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  • When the final games were played in the 2016 Rio Olympics, it was

  • one of the most expensive summer games ever. In 2018, it was

  • estimated that the total cost was over $20 billion, far beyond

  • the Rio organizing committee's initial estimate of $2.8

  • billion. Rio had big stadiums, impressive athletic villages and

  • top of the line training facilities, all of which

  • significantly impacted the game's bottom line. But that big

  • spending didn't just end with the cost of just hosting the

  • games. The city of Rio had to pay for a new subway lines or

  • renovated shipping port, a doping testing lab and

  • environmental cleanup costs in the Guanabara Bay. But just

  • seven months after the games, the once grand Olympic venues

  • look like this. These crumbling facilities left vacant are the

  • byproduct of a city struggling with debt and colossal

  • maintenance costs, often billions of dollars in overrun

  • costs. Most of the facilities built for the Rio Games were not

  • supposed to last longer than the lifecycle of the games itself.

  • But the change in local government left the venues in

  • limbo, when to be used or dismantled.

  • Now the question of the venues and especially those that are

  • that are still up there in the park. We're not supposed to be

  • there. We're supposed to be dismantled

  • cities going over budget when hosting the Olympics isn't

  • unique to just Rio. According to the Council of Foreign Relations

  • since 1960. Every Olympics all significant overrun costs, all

  • except one, the Summer and Winter Games have struggled to

  • stay within their estimated costs of hosting the Olympics.

  • Winter Games have done a better job of managing that. However,

  • the Sochi games was an outlier. And economists argue hosting the

  • games does very little for the betterment of a city.

  • If you're looking at this as an investment, you don't want to

  • make an investment something where you have a one chance at a

  • 10 to have the outcome that you're looking for. That's not a

  • good investment. That level of risk is ridiculous to undertake.

  • Well, other experts believe that the games are vital for the

  • city's infrastructure for its future,

  • better roads, maybe it's Metro having a development of the

  • metro or it could be the Hoss having housing that's put in

  • place.

  • As overhead costs become a growing concern. several cities

  • withdrew their 2022 Winter Olympic bids. So how did the

  • Olympics grow from its humble beginnings into a massive and

  • expensive international event? And how can the Olympics prevent

  • even more potential host cities from withdrawing their bids? In

  • 1896, the Olympic Games became a truly international competition

  • as a modernized becoming what it looks like today, a bi annual

  • event with Summer and Winter Games. in its infancy, the gains

  • were relatively small, how cities would use public funds

  • for the games with ticket sales generating revenue to offset

  • costs.

  • Very first Olympic Games were in 1896. No women were able to

  • compete in those games and certainly over time now as we

  • look at his recent 2018 on the games look a lot different feel

  • a lot different.

  • This is Dr. Nicole Forrester. She's a former Olympic athlete

  • in track and field who competed in the 2008 Beijing games.

  • The Olympics is like the the pinnacle or the Everest of that

  • sporting experience, both for the athlete and also for the

  • viewers at home.

  • The Olympic Games didn't see a rise in popularity until the

  • evolution of telecommunications. The 1936 Berlin Summer Games

  • were famously the first to be live broadcasted. At the time,

  • only about 50,000 viewers were able to watch from a nearby

  • Stadium by 1948. The radius grew even wider for the London Summer

  • Games. 500,000 people watch live up to 125 miles away in the

  • 1960s. With the Rome games, they were the first genuinely

  • international broadcast, reaching millions worldwide. By

  • 1968. About 17% of the world's population had access to the

  • game's cost balloon. As viewership grew over the years,

  • more prestigious white whales were being built to showcase a

  • country's national pride, draw and tourism, create jobs and

  • bolster local businesses. Since the 1960 games in Rome, both

  • Summer and Winter Games saw over one cost on their estimates,

  • things began to get dire in 1976 with the Montreal games. Andrew

  • Zimbalist is an author and economics professor at Smith

  • College in North Hampton. One of the things he specializes in is

  • the economics of the Olympic Games.

  • Famously, the mayor of Montreal declared that the Olympics This

  • is before the games started, but he declared the Olympics can no

  • more have a cost overrun than a man can have a baby. Well, it

  • turned out that the Montreal Olympics had a cost overrun that

  • was almost tenfold over the initial price.

  • The Canadian government shelled out $1.5 billion in overhead

  • costs in the Montreal games well over their estimated cost of

  • $120 million. The Canadian government finally paid off that

  • debt in 2006.

  • At that time in Canada, we were under a cultural war of sorts.

  • The other issue that happened is the price of steel had

  • skyrocketed. And then the year before the games are hosted, you

  • had workers walk off on a strike, which then cause more of

  • a delay, and then again added to the cost itself of posting these

  • games.

  • By 1984, no country wanted to host the games, only the United

  • States kept their hats in the ring for the 84 games in Los

  • Angeles, it became the first and only Summer Olympic Games to

  • have an operating surplus of $215 million. The reason as the

  • only bidder, Los Angeles had the leverage to negotiate its

  • contract with the IOC. And the infrastructure was already

  • there,

  • together with with the fact that Los Angeles, the second largest

  • city in the United States, arguably the entertainment

  • capital of the United States, meant that they didn't have to

  • do hardly any building, basically, everything was in

  • place, little building had to do but not very much.

  • There was such a surge in revenue that was derived through

  • the media coverage itself that actually went straight to the to

  • the Los Angeles games. And so like the IOC realized, okay,

  • now, we should, we should make sure that we make sure that we

  • get that big cut of the media revenue that's generated.

  • The IOC saw the ELA games as an opportunity to restructure their

  • television revenue distribution. Before the IOC auction its TV

  • rights to the games local hosts, were able to keep about 90% of

  • the revenues generated. In the 1980 Moscow games, the IOC only

  • took about 10% of the revenue. But all that changed in 1984

  • when the IOC took 33% of the LA games TV revenue. Over the years

  • broadcast revenue for the IOC increased the 9084 Summer and

  • Winter Games generated $287 million and $103 million,

  • respectively. Fast forward to 2016 and 2018, Rio generated

  • $2.9 billion, and Pyongyang generated $1.4 billion. But it

  • wasn't just the TV revenues that skyrocketed. So did the

  • percentage of the IOC takes broadcast rights revenues for

  • 2016 games in 2018. Games were 73%. over its lifetime, the

  • Olympics has grown as more and more nations participate and

  • more sports are added creating the massive competition we see

  • today

  • we're seeing there's more sports that have been added to the

  • program plan. So we look at the Games in 1896. And how many

  • sports were there and versus what it's gonna look like for

  • Tokyo it is night and day difference in vastly larger for

  • for these games.

  • As the games become more expensive, the price tag of

  • hosting the games becomes more of a burden. Before host city

  • begins constructing elaborate venues, putting in a bid to host

  • the games itself can cost 10s of millions of dollars.

  • All these cities would come together and would bid and then

  • it would be narrowed down to say like five other cities and then

  • you've got people within the IOC visiting during these site

  • visits, help decide like what where we're going to go and then

  • it narrows down to like two cities and then so on. This used

  • to be a very costly process to do. With no Garrett with a very

  • small guarantee that that city would be successful through the

  • bidding process.

  • Just take the Tokyo bid to host the 2016 Summer Games $150

  • million was spent by the Japanese Olympic Committee for

  • expensive consulting firms city planning, event organizing

  • architecture firms and much more. Eventually, that bid went

  • to Rio. However, Tokyo did have a successful bid for the 2020

  • games, but spent an additional $75 million for an update and

  • valuation and planning. winning an Olympic bid comes with a

  • steep price tag,

  • largest single facility it has to get built. This is the

  • Olympic Village. This is for the Summer Games. This is a village

  • that has to accommodate 11,000 athletes and about 5000

  • additional coaches and trainers. In addition to having the

  • lodging. You need to have athletic training facilities,

  • you need to have tracks you need to have weight rooms you need to

  • have other facilities. You need to have restaurants, you need to

  • have entertainment facilities for the athletes, you need to

  • have clinics, medical clinics. So you're actually building a

  • village. You know, this is a full full service village.

  • So what else needs to get built?

  • Then you have the Olympic Stadium infrastructure road

  • infrastructure telecommunications,

  • infrastructure, also potentially billions of dollars their

  • security costs these days easily run one and a half to $2

  • billion.

  • While both the summer and winter games are expensive to host. The

  • Summer Games are typically more costly and expensive. There are

  • more athletes More competitions and events that require more

  • specialized facilities. Winner games usually stay within their

  • cost estimate threshold with minimum overrun costs. However,

  • the Sochi games was an outlier and peaked an estimated $40

  • billion in 2014. And it's over on costs coming in at a total of

  • $51 billion

  • since 1980. The average cost overruns for hosting the games

  • is 252%.

  • For the Rio Games, it was estimated in 2017. That $13.1

  • billion went into hosting the Olympics, well over its initial

  • $2.8 billion budget. economist, however, put the actual numbers

  • somewhere north of $20 billion in 2018. An estimated $2.06

  • billion actually went towards sports related venues, while an

  • estimated $8.2 billion went towards legacy builds, or builds

  • intended to live well beyond the Olympics three week lifecycle,

  • legacy builds went towards things like an updated

  • infrastructure highways a renovated port, and cleaning the

  • polluted Guanabara Bay. Of that $8.2 billion. A delay riddled

  • subway line cost an estimated $2.98 billion and the renovation

  • of Porto malamala was an estimated $4.2 billion to meet

  • the iocs requirement of 40,000 rooms for accommodations, where

  • you had to lay out the construction of an additional 15

  • to 18,000 rooms, intended to be used after the games as luxury

  • apartments. nearly five years after the games, most of those

  • long term use buildings sit vacant. They're also expensive

  • to maintain about $14 million a year it goes into maintenance

  • costs for real venues. Real screams Moroccan a stadium built

  • in 1950, which held the opening ceremonies of the 2016 Summer

  • Games had its power cut off in 2017. After falling behind on

  • payments during a tendancy dispute from the games. After

  • two months of no power and left vacant, the stadium reopened for

  • football matches and concerts

  • in all cases. And in all cities, not just Rio reason why the

  • venues didn't exist before the games. This because it didn't

  • make sense to build them economically. Nobody wanted

  • to build them. The IOC has an active changes for cities who

  • wouldn't have much of a use case for certain sports venues. In

  • the future.

  • One of the simple change is you don't need to build venues

  • anymore. Either they needed by the community in the long term,

  • you don't build. And if you don't build you have different

  • choices, you can have temporary structures which work extremely,

  • extremely well in the majority of sports right now. Or go

  • abroad.

  • Real isn't alone with its overspending. Government spend

  • billions of dollars on these extensive upscale facilities,

  • hoping for job growth or revitalizing infrastructure to

  • become a new tourist hub. However, this big spending on

  • legacy builds and infrastructure for the future is outside the

  • scope of requirements from the IOC to host the games.

  • where there have been problems in the past is some of the

  • venues that were designed to be especially for for the after

  • games, and too expensive. And let's be clear, this is

  • absolutely not something we are demanding what we are doing now,

  • to make sure that that we don't have these problems they will

  • not repeat is that at the time, when we are speaking about the

  • future gains like it is the case now in Brisbane. We decide

  • together about the venue the master plan, what makes sense or

  • what doesn't make sense, so that we can not be accused of any

  • problems in the long run.

  • While Rio invest heavily on infrastructure that didn't pay

  • off as expected. That doesn't always mean that big spending is

  • the death knell to a city's future. Things like a newly

  • established metro line can pay off in the long run. Just take

  • the 1976 Montreal games,

  • one of the greatest things that the Montreal has has a legacy

  • from the games is the metro system and aisle council

  • committees that are bidding to host the games to speak less

  • than the sports themselves because the general public isn't

  • gonna all have access to like the sporting venues. But it's

  • more like the field that day in and day out. A resident of that

  • city can really experience the idea of new business

  • development, new technology, better roads, you name it,

  • whatever is required for that city has come into place because

  • of the games and but for the games, those things would not be

  • in place.