Australia

Will Brisbane be the cost-neutral, sustainable Olympics?

When the world welcomes the Tokyo 2020 Olympic Games, there will be nary a peep in the house.

The $US1.4 billion ($1.91 billion) Olympic Stadium’s stands will lie dormant, other than workers helping to bring the spectacle to the world.

One of the biggest visual spectacles in the world will be rendered a made-for-TV experience.

For a group of Australians who have been hard at work in recent years, the biggest event will happen two days before the opening ceremony.

Brisbane is set to be announced as the host of the 2032 Olympics on July 21, the sole bidder as part of the IOC’s “New Norm” process. For the south-east Queensland region, it’s a coup that could truly put the region on the global map.

Back home, some thought is starting to go to how much the coming Olympics might actually cost.

The New Norm

The path to hosting the Games has changed dramatically over the past decades. After decades of allegations of corruption, and small fortunes spent on unsuccessful bids, the IOC recognised that there had to be a better way.

Enter the New Norm. The New Norm promised to revolutionise the process of bidding for and hosting an Olympic Games.

Off the back of these reforms, the IOC established the Future Host Commission. They discarded the need for all events to be hosted in a single city, and for the announcement to occur exactly seven years out from the Olympics starting.

The first beneficiary of this new process is almost certain to be Brisbane, and south-east Queensland.

Coming into frame was a focus on venue reuse, sustainability and economic stability. The IOC allowed themselves the flexibility to designate a “preferred bidder” to engage in a “targeted dialogue”, the status given Brisbane.

It means that Brisbane is essentially bidding against itself, similar to Los Angeles being awarded the 2028 Olympics with no real opposition.

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It means that Brisbane has been bidding alone, given the time to prepare all the information it needs. There likely will not be a euphoric announcement, like Juan Antonio Samaranch’s “The winner is Sydney” in 1993, but the end result will be the same.

The focus on sustainability and reuse is designed to bring the costs for hosting the Olympics down. The early cost estimates for the operations budget of the Brisbane bid are not only balanced, but represent some of the lowest in recent times.

Brisbane’s bid, similar to that of the upcoming Paris and Los Angeles Summer Olympics in 2024 and 2028 respectively, will focus on reusing existing venues, refurbishing existing sites and using temporary venues where possible. For south-east Queensland, that means using a lot of the venues established for use hosting the Commonwealth Games in 2018.

Instead of the white elephants of Athens and Rio, the hope is that any venue built will also be used down the track.

An empty cycling velodrome shows the banking surrounding the cyclists' area in the centre.
Some existing venues, such as Brisbane’s Anna Meares Velodrome for cycling, would be reused for the Olympics.(

AAP: Darren England

)

While the budget seems balanced at first glance, there seems to be one element missing from the early documents — infrastructure costs.

Typically, Olympic bids contain the official operating costs and a separate item outlining the infrastructure spend, including building new venues for hosting sports and to house athletes and the media.

As a comparison, Paris and Los Angeles set out the total capital venue spends in their bid documents at $US3.185 billion ($4.34 billion) — including $US1.049 billion ($1.43 billion) of public funds and $US3.292 billion ($4.48 billion) and $US72 million ($98.04 million) from OCOG funds, respectively.

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In Brisbane’s bid document from February, the bid articulated that it was not estimated what the long term costs for the venues set to host the Olympics would be. While Brisbane has stated that their infrastructure projects will commence regardless of whether they are awarded hosting rights, Paris and LA also made similar commitments.

While it is stated that the Brisbane organisation budget is to be balanced, and privately funded, this large venue cost centre of the funding of the venues remains missing. Several major venues have been planned to be either built new or extensively rebuilt.

This includes the Gabba, which is mooted to be “completely rebuilt and raised up” in the words of Queensland Premier Annastacia Palaszczuk, at the potential cost of around $1 billion. This is not the only major stadium set for construction, with a major CBD arena (detailed as the Brisbane Arena in the bid document) required, alongside a whitewater centre and four indoor sports centres.

Costs for these venues are hard to pin down, but a similar proposal for a major indoor venue in the Brisbane CBD was costed at $2.1 billion, tied to a broader entertainment precinct near the current Roma Street Station.

The Brisbane bid states that these venues will be built regardless of whether or not Brisbane is awarded hosting rights for the Olympics.

Athletics and ceremonies

According to the most recent bid document from June, the annual profits of these two venues before and after the Olympics will be $13 million.

Ryan Buckland, a principal at the economics, policy and strategy firm ACIL Allen, suggests that this would be an optimistic outcome.

“Stadiums Queensland, the Queensland state government authority in charge of the state’s nine major sports and event assets, bought in around $48 million in income the year before COVID-19. The operation cost $135 million, including around $66 million in asset depreciation. The taxpayer picks up the difference.”

The role of governments in owning these assets is also quite straight forward according to Buckland.

“Governments own these assets precisely because they don’t make money. If they did private capital would run them. But the other reason governments own the assets is they provide public benefits — benefits to the economy, community, and people.”

It’s hard to evaluate what the final infrastructure costs for the proposed Games will be, but there is some belief that the economic benefits will outweigh these major costs.

According to a KPMG preliminary report into the economic, social and environmental benefits of the bid, an estimated $17.61 billion worth of potential quantified benefits Australia-wide could be delivered by hosting the Olympics.

Economic benefits

Like the infrastructure costs, breaking down what the specific benefits are is hard to do simply. Some of the benefits will likely include creating jobs leading into and during the Olympics, improving access to sports and recreation infrastructure, and raising the profile of the host city on the world stage.

The Tokyo drift

When the Olympics gets closer to being actually on, reality starts to set in. As Brian Dawe set out in the classic (fictional) ABC comedy The Games:

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Although a comedy from more than two decades ago, the broader lessons hold true. According to researchers from Oxford, the average cost overrun for the sports-related costs of the last eight Summer Olympic Games with data available is 213 per cent. That means that the Olympics ends up costing cities nearly triple the original budget for the Games.

The most recent Olympics show this lesson most clearly. Originally, the operating budget for the Tokyo 2020 Olympics was projected to be $US3.4 billion ($4.63 billion).

Now, it’s at $US6.7 billion ($9.12 billion) — almost double the original operating costs. This excludes non-operating costs of the Tokyo Olympics, which have also increased by nearly $US2 billion ($2.72 billion).

The two coming Summer Olympics after Tokyo, in Paris and LA, have also had increases to their budget so far. In their original bid document, the operating budget of the Paris 2024 Olympics was scheduled to be $US3.964 billion ($5.4 billion). In a recent document sent to the French Prime Minister, this was now stated to be $US4.6 billion ($6.26 billion).

For LA, their budget has risen from $US5.3 billion???? to $US6.9 billion as of 2019.

This is not to say that these Olympics will be unprofitable, or that they will cause a financial impost, but instead that predicting costs of a project of such a great magnitude is challenging.

“What appears to be most important to the long term success of hosting an Olympic Games isn’t keeping costs down.

“Otherwise, history shows the financial benefits simply aren’t worth it.”

The unquantifiable cost

There is undeniably a social cachet attached to a city hosting the Olympics. Many around the world can recite the hosts of Olympics past and recall sights of the city from watching the Games from afar or up close.

South East Queensland, with stellar beaches, sunny days and a good climate, should be the type of city that can capitalise on this heavy publicity.

Locally, the proposed Olympics has the early support of around two-thirds of both Queenslanders and Australians. Coming out of COVID, the Olympics could provide necessary jobs to stimulate the economy.

But the true costs of hosting the Olympics in 2032 need to be known, and sooner rather than later.


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