Londoners are greeting the Olympics with all the enthusiasm of a child awaiting a root canal. The government has warned those unable to book coinciding holidays not to travel anywhere beyond walking distance of home as Communist-style “Olympic lanes” whisk dignitaries past the interminable traffic the Games cause. During the Olympics, London will be run under a curious kind of corporate martial law. Thousands of troops will handle security to make up for private contractor G4S’s staffing “shambles”; missiles have been placed atop public housing; an Orwellian “brand police” is sweeping the city to ensure no businesses other than 11 official sponsors use words like “gold,” “silver,” “bronze” and even “London.”
Putting up with this misery is supposedly justified by the commercial windfall, tourist bonanza and enhanced prestige the Olympics create. One Tube station poster depicts a man who, having identified alternative transport routes, is jauntily reading a newspaper as he whizzes past an escalator logjammed with athletes: The headline is “London 2012 Games a huge success, save British economy.”
But as Wednesday’s woeful economic data confirmed Britain’s slide into a double-dip recession, it’s worth questioning whether hosting the Olympics is worth the $14.5 billion cost. In strict financial terms none ever actually make money. Some host cities have turned profits since Los Angeles was the first to do so in 1984, escaping the crippling public debt incurred by cities like Montreal and Vancouver. But, as a recent report by Goldman Sachs points out, “most countries … have treated the cost of constructing facilities and infrastructure, together with security and other ancillary costs, as being separate from the cost of running the Games themselves.”
In other words, it’s possible to declare an operating profit while incurring huge losses on major expenditures that may not be recovered for decades. Beijing trumpeted a $171 million profit made on operating costs, while neglecting to mention the $40 billion-dollar infrastructure buildup it made ahead of the 2008 Games. The $5 billion to $6 billion the London Olympics earn will not even begin to cover the cost of infrastructure and security alone. Even if it did, half of revenue is split among International Olympic Committee members.
Like many major sporting tournaments, the Olympic Games often create embarrassing white elephants. Beijing’s Bird’s Nest remains largely unused. The Olympic stadium in Montreal proved such a drag on city finances that the Quebec government imposed a $2 billion tobacco tax to help pay it off – and that took 30 years. Facilities often have no conceivable use beyond the two weeks of the Games, like Athens’ softball stadium and sailing marina. Since the world seems likely to remain in the economic doldrums for some time, chances of future facilities being purchased or converted are low: The London village already looks like a combination of a garish British seaside holiday resort and Pripyat, the Ukrainian ghost town abandoned after the Chernobyl disaster.