World Cup, Olympics have 'no convincing legacy' for host nations

For Brazil, hosting the 2014 World Cup was supposed to be a moment of national pride and international prestige.

Yet on the eve of the biggest sporting event in the world, the South American country is dealing with street riots, the death of another construction worker, the threat of more transit strikes and a growing sentiment that hosting mega-sports events carries few social benefits.

International competitions allow nations "to showcase their country, to attract both tourism and investment," says Richard Powers, a professor at the Rotman School of Management and an expert in sports marketing and governance.

But, he adds, "in many of these cases you can question their ability to put on games under today's conditions, and whether that's the best use of the money."

Over the past year, many Brazilians have vented their anger at the cost of the World Cup tournament, which they believe comes at the expense of much-needed improvements to education, health care and infrastructure.

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In order to stage the tournament, the country built or refurbished 12 stadiums at an estimated cost of $3.6 billion, including one in the city of Manaus deep in the jungle. As Brazilian architect Miguel Capobiango Neto told the CBC's Susan Ormiston, the 42,000-seat Arena de Amazonia in Manaus cost an estimated $319 million and will only see four World Cup games.

After the event, the stadium's future is unclear, since Manaus's home club, Nacional, only attracts about 1,000 spectators per game.

Benefits overstated

Thanks to broadcast rights and corporate sponsorships, sporting events are hugely profitable to organizations such as FIFA and the International Olympic Committee (IOC). FIFA is predicted to pull in $4.5 billion in revenue on the 2014 World Cup.

They're seldom as beneficial to the hosts.

Countries vying for mega sports events tout the economic benefits, such as tourism and trade, and typically promise a number of infrastructure projects such as roads and transportation links that will have future benefits for the citizenry.

Zimbalist says the tourism benefits have never been proven, and hosts rarely make good when it comes to lasting infrastructure improvements.

In addition to building stadiums, for example, Brazil's bids for the World Cup and the 2016 Summer Olympics promised public works projects such as new roads, improved transit and upgraded communications systems.

But 85 to 90 per cent of these projects haven’t been completed, says Andrew Zimbalist, an economics professor at Smith College in Northampton, Mass.

He says the city of Sao Paolo has opened a couple of rapid bus lanes that could improve travel for World Cup participants and the fans, "but there's almost nothing that benefits the resident in those cities."

It's a similar story for former Olympic hosts such as Athens and Beijing, and World Cup presenter South Africa, which are now home to unused and expensive-to-maintain stadiums.

"You end up with billions of dollars of expense, and white elephants that don't get used very much but also end up taking up very valuable real estate," says Zimbalist.

In terms of dubious social benefits, one of the most controversial events is the planned 2022 World Cup in Qatar, the sweltering Gulf state that is currently the subject of a FIFA bribery investigation.

"[FIFA members] either have to be committed to an asylum for the mentally ill or taken to court and accused of corruption. You don't give it to Qatar in the summer," says Scottish journalist Andrew Jennings, author of Omertà: Sepp Blatter's FIFA Organized Crime Family.

Many observers believe Qatar's legacy will be the hundreds of construction workers who have died building the soccer facilities.

Barcelona seen as a model

Major sporting events don't have to be a major burden for the hosts, but that requires proper management and planning. The 1992 Olympics in Barcelona are seen as a model of a mega sports event with significant legacy benefits. The city took advantage of winning the Olympic bid to improve its urban design, says Zimbalist.

Much of the money was spent on roads and transportation, such as the building of ring roads, which alleviate some of the traffic congestion in the downtown core. The city also made significant investments in new housing and offices.

The reason Barcelona was able to build so smartly, says Zimbalist, is that the city was working from designs hatched before it bid on the Olympics.

"They had a very good plan, and the Olympics were seen as an instrument of that plan," says Zimbalist.

Unfortunately, he says, what typically happens is that, "the Olympics or the World Cup comes along, the IOC and FIFA levy their demands, and the city has to make the [restructuring] plan an instrument of the IOC or an instrument of FIFA, and that doesn't work out."

Zimbalist says the ever-rising costs of staging sporting events — which culminated with the estimated $51 billion price tag for the 2014 Winter Games in Sochi, Russia — are the result of two developments. The first was the fact that Los Angeles made a $300-million profit hosting the 1984 Summer Olympics, which made the idea of hosting palatable to other countries.

The second is the desire of emerging economies such as South Africa and Russia to stage a world event, which inevitably requires huge expenditures to bring their sports facilities up to the standards of more prosperous nations.

Bidding process flawed

The Rotman School's Powers, who is also a treasurer for Commonwealth Games Canada, says the problem ultimately lies in the courtship phase, when countries propose highly ambitious stadiums and infrastructure projects to entice major sports bodies.

"It's the bidding process itself – it forces you to overpromise, to differentiate yourself from everybody else," Powers says.

A study by the University of Oxford on the cost of Olympic projects from 1960 to 2012 found that the games exceed their budgets 100 per cent of the time, and that "no other type of megaproject is this consistent regarding cost overrun."

The study showed that, "for a city and nation to decide to host the Olympic Games is to take on one of the most financially risky types of megaproject that exists, something that many cities and nations have learned to their peril."

It's this realization that likely led Stockholm, Munich, Krakow and a joint project from Switzerland (Davos and St. Moritz) to abandon their bids for the 2022 Winter Olympics, leaving only Oslo, Beijing and Almaty, Kazakhstan in the running.

Jens Sejer Andersen, international director of Play the Game, a Denmark-based non-profit aimed at promoting transparency in sport, says more and more countries are realizing that these events make little economic sense.

"In open societies with a vivid [democratic] debate, they have discovered there's no convincing legacy after this huge and unpredictable investment," says Andersen.

As a result, the major sports organizations could be tempted by bids from more authoritarian countries "where not so many questions are asked," says Andersen.

"It is a genuine dilemma, and I think the IOC has understood it, since they're now calling for a reform of the bidding process. But you may ask to what extent they will really be determined to change it."