The Chinese authorities promised the IOC to hold one of the most budget Olympiads in decades. But in fact, spending on the preparation of the Games exceeded the official budget by about ten times.
Beijing has become the first city in history to host both the Summer and Winter Olympic Games. And he will do it with a difference of 14 years. No city has ever held two Olympic Games in such a short time. And of the countries, only the USA has hosted two Olympic Games in a shorter period since 1980 (in 1980, 1984, 1996 and 2002).
But if the organization of the 2008 Olympics in Beijing cost a record $43 billion at that time ($52.7 billion in 2022 prices), then the Chinese authorities positioned the 2022 Winter Games as budget ($3.9 billion). The key to this economy, as noted during the bid campaign— is the legacy of the 2008 Olympics.
In 2015, Beijing won the election for the right to host the Games by a margin of four votes from Alma-Ata. The voting members of the IOC were not confused by predictable problems with snow, the absence of a ski center and the remoteness of Olympic facilities (the distance between them is up to 200 km). The argument about holding economical Games played in favor of Beijing, since already at that time there were calls to reduce the cost of the Olympics, which had sharply increased in recent years. But will the Games really become budget-friendly?
Why is the IOC trying to cut costs for the Olympics.
From 2008 to 2014, two of the most expensive Olympiads in history were held. Spending on the Games in Beijing and Sochi exceeded $40 billion and $50 billion, respectively. Before, the cost of the sports forum did not rise above $ 20 billion. For example, the total budget of the Olympics in 1996-2006 corresponds to spending on Sochi 2014.
The Games are rarely profitable for the organizers — more often the opposite. The 1976 Olympics led prosperous Montreal to years of stagnation. The Games left one of the leading Canadian cities with a billion-dollar debt, which was repaid only after 30 years due to reduced spending on infrastructure and social needs. The Olympics caused serious financial damage to Athens (2004), Rio de Janeiro (2016) and a number of other cities.
After 2010, the IOC faced a massive refusal to participate in the elections of Olympic capitals. Since 2013, ten cities that were originally going to compete for the 2022, 2024 and 2028 Games have withdrawn their candidacies. The reason is the high cost of the event.
The situation forced the IOC to reform. In 2019, in order to reduce costs, the procedure for choosing the capitals of the Olympiad was changed. The IOC decided to abandon the bid campaigns of cities with evaluation commissions, lift the ban on holding competitions in one region and allowed to choose the capital not seven years before the Games.
The bid campaign cost an average of $50-100 million. It included design, payment for consulting and audit services, organization of events, trips of members of the bid committee, reception of IOC guests. For example, Tokyo spent $150 million on the unsuccessful 2016 Olympics campaign and about $75 million on the successful 2020 campaign. At the same time, Toronto refused to compete for the 2024 Olympics because it did not find $60 million for the application.
Due to the ban on holding the Olympics in different cities, previously the hosts of the Games had to build arenas in the immediate vicinity of the city. After the end of the competition, these facilities often fell into disrepair.
Now the capital of the Games is chosen by special commissions for the winter and summer Olympics. When choosing the capital of the Games, the IOC proceeds from the availability of permanent or temporary sports and infrastructure facilities. This allows you to choose the most suitable options and significantly reduce the costs of candidates.
In 2019, Brisbane, Australia, was chosen as the capital of the 2032 Olympics. It is expected that the Games will become one of the most budget-friendly in three decades. At the moment, the cost is estimated at $5 billion. The Australian authorities have announced that the amount will be increased, but definitely not twice.
Professor of the University of California, an expert in the field of sports marketing Andrey Mikhaylichenko stressed that "sports spectacles are still the most popular on the planet, but such arguments are increasingly heard: holding the Olympics requires unreasonably high costs, their legacy is overestimated, sports achievements are no longer a component of prestige in the international arena."
"The IOC needs to develop programs to assist the governments of states that are still ready to place their applications and invest in the fight for the right to host the Olympic Games. Under the current system, it does not help in any way, countries are cooked in their own juice. The application passed - success, failed — all costs and losses remain on this side, " Mikhailichenko quotes the BBC.
Olympiads don't fit into budgets
In general, at the Olympic Games (both winter and summer were taken into account), the average budget overspend directly on sports facilities is 156%, this is the highest figure among all megaprojects. This is stated in a study by the University of Oxford.
At the same time, the amounts indicated in the budgets of the organizing committees differ markedly from the final cost of the Olympiad. As a rule, budgets prescribe only spending on the objects of the Games (arenas, Olympic villages, media centers), reception of guests, organization of Olympic events. But the costs of upgrading the transport infrastructure and the construction of non-sporting facilities for the Games are not taken into account.
To date, the most expensive Olympiad in history is Sochi. A few weeks before the start of the 2014 Games, Prime Minister Dmitry Medvedev announced that total spending on the organization of the event amounted to $50 billion, and $6.4 billion (13% of total spending) was spent on the construction of sports facilities.
Why the 2022 Olympics were expensive
When the IOC chose the capital of the 2022 Games, four out of six candidates withdrew from the vote for financial reasons. Representatives of Beijing in their application noted that they are able to hold economical Games thanks to the legacy of 2008. This argument was one of the key ones.
The budget of the Games spelled out the amount of $ 3.9 billion, which on paper makes them the most economical in the last two decades. But the real state of affairs suggests the opposite.
Unlike the Tokyo 2020 organizing committee and the Japanese authorities, the organizers of the Winter Olympics do not disclose specific items of expenditure. However, even official data show that Beijing-2022 will enter the top three most expensive Olympics, being behind only Sochi-2014 and Beijing-2008.
Construction of the Beijing Olympic Village for 2.3 thousand athletes — $3.2 billion (after the end of the Games, the authorities will put up for sale apartments in the Olympic villages).
Construction of a ski track, a bobsleigh complex in Yanqing and Zhangjiakou — $442.9 million.
Construction of the skating center — $186.6 million.
The expenses for the construction of the Olympic village in Yanqing, reformatting and reconstruction of the 2008 Games facilities and operating expenses remain unknown.
Unsportsmanlike facilities
Construction of a high-speed railway between Beijing, Yanqing and Zhangjiakou — $9.2 billion.
Construction and modernization of 76 facilities in the Zhangjiakou Olympic Cluster — $5.2 billion.
Modernization of the airport in Zhangjiakou — $205.6 million.
Construction of highways connecting the Olympic clusters — $15 billion.
Construction of a new Beijing Subway line for the Winter Games — $773.5 million.
The result: $34.2 billion - and this is excluding a number of expenses. More than $12 billion of this amount was allocated by the local banking sector.
Zhao Weidong, a representative of the organizing committee for public relations, said that due to the pandemic, "some expenses have also been increased." However, he indicated that others could be reduced without specifying details.
What will the organizers of the 2022 Games earn.
Direct revenue.
The organizing committees of the Games earn directly through the sale of tickets, licensed products and other expenses of fans on the territory of Olympic venues (organizing committees pay 7.5% of the amount of income to the IOC under these articles), contracts with local sponsors (7.5%), suppliers (5%) and the sale of other products with Olympic symbols (postage stamps, coins)..
Due to the pandemic, the Olympic events will be held with a minimum number of spectators and without foreign fans. It was reported that only the "chosen ones" will be able to attend the events of the 2022 Games. Before the decision to abandon the audience, Beijing-2022 planned to gain $118 million from ticket sales.
The record for ticket sales in the history of the Winter Olympics belongs to Vancouver 2010 ($ 250 million). Sochi 2014 ($205 million) is the second in this indicator, followed by Salt Lake City 2002 ($183 million) and Pyeongchang 2018 ($143 million).
Closed stands will also have a negative impact on sales of licensed products. This revenue item has never exceeded $100 million. In 2018, revenue was $79 million.
The Olympiad will be held almost without an audience for the second time. A similar situation arose in 2021 at the Tokyo Games. According to experts, due to the non-admission of foreign viewers and a sharp decline in attendance, the organizing committee of the Japanese Olympiad missed about $ 800 million, and the country's economy - about $ 2.7 billion.
The list of commercial partners/sponsors of the organizing committee currently includes 22 companies (including 45 suppliers), all of them from China. The total amount of contracts is not reported. The record for this indicator among the Winter Games belongs to Sochi-2014, which signed contracts with 46 companies totaling $ 1.19 billion.
The absolute championship is held by Beijing-2008 ($ 1.22 billion). In history, only three times have organizing committees earned more than $900 million at the expense of local sponsors. London 2012 also managed it ($1.2 billion). In the history of the Winter Games, no one, except Sochi 2014, has surpassed the $700 million mark.
Payments from the IOC.
The budget of the organizing committee will be replenished by payments to the IOC. The Committee has already transferred $880 million in compensation for the cost of hosting the Games. Also, Beijing-2022 will receive a percentage of the cost of media channels and contracts with IOC sponsors. At the moment, these amounts are unknown.
Earlier, Pyeongchang 2018 received $600 million from IOC sponsors. Taking into account the total revenue of the organizing committee of $ 2.2 billion and a number of income items, it can be concluded that he received no more than $ 300 million from the media.
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