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Column: A global party's bad hangover

A bridge collapsed in Belo Horizonte, Brazil, on July 3. The incident took place on a main avenue, the expansion of which was part of the World Cup infrastructure plan.

Associated Press

A bridge collapsed in Belo Horizonte, Brazil, on July 3. The incident took place on a main avenue, the expansion of which was part of the World Cup infrastructure plan.

Could it be? Are the voices of reason and fiscal prudence at last winning out over greedy special interests, mathematically illiterate pundits and corrupt politicians? In other words, has the world finally realized what a superbly dumb idea it is to host a major sporting event? So far the signs look good.

Even before their team's humiliating, tear-jerking loss to Germany, Brazilians had buyer's remorse about hosting the World Cup. The country has been wrestling with political unrest over spending demanded by the organization behind the World Cup, and, according to recent polls from Gallup and Pew, a majority of Brazilians believe the event is hurting Brazil's economy. This seems like a rational response, even from a population of soccer enthusiasts. The government is spending an estimated $14 billion to fund a big party (including building a stadium in the middle of the jungle) while millions live in abject poverty and critical infrastructure projects go unfunded. Given the choice between bread and circuses, Brazil's government chose circuses, complete with a herd of white elephants. As have, for many decades, many other places. Until, perhaps, now.

Countries have fought over the supposed privilege of hosting the Olympics, but the 2022 Winter Games are proving less popular. Last year, Munich and the Swiss cities of Davos and St. Moritz dropped out of consideration after proposals to bid were defeated in public referendums. Stockholm exited in January. Krakow stepped aside after nearly 70 percent of voters nixed the idea in May. And Lviv, Ukraine, dropped out weeks ago because the country has, well, more pressing concerns these days.

The three cities left, all of which the International Olympic Committee ceremoniously named "finalists" last week, are: Oslo (though Norway's government looks likely to nix the bid later this year, since polls show only 36 percent of Norwegians are on board); Almaty, Kazakhstan (an uncomfortable choice, given the country's record on human rights and political repression); and Beijing (see previous parenthetical, but add chewable air). Maybe the skittishness about hosting is related to the widespread mockery that Sochi was subjected to when journalists descended on the Russian city's hotels, stadiums and toilets. But, probably, cities are backing off thanks to the ludicrous price tags and dubious economic benefits that country after country has seen from hosting budget-busting athletic competitions.

Economists and budget analysts have long proclaimed the fiscal folly of hosting these events. The rosy economic estimates touted by sports leagues and politicians tend to use suspect methodologies, when they're not pulled from thin air (as seemed to be the case for the NFL's claims that the Super Bowl would bring a half-trillion dollars to the New York metro area last winter). The news releases promising riches to be gleaned from putting on a major sports event rarely include the massive costs — in sanitation, security, traffic and overpriced and soon-to-be-underused stadiums — that must be incurred. They also tend to ignore the fact that the event may crowd out other kinds of economic activity. The question has always been why cities kept wanting to host in the first place, given that honest experts consistently tell them that it's such a lousy economic proposition.

Hosting fell out of favor once before, for a little while. After the high-profile financial losses from Montreal's 1976 Summer Games, Los Angeles was the only bidder for the 1984 Olympics. And because it was the only city willing to host, "They could dictate terms to the IOC rather than the other way around," Victor Matheson, an economics professor at the College of the Holy Cross, told me. Since Los Angeles got to call the shots, it decided not to build lavish facilities to appease the committee. Instead, it relied mostly on facilities that already existed, including one arena used for the 1932 Olympics. As a result, Matheson said, those were one of the only Olympics in modern memory to turn a profit.

Of course, there are lots of reasons countries volunteer to host major sporting events, and some don't have anything to do with applying public funds in the most socially optimal way. Pride, propaganda and egotism come to mind. Sadly, as more democratic countries start to realize what a boondoggle the Olympics and World Cup are, we're likely to see such events increasingly awarded to places where they'll inflict the most social and economic damage: countries such as Qatar, China and Kazakhstan, where leaders have something to prove — but don't have to worry about ever getting voted out of office.

Catherine Rampell comments on economics, policy and culture, and anchors the Washington Post's Rampage blog. © 2014 Washington Post

Column: A global party's bad hangover 07/11/14 [Last modified: Friday, July 11, 2014 6:33pm]
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