18 March 2003

Vancouver bids for the 2010 Olympics

Vancouver bids for the 2010 Olympics

By David Agren

In 1973, flamboyant Montreal Mayor Jean Drapeau declared: "The (1976 Montreal Olympic) Games could no more have a deficit than a man could have a baby." The games lost over $1 billion and left behind a host of spectacular, but underused facilities. Montreal taxpayers will finally retire their Olympic debt in 2006 – 30 years after the Olympic flame was extinguished.

The Olympics rings lost its luster after the Montreal debacle and potential host cities soured on the idea of hosting the world’s largest sporting spectacle until entrepreneur Peter Ueberoth figured out how to make the games profitable.

As chairman of the 1984 Los Angeles games, he commercialized the Olympics and attracted sponsors that underwrote the games. A runaway commercial success, the games turned a $215 million profit despite a Soviet lead boycott. The federal government only contributed $75 million to offset security costs and the city of Los Angeles refused to commit public funds to build new facilities or infrastructure in support of the games.

Thirty years after Drapeau’s infamous remarks, Vancouver and the resort community of Whistler are bidding to host the 2010 Winter Olympic Games. International Olympic Committee shortlisted Vancouver and Whistler along with Salzburg, Austria and Pyeonchang, Korea as candidate cities and will decide the host city in July.

With Drapeau like enthusiasm, British Columbia Premier Gordon Campbell proclaimed a successful Vancouver Olympic bid would generate a $10.7 billion windfall and create 28,000 new jobs.

Proponents like Campbell view the Olympics as a gold medal proposition capable of lifting the province from of a 10-year economic funk and simotaneously thrusting the province into the international spotlight.

The province and federal governments will each spend $310 million to bring the games to British Columbia. The provincial government also promised to act as a guarantor – covering any losses the games may incur.

Estimated to cost $1.23 billion to stage, the bid committee proposes to host the host the Alpine and nordic skiing events in Whistler and all other events in Vancouver. The Vancouver 2010 Bid Corporation also expects to generate a legacy (profit) to finance the operations of the Olympic venues after the games leave town.

Niels Veldhuis of the right-leaning Fraser Institute lambasted the premier’s economic figures, calling them “ridiculous” and pointed out no modern Olympic games except Los Angeles has turned a profit.

He also accused Campbell using the Olympic bid to “build political capital.”

Based in Vancouver, Veldhuis grew up in Calgary and attended many events at the wildly popular 1988 Winter Games the city hosted.

“I love the Olympics,” he said. “If you’re going to do it, do it without government funds.”

Trevor Miller, a spokesperson for the Vancouver 2010 Bid Corporation said the games will not jeopardize taxpayers money because the bid uses modest numbers in its forecasts.

While he downplays the premier’s figures, he expects the bid will cost “$3 per Canadian” and pay dividends of “$9 per Canadian.”

Many Vancouver residents share the premier’s enthusiasm for the hosting the Olympics – 64 per cent of Vancouverites endorsed the games in a non-binding plebiscite.

Still, a pesky, determined and vastly under-funded opposition group dubbed the No Games 2010 Coalition threatens to derail the Olympic bid.

A motley crew of social activists, environmentalists, leaky condo owners, fiscal conservatives and libertarians, the group united to oppose the games for a variety of economic and environmental reasons.

For many critics like the No Games 2010 Coalition, the games represent a five ring Olympic circus of civic pride and nationalism run amok. Consistently oversold as an engine of economic growth, they contend the Olympic games seldom deliver the promised benefits.

Lead by Chris Shaw, the coalition spent a paltry $3,000 to convince 36 per cent of plebiscite voters to cast ballots against hosting the games.

“If we had even 1/10 their budget we would kick their buts,” he jokes (the yes side had a $700,000 campaign war chest to contest the plebiscite).

Suspisicion of the alleged cost to taxpayers and supposed benefits the games would deliver motivated Shaw to research the experiences of previous Olympic host cities.

His research revealed the Olympics left host cities with a troubling legacy of debt, underused facilities, murky accounting and less than expected economic growth. Countless Olympic organizers promised a mother lode of economic and societal benefits, but instead struck a vein of fools gold.

Several host cities boasted amazing operating profits, but since Montreal, all bid organizers separated the operating costs of staging the games from the infrastructure costs – roads, transit, and security.

Organizers of the recently concluded Salt Lake City games boasted an operating profit of $110 million. The U.S. General Accounting Office scrutinized Salt Lake games and determined the federal government contributed $1.3 billion towards the event.

The Auditor General of New South Wales stated cost overruns plagued the 2000 Sydney Olympics and as the guarantor of the games, the state government spent $2.3 billion.

The 1994 Lillehammer and 1992 Albertville Olympics along with the 1992 Barcelona Summer Olympic Games ran multimillion dollar deficits.

Even Calgary – considered a model Winter Olympic Games – lost money. The International Olympic Committee claims Calgary turned a $90 million profit in 1988, but Thomas Walkom, a Toronto Starr reporter and columnist disputes those figures.

In 1999, he reported the organizing committee omitted the cost of building facilities from its figures. The federal, provincial and municipal governments contributed $461million towards the games – nullifying any profits.

Critics of the 1998 Nagano Olympics suspect the games lost money, but Sports Illustrated reported organizers burned some of the books, leaving the financial impact a mystery.

Chris Shaw expects the Vancouver games would cost at least $4 billion if organizers included infrastructure costs in their projections.

Blueprints exist to build a new Vancouver convention centre and light rapid transit line from downtown to the airport. The provincial government also plans to upgrade the accident plagued Sea-to-Sky highway between Vancouver and Whistler. Often subject to closure, both critics and boosters cite the perilous two-lane road as an Achilles heel of the bid because it could not handle the influx of Olympic traffic.

Shaw also expressed shock at the scant $177 million security budget.

He called it “absurd” to spend just $177 million to “defend Vancouver and Whistler seven years hence in an uncertain political climate.”

Security at the Salt Lake City Olympics cost $500 million dollars and the Canadian government spent $300 million to secure the 2002 G8 summit in Kananaskis and Calgary.

Trevor Miller of the Vancouver 2010 Bid Corporation defends omitting infrastructure costs from the bid finances saying the rail line and convention centre construction and Sea-to Sky highway improvements were “going to be done either way.” He acknowledged the games may hasten the decision to proceed with construction.

For Miller, Vancouver and British Columbia will gain most from the massive exposure of being in the Olympic spotlight.

The games will attract “billions and billions of viewers,” he says. “Had you ever heard of Lillehammar or Nagano before the Olympics?”

Economist Alan Greer questions why Vancouver would use a “risky venture” Olympics as vehicle to increase its international exposure.

“(There is) a failure to take stock of where we are in the world,” he says. “We’re not under appreciated or under exposed.”

He points out ski magazines consistently rank Whistler as the premiere ski resort in North America.

The Canadian Centre for Policy Alternatives, a left-leaning think tank, commissioned Greer to scrutinize the Vancouver Olympic bid.

Like the Fraser Institute’s Niels Veldhuis, he casts doubt on the economic merits of the bid. He also questions why the bid committee has yet to commission a cost benefit analysis to determine the true opportunity cost of hosting the games.

His analysis projects the Olympics will create only 1,500 - 5,600 jobs – few of them in regions plagued by high-unemployment.

“You can assume in a healthy economy most of those people would have been employed anyway,” he explains.

Greer believes the games could bring many intangible benefits to British Columbia like increased civic pride and the thrill of watching Olympic level competition. He just wants the Vancouver 2010 Bid Corporation to promote the games on that basis and not as an economic panacea.

This story appeared in the Reflector.

UPDATE: Quebec taxpayers are finally off the hook for the 1976 Olympics! Somewhat ironically, the news came around the same time as Prime Minister Stephen Harper announced a plan to compensate land owners who had their properties expropriated to build Mirabel Airport, a grandiose project that perhaps even tops the Olympic Stadium in its folly.

On a related note, the Guardian ran an excellent opinion piece on how the budget for London 2012 is rapidly ballooning. It's deja vu all over again. The author makes an apt comparison between the pricey 2012 Olympic Summer Games and costly Millennium Dome.