As Russia prepares to host the 2018 FIFA World Cup, the cost of the event that will see 32 teams compete across 11 cities from mid-June has soared. Russia has spent an estimated USD 11.8 billion preparing ̶ some USD 600 million more than originally expected. The payback is greater international prestige and visibility.
That Russia has bust its budget is unsurprising. Most mega events do. Yet a few have lasting social and economic benefits. The wisest hosts have planned mega events strategically to advance their development goals, putting a country or city on the map, turning it into a tourist destination and engineering the transport infrastructure needed to boost economic growth.
Realistically planning the potential benefits while limiting the cost is the key. “The sustainability of these international extravaganzas is increasingly important”, explains Mark Wilson, professor of urban and regional planning at Michigan State University. “We would argue that the event should be a vehicle to get somewhere else. To build infrastructure such as underground lines that take the people where they want to go or to regenerate areas of the city.”
It is an accepted fact that most mega events cost the host nations dearly, while the international organisers take most of the revenue. The 'Oxford Olympics Study 2016' found that from 1960-2016 all the games had cost overruns, averaging 156%, even without adding in the cost of new transport infrastructure. And on average, the Summer Games cost USD 5.3 billion and the Winter Games USD 3.1 billion.
The history of such events in the 70 years since the Second World War offers much for prospective future hosts to learn from – good and bad.
Barcelona: The 1992 Olympics is most frequently cited as an event that shows how to revitalise a city. Listing six ways that the Olympics transformed the city, Metropolitan Barcelona website includes: creating two miles of beachfront, rejuvenating an industrial coastal neighbourhood, building ring roads to reduce congestion and giving the city green spaces as well as water features. More generally, it credits the Olympics with “positioning the city as one of the world’s leading tourist destinations”, adding that “prior to the Olympics, there were approximately 1.7 million tourists in 1990, increasing by over six million over the next 14 years.”
Lisbon: Similarly, the Expo ‘98 in Lisbon used the event to reclaim an industrial site on the Tagus river – later renamed Parque das Nações – by building a metro line, major transport node and the new Vasco da Gama bridge over the Tagus. This investment was partly funded by EU funds.
Germany: Also in Europe, the FIFA World Cup in Germany in 2006 was judged a success, both for its limited cost and for giving Germany a sense of togetherness for the first time since reunification in 1990. They made good use of existing sports stadiums, roads and railways, so did not have to go to great expense. “The World Cup was not only a sporting success but also an economic, political and security success,” Interior Minister Wolfgang Schäuble was quoted as saying at the time. But this is not an example all countries can follow. "The success of Germany 2006 as the best organised World Cup forgets that this is a small country with highly developed transport and sport infrastructure, which is not the case for countries like South Africa that are much larger and do not have comparable levels of infrastructure”, asserts Sven Daniel Wolfe, researcher at the University of Lausanne.
Los Angeles: The 1984 Summer Games are often regarded as the most financially successful modern Olympics. The city strictly controlled expenses by using existing facilities, apart from a swimming stadium and a velodrome, which were paid for by corporate sponsors. Furthermore, the Los Angeles Olympic Organising Committee used some of the profits to promote youth sport in Southern California. Los Angeles recently won the bid for the 2028 Olympics and will once again use the LA Coliseum for track and field events. In fact, most of the 2028 venues already exist.
Brazil: The 2014 World Cup is often given as an example of the mistakes made by developing nations, building lavish sporting facilities that they will no longer need after the event. Rio’s famed Maracanã stadium was for a time in a state of disrepair although it is back in use now for football matches and concerts. And several stadiums were either built or renovated in cities that do not have strong local football clubs needing facilities for large crowds – namely Arena Amazonia in Manaus and Arena Pantanal in Cuiaba, while Garrincha in Brasilia, originally built in 1974, had its capacity almost doubled to 72,000. After the event, the area surrounding Brasilia’s stadium was reportedly converted to a bus parking lot and Cuiaba’s hosted homeless people after standing idle. Part of the Arena Pantanal is being used as a school, while Manaus has been renting out its stadium for all sorts of non-football events including bazars, dog shows and corporate events just to keep up with the bills.
South Africa: The 2010 World Cup also saw a developing country building a new stadium that proved under-utilised afterwards. Cape Town’s huge Green Point Stadium has had difficulties finding long-term tenants after the event, reportedly costing the city tens of millions of dollars in maintenance over the few years following the World Cup. Recently, it has been used hosting events such as the South Africa Sevens Rugby Tournament and as an entertainment venue.
Athens: Even the home to the first modern Olympics in 1896 has a chequered legacy from its 2004 games. Hosting the event reportedly cost almost EUR 9 billion, which did not include the cost of projects such as a new airport and subway system. More than a decade later, beach volleyball, softball and tae kwon do stadiums stand empty, as do waterless swimming pools and kayaking facilities. With Greece struggling under the weight of the EUR 248 billion it owes to the eurozone and IMF, the Olympics carried a high opportunity cost.
Time for a game changer
The distinction between leaders and laggards is clear. The successful have long-term visions about how mega events can help development, and involve local communities in planning them. They also go beyond just seeking to put themselves on the map as tourist destinations, and instead prioritise local needs. Finally, successful events often manage to limit costs by reusing existing facilities.
Critics blame FIFA and the International Olympic Committee (IOC) for putting pressure on hosts to build glittering stadiums that they may not be able to afford. As bidding takes place many years before the events, local governments may prioritise gaining short-term popular support from winning the bid, not worrying about the long-term cost.
Responding to criticism, the IOC has proposed 118 reforms in a document entitled the ‘New Norm’. Its goals are to provide cities with greater flexibility in designing the games to meet long-term development goals and to save hundreds of millions of dollars. But rhetoric has yet to become reality. Behind the fanfare of competitions to host mega events, some cities are quietly withdrawing. Of the six finalists for the 2022 Winter Games, for example, four reportedly withdrew – Stockholm, Krakow, Lviv and Oslo – citing public backlash and cost concerns. That left Almaty, Kazakhstan, and the winner, Beijing.
“We really need to see the event organisers accepting the most sustainable bid rather than the most lavish bid”, says Michigan State University’s Mark Wilson.
No matter what happens on the pitch, Russia’s over budget 2018 World Cup will not be the required game changer. But a sharper focus on leveraging legacies should lead to more Barcelonas, and fewer white elephants weighing on the national debt.
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