Russia’s record $51 billion spending on the Sochi Olympics and the expenses needed to bid for the games is scaring away potential hosts, according to one of the International Olympic Committee’s main sponsors.
The price of the Sochi games has deterred cities even though much of the money went toward projects not directly linked to the event, said George Hamilton, the outgoing vice president of Olympic operations at Dow Chemical Co., one of the IOC’s 10 biggest partners.
“There’s the perception that it’s a big number and so the the voting public tends not to want to support that,” Hamilton said during an interview in Rio de Janeiro, host of the the 2016 summer games. “For the future of the brand of the Olympics I think it’s important that we really do some work on the entire economic model.”
Oslo this month became the fourth city to drop out of the running to host the 2022 winter games, leaving only Beijing and Almaty, Kazakhstan. Proposed bids from Munich and St. Moritz- Davos were rejected in public votes. The IOC is reviewing the bidding system to attract more cities and be less of a drain on finances.
Organizers in Rio changed the way they present costs related to the games following nationwide protests in 2013 over the $15 billion price of hosting this year’s soccer World Cup. The Olympics will cost about $20 billion, and organizers have divided expenses into three segments: staging the event; structures needed to host the games and projects like new railway and bus networks that the city would have needed even without the games.
Olympic host cities often make infrastructure choices based on games venues, and those costs should largely be included in the final bill, said Andrew Zimbalist, an economist at Smith College in Northampton, Massachusetts, and author of 12 books on the business of sports.
Rio’s decision to build rapid bus lanes linking the airport with the four Olympic clusters doesn’t address more pressing transportation issues in Brazil’s second-biggest city.
“It’s certainly not the most useful way of spending infrastructural dollars,” he said by phone.
Just bidding for the games costs “several million dollars,” according to Hamilton, and means that several potential hosts won’t even enter the competition. Istanbul last year failed for the fifth time when it was defeated by Tokyo to host the 2020 Summer Olympics. The Turkish government has spent millions preparing complicated bid documents to meet IOC standards and hired foreign consultants that specialize in sports bids.
The sum needed to deliver the Olympics such as building the athletes’ village and sporting facilities doesn’t vary much from games to games, Hamilton said.
“But when you get that number reported with the kind of investment that was made in total in Russia the perception becomes: that’s what it takes,” he said.
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