Did the 2004 Athens Olympics contribute to the Greece financial meltdown?
By Evan Weiner
December 17, 2009
Is the International Olympic Committee to blame for the December decline in the Euro? It may not be that much of a stretch to blame the International Olympic Committee demands on Greece to make certain that the 2004 Athens Olympics opened on time with state of the art facilities which in turn cost Greece taxpayers’ billions upon billions of dollars.
Greece is still paying for the Olympics and the Olympics may have partially helped nudged Greece into a financial abyss that is causing trouble for Europe and the euro. Greece may not be able to borrow any more money to pay down the country’s debts, some of which can directly be traced to overspending on the 2004 Athens Olympics.
Greece has not exhibited much discipline in spending over the years. Greece won the 2004 Olympic bid in 1997 and the project was in immediate trouble. Construction of the facilities and infrastructure was slow and costs mounted. Costs soared and Greece was on the hook for the billions of euros or dollars or pounds or whatever other currency you could name.
Greece could be insolvent and join Iceland, Dubai and Ireland as major financial trouble spots which gives the European Union a major problem. The EU wants a concrete plan of action from Greece officials that will reduce government spending and debt. Some of that debt is 2004 Athens Olympics related. Greece is also reeling from decisions by various credit agencies to downgrade the country’s financial ratings.
There seems to be a spillover which is dragging down the Euro to new December lows. The European currency has fallen to about a $1.44 US as of December 17 and is about seven cents down in the month of December.
The 2004 Athens Olympics is not the only financial burden on the Greece’s government but it certainly has not helped the Greece’s bottom line. The International Olympic Committee promises the world to host cities and it usually ends up in a bad financial experience for host cities such as Montreal, Sydney, Athens, Turin and the same thing is happening right now in Vancouver, Canada who host of the 2010 Winter Olympics, and in London, England, the host of the 2012 Summer Olympics.
In the United States, General Electric’s NBCUniversal division could lose as much as $200 million (US) because advertiser revenues are not going into the Vancouver Olympics telecasts.
The Olympics experience has become a money pit. Most people going after the Olympics know that the International Olympic Committee is a scourge but cities still throw themselves at the IOC’s feet hoping to get chosen. The lure seems to be nothing more than let’s feel good about hosting the event and that we will get some positive publicity out of the event that might eventually draw tourists to the city.
Remember how the Republicans and Conservatives in the United States mocked President Barack Obama when Chicago did not receive the nod from the International Olympic Committee to host the 2016 Games after Obama went to Copenhagen, Denmark to speak before the IOC? Remember how American radio talk show hosts were gleeful that Obama failed to get the Games and how America failed.
Needless to say the politicians and the noise crowd were really ignorant of the whole Olympics process and how it really is a drag on countries and local and provincial governments. The noise and ignorance radio carnival barkers crowd, led by Rush Limbaugh, didn’t bother to do any homework and see how tax rates in Montreal and Quebec rose between 1976 and 2006 to pay off the 1976 Montreal summer games.
The Montreal Games ended up costing about one billion dollars US. But that was nothing compared to what happened in Athens. The radio know-it-alls failed to notice just how much money the 2004 Athens games cost. But the Obama is failed carried the day for the know-it-alls on crow on radio daily.
Did Greece spend 10 billion euros or more on the Games? The true answer may never be determined. Whatever was spent, Greece lost billions of euros on the two week sports event. By 2008, 21 of the 22 venues built for the 2004 Games were unused and were in various state of disrepair yet Greece taxpayers were paying for some sort of maintenance at the venues and that too was very costly. It seems that the Olympics did very little for Athens and Greece and that 10 billion euro expenditure was a waste and probably in some way has led to Greece’s financial meltdown.
Of course people will scoff at that notion but that money spent on the Olympic venues could have been used elsewhere. Tennessee Governor Phil Bredesen in 1997 as Nashville mayor admitted that a supermarket was worth far more than a stadium or an arena in terms of economic impact. But Bredesen wanted to change Nashville’s image and make it a major league town complete with a National Football League team that would play on Monday Night Football and show off the Nashville Skyline and either a National Basketball Association or a National Hockey League team.
Bredesen wanted Nashville to be known for something even though it was the “country music capital of the world” and Bob Dylan put out an album called “Nashville Skyline” in 1969. Nashville spent hundreds of millions of dollars for the right to be a “big league” town and has an NFL team, the Tennessee Titans and an NHL team, the Nashville Predators.
It is a much smaller comparison, building a stadium or an arena with taxpayers’ money when put up against an Olympics which requires 22 or so venues but Bredesen’s point is well worth examining.
A supermarket that is open 24 hours a day, seven days a week employs three full shifts plus weekend shifts and employs far more people than a stadium and/or an arena. The people who work in the supermarket live in the community and spend their paychecks at other businesses in that community. A stadium is used just a handful of times a year, a football stadium might operate only 10 days a year and employee a handful of part time employees. A team might have an office in the stadium, but the team does not employee as many people as a supermarket, Yes players get paid large sums of money and taxes are collected on the salaries but players don’t live in the community surrounding a stadium and don’t shop in the area. Wealthy athletes live in gated communities somewhere else.
A baseball stadium could be used 90 days a year but that still leaves about 275 days with no event. An arena might get 200 days of use but none of the sports venues are open virtually everyday of the year. Having 22 venues unused is not financially feasible yet that is what is happening with Olympic facilities after the circus leaves town.
Even if some of the 21 unused Greece facilities come back on line, it is highly unlikely that the Greek government can ever reclaim the public investment money on the buildings.
Athens did get a new airport and new transportation system out of the Olympics and walkways in the historical areas. However Greece would have built that infrastructure eventually but all has not been well with the construction.
Greece doesn’t even have a real handle on just how much was spent on the non Olympic venues in the “infrastructure” category. The Olympics cost is a drop in the bucket compared with the Greece debt which is about $300 billion euro but the Greek economy was faltering long before the global market collapsed in September 2008.
The 2004 Olympic experience certainly did not help. Yet even with all of the evidence, cities continue to go after the Olympics and there is a list of cities wanting the 2018 Winter Games as Annecy, France, Munich, Germany and PyeongChang, South Korea are bidding for the right to hold the competition. Italy wants the 2020 Summer Games and will decide whether Rome or Venice is the best city for the country’s bid next April.
Meanwhile, economists and sports business experts really need to examine what affect the 2004 Athens Games had on Greece’s debt and how those Olympics bills are dragging down the euro.