Olympics in India: Does It Really Make Economic Sense?
Last week, Ahmedabad Urban Development Authority (AUDA) showed interest in trying to host the 2036 Olympic Games.
Many Indian politicians and sports administrators have spoken about their dream to bring the Games to India but the country has never bid for the quadrennial event in the past and given the experience of hosting the 2010 Commonwealth Games, no one is really complaining.
But last week, the Ahmedabad Urban Development Authority (AUDA) surprised everyone by inviting proposals for hiring a firm to access sports and non-sports venues along with the city’s infrastructure for hosting the 2036 Olympic Games.
It had been quite clear for a while now that if India ever bid for hosting the Olympics under the Narendra Modi government then Ahmedabad would be one of the cities in the running. And Home Minister Amit Shah endorsed the same during the inauguration of the Narendra Modi stadium ahead of the day-night cricket encounter between India and England three months ago when he said that the proposed construction of the Sardar Patel Sports Enclave would help them host multi-discipline international events in the city.
Despite all these announcements, AUDA’s Request for Proposal (RFP) would have taken many by surprise as the International Olympic Council is already in the process of granting hosting rights for the 2032 Games and there won’t be much time before the discussion with host cities for the 2036 edition.
Thankfully for Ahmedabad and for India, there is no need to start putting together a bid document already and start spending substantial funds on building a proposal as the IOC’s new roadmap starts with an informal dialogue with Future Hosts Commission and need not be edition specific. The interesting part is that an interested party can propose multiple cities or region for hosting the Games during these dialogues and the Commission would ultimately determine whether the potential host is suited to organise the Olympic Games or Youth Olympic Games and when.
It also means that there is a long way to go before India can even officially stake claim for the 2036 Olympics and that discussion can wait. But even before we go down that road, it’s probably imperative to discuss whether Olympics is even worth hosting in India.
Olympics in India: Would It Be Worth It?
The primary argument behind hosting mega multi-discipline events is that the host city doesn’t just get state-of-art sports facilities but also the civic infrastructure like better road network, public transport and other amenities get development at rapid pace since it’s a time-bound exercise. Also, the events are expected to boost tourism in the city and country.
But is the price worth paying? Apart from building stadiums for more than 28 sports disciplines for hosting the Games, Host City Contract – Operation Requirement circulated by the IOC in 2018, requires over 40,000 hotel rooms only for stake holders, tax exemptions and plethora of other facilities in a stipulated time period. This invariably leads to actual cost going way higher than the estimates.
Previous editions of the Olympics have shown that tourism boost isn’t as guaranteed as it is made out to be and one wonders whether the exorbitant infrastructure cost is really worth it.
The 2016 Rio Olympics cost Brazil over $13 billion dollars while the estimated cost for the Tokyo Games has already crossed $15 billion.
It is a known fact that Greece is still reeling from the economic fall out after hosting the 2004 Athens Olympics. Even in a developed country like Canada, the city of Montreal, which hosted the 1976 Games was swamped in debt till 2006 after spending $1.6 billion on the games.
Could India Emulate Los Angeles’ Profit Model?
The first Olympics to ever make a profit was the 1984 Los Angeles Games which kick-started the era of corporate sponsorship in the Games. The television rights were also sold for almost three times the amount it fetched in 1980.
The value of television rights have gone up with every edition since, but that money goes to IOC. The IOC, however, contributes some amount to the hosts for organising the Games and pays for broadcast operations. The Games’ organisers can raise fund by commercialising the Olympic rights in their territory, national partnership programme, and ticketing of events.
For Rio Olympics, IOC contributed $1.5 billion out of the total budget of approximately $13.1 billion.
With LA once again scheduled to host the 2028 edition, the organisers have been talking about once again making it an example of financial prudence.
The organisers of LA 2028 have said that they would not need to build stadiums or arenas as they would be using infrastructure that is already in place and the rest would be done through private funding.
However, the organisers have already revised their budget from $6.88 billion, a $1.36 billion increase accounting for the inflation. If we look at any Olympic Games in the recent past, the average spending over the estimated budget has been over 50 percent.
Be it Ahmedabad or any other Indian city, none of them boast of an existing infrastructure that can be used for the Games. This means that the only way the infrastructure cost could be brought down would be by building these venues on public-private partnership model with the corporate utilising the venues after the Games.
Given the sports culture in the country, it is difficult to ascertain how many corporates would really jump on the proposal.
Learnings From Past Mistakes
All the civic infrastructure required to develop a city can be developed without hosting the Games if the administrators and political leadership have the right vision.
In that context, India’s record of hosting the 2010 Commonwealth Games doesn’t really inspire much confidence. According to a Business Today report, India spent over $7.5 billion, approximately half of what United Kingdom spent on hosting the 2012 London Olympics. However, some speculate that the actual cost was way beyond $10 billion.
And CWG isn’t anywhere near the Olympics in stature or even the number of participants and facilities required.
Add to that, the sports infrastructure created in Delhi hardly led to a revolution in Indian sports as the country clearly lacks the requisite sports culture. Also, most of these stadium have turned into ‘white elephants’ as they are out of bounds for general population and the maintenance cost has been quite exorbitant. And it is going to be no different even in Ahmedabad or any other city in India dreaming of hosting the Olympics.
Focus Instead of Nurturing Medallists
When India’s only individual Olympic gold medallist Abhinav Bindra was asked about India hosting the Olympics, the ace shooter hit the bullseye when he said that for him the right time to host the Games would be when the country has a realistic chance of winning at least 40 gold medals.
India’s best medal haul at the Olympics is six at the 2012 Games and even winning 40 medals of any colour in one edition seems to be a pipe dream for now.
The real need of the hour for a country like India is to provide decent quality sports infrastructure across the country instead of concentrating it in some mega city just to host multi-discipline sports when we are hardly equal contenders on the world stage.
It’s quite possible that while the Ahmedabad authorities are posturing for the Olympic Games in 2036, they could be quite satisfied with hosting the Youth Games two years before or after their stated target.
Whatever it is, the real assessment any consultancy firm/agency should be doing is whether hosting any of these Games would bring any real value to the host city and the country and whether the comparison of the cost involved and the return on investment makes any business sense.
(Abhijeet Kulkarni has been a journalist for over two decades and has been covering sports since 2003. He has also written a book on the rise of the sport since the turn of the century titled, ‘The Gopichand Factor’)
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