rio. "Paris, as one of the world's most iconic and cosmopolitan cities, would provide a unique and stunning backdrop for the 2024 Olympic and Paralympic Games through its historic landmarks and breathtaking venues," said bid co-chairman Bernard Lapasset.

And yet, even the likely remaining two cities have concerns. Anne Hidalgo, the mayor of Paris, was initially skeptical about the cost – although she has since become one of the most enthusiastic proponents of the plan.

Last week some in France were angered by the announcement of Paris’s proposed Olympic slogan: Made for Sharing. The slogan, critics said, should be in French. The Academie Francaise went even further, saying not only was it the wrong language, but it was also widely in use - in adverts for pizzas and sweets.

Bernard Pivot, widely known for defending French culture, said: "French-speaking countries are going to be surprised and indignant that Paris, capital of the francophone world, bows down before a language that is not only that of Shakespeare but that of Donald Trump."

And in Los Angeles, some of the city’s officials are deeply concerned about the prospect of holding the games while Mr Trump could be still in power.

Following the president’s short-lived imposition of a travel ban on seven nations, officials from Los Angeles 2024 and the US Olympic Committee were forced to speak to Mr Trump’s officials to ensure Iran’s archery team would be able to travel to a World Cup event in Las Vegas last week (FEB 10-12).

Iran is one of the seven Muslim nations named in the executive order banning most citizens from those countries from entering the US. Derick Hulme, an Olympic historian at Alma College, described the first 10 days of the Trump administration as “a catastrophe” for Los Angeles’ bid, and said the new president could also set back other American bids for potentially more than a decade.

“I think the IOC is going to be very, very hesitant to select Los Angeles,” he said.

“Trump has this reputation for being unpredictable, and that’s not going to go well with the IOC. They’re not looking for problems. At this point they want to avoid uncertainty, and Trump makes a US bid a significant risk. The Trump administration is behaving in such a reckless fashion.”

But other Olympic analysts said such speculation was premature. The final decision will not be made until September, at a gathering in Lima. “It’s too early to know,” said Robert Livingstone, senior producer for the Toronto-based GamesBids.com.

“I don’t think it’s going to have a huge impact with the IOC. The IOC has done business with China, they’ve done business with Russia. I don’t think they’re going to have a problem with Trump.”