The Olympics and the FIFA World Cup – can we afford it?

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At the end of the Tokyo Olympics, the enthusiasm for the Olympics has persisted, but there is a downside to accepting Brisbane’s bid for 2032.

This will be Australia’s third time hosting the Olympic Games; the first, in Melbourne in 1956, was followed by the highly successful Games in Sydney in 2000. Graham Richardson, a former Labor Minister, was chairman of the Sydney 2000 committee. He recently commented on the success of the games, but failed to mention the downward cost of holding the event, currently budgeted at $5 billion.

There is now pressure to also apply for the World Cup football competition in 2030-34.

The International Olympic Committee was founded in Paris in 1894, which led to the first Olympic Games in Athens in 1896 held as a small event with 14 nations involved. As the number of events and participants increase, the cost of hosting the Olympic event and the losses incurred also increase; the worst on record was the 1976 Montreal Olympics, which went 720% over budget. Expecting a small profit of US$124 million, it produced debt of US$1.5 billion and took 20 years to repay.

Other economic disasters include the 1992 Barcelona Olympics (260% over budget) and the 2016 Rio Olympics ($2 billion and 350% over budget), loss average incurred is a cost overrun of 213%. The last Olympics to make a small profit were in Atlanta in 1996. Economists have struggled to establish a long-term advantage, local or national, without a demonstrable change in business, employment, tourism or the lodging.

The 2000 Sydney Olympics were budgeted at around A$650 million and cost around A$2 billion (about $3 billion in today’s money, the deficit was only recently paid off). Some of the facilities that were built went on to lie idle or underutilized, leading to ongoing maintenance costs. The New South Wales government recently considered demolishing and rebuilding the main stadium, Stadium Australia, but after a backlash from the public, it will now attempt its refurbishment.

All decisions are made by the International Olympic Committee; IOC membership has steadily increased to currently 105 members and 44 honorary members, with an executive of 15. They organize the Summer, Winter, Paralympic and Youth Olympic Games. They are based in Lausanne, Switzerland in a new headquarters completed in 2019 at a cost of US$156 million. They are all volunteers in theory who give their time out of altruism, the reality is somewhat different. An analysis in 2018 revealed that they are paid daily to attend meetings, with committee members on 900 USD per day and ordinary members 450 USD. Plus, they get business class travel, free hotel and meals, and free car rental. President Thomas Bachreceived compensation from 260,000 plus 300,000 expenses and a supplement 100,000 to cover Swiss taxes (total over A$1 million). There have been regular vote-buying scandals, the worst in 1998 when 6 committee members were expelled.

There are disturbing parallels with the FIFA World Cup, organized by the international governing body, FIFA (Fédération Internationale de Football Association), founded a few years after the IOC in 1904 in Paris. Initially it had 7 members, now expanded to 209 members, (more than the UN). It is also headquartered in Switzerland and, like the Olympic Committee, derives its revenue from television licensing and sponsorship, estimated at $4.6 billion in 2018.

Gianni Infantino has been president since 2016. Sepp Blatter, his predecessor, was also involved in IOC bureaucracy before becoming FIFA president, a post he held from 1998 until he was removed from office. functions for allegations of corruption (of which he was later cleared). He and his European football equivalent Michel Platini were later acquitted of fraud. At that time, several other senior leaders were purged, but concerns remain. The president oversees 7 vice presidents and 22 standing committees. The organization oversees billions of dollars in revenue, with concerns over limited financial transparency. As with the IOC, its main function is to promote and improve the game.

The cost of hosting the World Cup is substantial; in 2014, Brazil cost US$15 billion, in Russia in 2018, US$12 billion, and the latest in Qatar in November this year, reportedly cost a staggering US$200 billion. A full economic assessment was made following the Japanese event in 2002, it suggested a loss of US$9 billion without continued improvement in tourism. The last financially successful tournament was held in Germany in 2006, when a profit of US$200 million was made.

Australia’s initial bid for the 2022 World Cup cost $46 million of taxpayers’ money and secured a costly one-vote result. Now-disgraced FIFA president Sepp Blatter has said that “Australia doesn’t stand a chance”, possibly because the country couldn’t compete with other countries’ bids for broadcast rights ( the money went to FIFA); there were again rumors of vote buying. The eventual winner, Qatar, offered 100 million dollars to FIFA to organize the event.

The 2026 event will take place in the United States and Canada; we are bidding again for the 2030 or 2034 World Cup, having secured the rights for the women’s competition (with New Zealand) in 2023. Budget discussions, both for the bid and for the event, require careful consideration .

The bloated governing bodies of the IOC and FIFA seem to have lost sight of their original intentions to promote the sport. They have become self-serving organizations, which are financially rich from sponsorships and advertising, but they leave the ever-increasing bills to the cities (and taxpayers), who now volunteer to host the events.

There is no doubt that they provide television advertising revenue, but can and should the taxpayer subsidize these show-boating events that have no long-term benefit to the entertainers or the global sporting community ?


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