Wednesday, August 10, 2016

Costs, Benefits, and Sorrows of Hosting the Olympics

 Costs, Benefits, and Sorrows of Hosting the Olympics

It has always been considered a high honor to be the host city of the Olympics. But, almost as important as honor, is also the anticipated revenue and profit expected to come to a city during the Olympics and forever after. City officials have hopes that tourists will flock to the reputed Olympic city, as television viewers fall in love with what they see and travel to the hosting city for years to come.

Potential Revenue

The hoped-for-revenue vs. the high cost of preparations to manage the gigantic event does not necessarily prove profitable. In bidding to the 100-member International Olympic Committee to "please choose us," a city puts together a proposed budget for what they have determined will be the cost to get everything in place - stadiums, swimming pools, ice skating rinks, ski slopes, hotels and highways to welcome the approximately 600,000 guests.

It certainly seems that so many guests will bring an enormous revenue. But frequently, all the preparations go way over budget, and there is not always a profit, but instead a deficit. While new infrastructure is repaired or constructed, citizens’ lives are disrupted with traffic jams and delays. Generally, they look forward to being the host city and take the interruptions in stride, knowing it's temporary.

But in the case of the current host city, Rio de Janeiro, the first South American city ever to host the Olympics, many citizens have had major losses. First of all, most of the population did not want to be the Olympic host, knowing their city was not fit and foreseeing destruction to their homeland. Close to 60,000 people have been evicted and displaced from their shanty-like homes and had to see them bulldozed, to rid the new Olympic city of the appearance of poverty. Additionally, beloved forests cleared and rare animals gone, to say nothing of the increased crime and killings surrounding the Olympic preparations.

Locals Suffer

Temporary and some permanent housing was provided for homeowners that were relocated, and they were compensated financially. But the thing that shattered them most is that their homes (favelas) had been built by their parents or grandparents and were more than a place to live, but a legacy of family and a symbol of tenacity and love. A few citizens refused to leave, and remain in their homes to this day, even though their neighborhood has been demolished.

So, who really pays the price for being an Olympic host city? Political leaders should care more about their citizens than the fame and fortune of being an Olympic host city. The fame fades and the fortune isn’t guaranteed, but the citizens remain. In the process, any good PR attached to being host for the Olympics is lost on the citizens and as news travels, lost as well on the citizens of the world.

David Milberg is an experienced investment banker who hails from NYC.

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