Moisés Naím / World Energy & Oil

Every four years, the talking heads on TV ritually remind us that the modern Olympics were launched in 1896 with the lofty goal of furthering world peace. There’s little evidence that they do that, or even that they lessen diplomatic tensions between countries in conflict. As the back-to-back boycotts by the United States and the Soviet Union showed in the 1980s, the Olympics can even do the opposite, becoming more grist to the mill of diplomatic tension.

WHITE ELEPHANTS AND BUDGET OVERRUNS

Cost-overruns are almost as much a part of Olympic tradition as the lighting of the torch. The tradition started in 1976, with Montreal building a futuristic stadium with a state-of-the art retractable roof that, alas, wasn’t designed to support the weight of snow and never actually worked. First budgeted at USD 770 million, the stadium ended up costing twice as much, and was financed with a 30-year bond that Montrealers only finally paid up through their taxes in 2006, giving the stadium its sardonic local nickname: the Big Owe.

It was only the first in a long tradition of Olympics White Elephants: gleaming venues for sports like indoor cycling and swimming are expensive to keep up and impossible to fill up outside the one-time global spotlight the games bring. From Rio and Athens to Sarajevo and Beijing, Olympics venues go to seed directly after the games with disturbing regularity. Turns out spending lavishly on state-of-the-art infrastructure you’ll only ever use once is not the most fiscally prudent thing to do. Bent Flyvbjerg and Alexander Budzier, researchers at Oxford University, have found that all the Olympic games (from 1960 to 2020) have suffered from high cost overruns, averaging 172 percent.

THE IMPACT OF ATHENS 2004 ON THE EU

Surely, though, that’s only a problem for the unlucky citizens of cities whose leaders set their sights on Olympic glory, isn’t it? Think again. When the historians of the deep future look back on our time, what’s likely to stand out for them is the way the 2004 Summer Olympics in Athens ended up destabilizing the greatest integration project of the last hundred years: the European Union.

It’s easy to forget now, but it was the 9 billion Euros it cost Greece to host the games that tipped Greek finances from “problematic” to “catastrophic.” By 2004, the games had sent Greece’s fiscal deficit to 6.1 percent of GDP, more than double the 3 percent that European rules set as an upper limit. The spending—much of it on White Elephant facilities that were abandoned directly after the games—set the stage for the deep fiscal crisis in 2008- 2010 that destabilized the Euro, wreaked havoc on European debt markets and put an end to the golden age of European integration, eventually setting the stage for Brexit, to say nothing of its shocking impact on the wages and pensions of ordinary Greeks. In the long history of Olympic spending folly, it’s hard to imagine how Athens 2004 could lose the place of honor.

Perhaps the Olympics reveal the character of their hosts more than transforming them. Some venues have gotten tough on cost overruns and become adamant about making realistic plans for the venues after the games. In Vancouver, the 2010 winter games were paid almost entirely out of private funds, and the infrastructure that was built was infrastructure that was already known it was needed, regardless of the Olympics. The games turned a profit and left no unsightly messes behind. London’s 2012 games and Turin’s 2014 winter games also get talked about as Olympics without boondoggles.

THE STRATOSPHERIC COSTS OF SOCHI 2014

But in kleptocracies, the Olympics open alluring possibilities for the kleptocrats. The infamous 2014 Winter Games in Sochi, Russia, whose ultimate cost of $55 billion was 4.5 times the initial estimate and more than eight times as much as the next most expensive winter games. Russian taxpayers were on the hook for 97 percent of that and continue to dish out $1.2 billion per year to finance the debt incurred and to maintain facilities unlikely to ever be filled again in working order.

Of course, not all of the $55 billion were spent on venues. $10 billion, for instance, was used to finance a gleaming new rail and road link between the town of Sochi and the site of most of the downhill events, some 48 km. away. Yet researchers have long known that building this kind of infrastructure in the context of the Olympics reliably sends costs skyrocketing, knowing the government is up against a hard deadline massively tips the balance of power in negotiations to the side of contractors, who are free to profiteer on the contracts. In Russia, where lining the pockets of regime-backed cronies was the point, this dynamic was treated almost like a feature, rather than a bug. In the event, non-sports infrastructure for the Sochi games ended up costing 347 percent of the initial estimate.

TOKYO, SUCCESS OR FAILURE?

Will Tokyo be remembered as one of the successes, or as one of the failures? Costs have been a problem. Despite a drastic reduction in the ambition of the main track and field venue, the cost for sporting facilities is already twice what was originally forecast, coming in at $15 million. That’s more than any other summer games. Overall costs—including infrastructure upgrades—are expected to come in at $28 billion, also a summer record. The Covid-19 pandemic has greatly added costs and the logistics it requires are immensely complex. Professor Jules Boykoff, who has written four books on the Olympic Games, has alerted that in Japan “polls find that about 80 percent of the population opposes staging the Olympics amid a global pandemic. Japan’s vaccination rate lags behind those of other developed economies, with vaccines for people under age 65 rolling out in full force only a few weeks ago. The Games will feature more than 11,000 athletes from more than 200 countries; they’re not required to be vaccinated.”

And if experience serves as a guide, it’s unlikely that the reputational boost the nation enjoys from hosting the games will be worth anything like that enormous sum of money it will have to spend to host the games. Successful, affordable Olympics that leave a positive legacy for their host cities are the exception, rather than the rule. The risk is that democracies will find it increasingly difficult to justify the expense to their voters, pushing more and more games to authoritarian nations. The solution here is almost too obvious to need stating: picking a single permanent site for the games, perhaps in Greece, by Mount Olympus, or in a neutral, wealthy, temperate country like Switzerland, already home to the International Olympic Committee.

This call for a permanent Olympic site gets floated anew every few years, but never seems to get any traction. Perhaps it’s just one of those ideas too obviously sensible, fiscally prudent, and environmentally smart to risk ever being actually implemented.