Are Excessive Olympic Bidding Costs Driving Host Cities Away?

The bidding to host the Olympic games is a lengthy, drawn out process with initial invitations sent out as much as 10 years before the event is scheduled to take place. Bidding cities also have to shell out a hefty amount just to apply with a $150,000 price tag on the application fee and a further $500,000 once their application has been accepted. These fees are the ensure that the bidding cities are serious about hosting the games and have the funds to do so.

The recent Rio games that just ended in August had a budget set by the Rio Organizing committee of $2.25 billion USD for the planning and operating expenses alone, this did not include the cost of building and running the venues and infrastructure though.

For the 2016 Olympics, four out of seven applicant cities landed in the IOC’s shortlist. Chicago was one of them and considered a serious contender, despite two unsuccessful bids for the Summer Olympics in 1952 and 1956. In the one and only time Chicago was chosen as a venue, for the 1904 games, the games were moved to St. Louis, MO. The city was holding its World Fair within the same period as the Olympics and demanded for the IOC to award the Games to them. The IOC founder and president Pierre de Coubertin reluctantly acquiesced but to show his displeasure, did not attend the Games.

The 1904 Games would have been a significant event for Chicago, since it was the first Olympiad to be held in the US. Could it have been an omen for things to come? Its 2016 bid failed too, following the course of its two previous attempts. But if it’s any comfort, the St. Louis hosting was a dismal failure. Coubertin even made an un-Olympic statement about it, saying “I had a sort of presentiment that the Olympiad would match the mediocrity of the town.”

Chicago’s 2016 bid was accepted on September 2007 and eminent personalities led by no less than US President Barack Obama, a native Chicagoan, began their campaign for the city in earnest. Whether Obama, along with Oprah and Michael Jordan, were significant factors to its failed bid, is still up in the air. What’s clear is, media personalities  who had given their all-out support to The Windy City’s proposal are now one in saying they’re relieved and elated  that the city lost. The No Games Chicago movement, which claims to have been the inspiration for the Boston and Hamburg opposition to their cities bidding for 2024, is on “I told you so” mode. They had been opposed to the city’s bid for the Games from Day 1, citing the astronomical cost and financial drain on the city’s treasury. Its unrealistically low bid of $4.2 billion would have put the city in debt in the years to come, the movement claims, citing the Vancouver and London post-Olympics predicament. Afterwards, it was learned that Chicago had spent nearly $80 million for the bid. Then Mayor Richard M. Daley, the bid’s strongest supporter and who was on his sixth term as mayor, declined to run again when his term ended in 2011. Many believe Chicago’s shocking bid loss was central to his decision to retire.

The Olympic bidding process speeds up 24 months before elections. Once a city is recognized as an applicant by the International Olympic Committee (IOC,) it has two years to prepare its bid before the IOC makes a decision on the winning bidder. It has to create a presentation to show to the IOC why it is the most qualified to become a host city. The preparation that builds up in the next two years is an elaborate and meticulous program that details the city’s plans for the Games. It includes several aspects such as the infrastructure; accommodations for the players and teams from the different countries and for visitors who come specifically for the Olympic experience; a reliable mass transport system that will carry the participants and spectators to the venues; the highest level of security and where it gets its funding.

Creating a worthy presentation that will amaze the decision-makers and hopefully influence them to vote for the bid city needs skilled consultants and professionals in the different disciplines. And these experts charge notoriously high fees which the cities are willing to pay. It is not unusual for applicants to host the Olympic Games to rely on those consultants and professionals to support their application, and the IOC even encourages this practice. Take for example, Boston’s cancelled bid for the 2024 Olympiad. Pressed for transparency, the Boston bidding group released its proposed funding, including consultants’ fees. The total amount to be paid for consultancy companies is $124,000 per month and their contract is for the duration of several months. These are consultancies for marketing and PR, communications works, grassroots and community outreach, political and media consulting, strategies, government outreach and fundraising work.

The amount does not include the fee for former Massachusetts governor Deval Patrick who will get $7,500 per day to promote Boston to the IOC members. The Boston 2024 staff of ten people will get a total salary of $1,390,500. And in spite of its cancellation, it still had a debt of over $4 million. A major factor in its decision to cancel is the lack of public support and loud protests against the city’s move to bid.

For the 2020 Games that was awarded to Tokyo, no American city joined the bidding due to an ongoing dispute between the IOC and the US Olympic Committee.

On consultancy fees, Japan is currently under investigation for depositing over $2 million in a dubious bank account in Singapore. Japan Olympic Committee president Tsunekazu Takeda has stated that it is legitimate payment for consultants’ fees for the planning and execution of its presentation for the 2020 bidding, which Japan finally won because of this consultants’ fee as a result. But overzealous French police want to pursue a possible link with the son of Lamine Diack, discredited ex-president of International Association of Athletics Federations (IAAF) who has been charged with accepting bribe money to cover up the Russian athletes’ doping. Diack’s son, who is also facing charges, is a close friend of the owner of the bank account. Investigations have not turned up any evidence of wrongdoing but the IOC is awaiting final results from the French magistrates and JOC’s own probe.

Hints of bribery and corruption always assail any Olympic bidding. Jerry Colangelo, a Chicago native and a member of the 2016 bid team, now claims he believes the elections were rigged in favor of Rio de Janeiro. Rio itself is suffering from corruption issues involving its big construction businesses that have been given Olympic venue projects. The Olympic movement had suffered a blow to its image with the 2002 Winter Olympics scandal.

For the 2024 bidding, Paris and Los Angeles are two of the four contenders left, after Boston, Toronto and Hamburg withdrew their bids. The cities have come up with low-cost plans, in accordance with the Olympic Agenda 2020 that changed the rules of the bidding and planning processes. Paris will have minimal constructions, since 95 percent of the requirements will utilize existing venues. Total cost is pegged at $9.3 billion (6.2 billion euros) for infrastructure and operational expenses. Los Angeles has put forward a potential total budget of $6 billion including cost overruns. The Organizing Committee has said that $1.7 billion of the amount would come from private-sector investors. LA is able to reduce expenses because it will utilize current venues, of which there are many. The Staples Center, the LA Coliseum and university campuses for athletes and media housing are only some of them. The winner for the 2024 Games will be announced in Lima, Peru on September 2017.

But nothing tops the 2014 Sochi Olympics that had actual costs running to $54.9 billion , up 4.5 times more than its planned $12.3 billion. Overpaid but dismal accommodations and the overall poor conditions after extensive preparations suggest massive corruption in the infrastructure aspect. Beijing 2008 ranks second in the list of most expensive Olympics, with the city spending around $44 billion. The billion-dollar stadiums that are now white elephants raise the question of the wisdom of Beijing holding the Olympics. The same scenario is also playing out in cities that have won the bid for having the games in their areas. Considering the above cases, it might be one of understandable reasons why Tokyo won the bidding race, which reduced the estimated costs to $17 billion by using existing facilities for a certain amount of the infrastructure.

Fortunately, the movement has a president who is pragmatic and pro-active. President Thomas Bach, seeing that cities are running away from the Olympic biddings, has instituted changes to make the bidding process friendlier, less costly and more sustainable, and one that leaves a legacy to its host city. The legend that is the Olympics will remain relevant if these changes are followed.