The Winter Olympics are underway, which for me means sitting through lots of ice dancing and people falling down mountains on various contraptions, while hoping to catch some curling. And, of course, wondering how much all this is costing. CNBC’s Squawk Box has the answer, via our old frenemy Andrew Zimbalist, and it ain’t pretty:
Speaking to CNBC on “Squawkbox,” he said: “At the end of the day, they’ve spent $13 billion and they’ll get back about $2.5 billion. The only way you can justify that kind of a terrible balance is if, in the long run, it’s going to promote tourism, promote trade and promote foreign investments.”
“There’s no evidence from other Olympics that that happens,” he added.
He’s not wrong: Multi-billion-dollar losses are de rigueur in the Olympic world, and by all accounts the only Olympic host to see a significant rise in tourism after the Games was Barcelona, which may now be having some second thoughts about that strategy. Still, a negative-80% return on investment is pretty impressive no matter how you slice it, so how exactly is South Korea managing this?
A $109 million Olympic stadium that will be torn down after only four uses is a decent start. Selling only 60% of the available tickets (according to Zimbalist) also helps, though Olympic officials claim that number is now down to 16%. I don’t have numbers for much of that $13 billion expense is cost overruns, but it’s typically a whole hell of a lot. A $3.7 billion bullet train to connect Seoul to Pyeongchang? Now we’re talking!
With the most impressive Olympic construction being its massive sea of red ink, cities like Oslo and Boston have to be breathing sighs of relief that they bailed out of their Olympic bids, while potential 2026 bidders — I’m looking at you, Sion, Erzurum, Innsbruck, Calgary, Stockholm, Sapporo, Denver, and Almaty — may want to start having second thoughts. I’m not honestly sure whether the best solution here would be to rotate the Olympics permanently among a few cities with permanent venues (but what city would really want to have to keep a velodrome sitting around that’s only going to be used for three weeks every 16 years?) or scaling back the Olympics to where they only involve sports that can be played in multipurpose venues (curling and ice dancing, you’re all good!) or what, but something’s gotta give eventually if we don’t want our planet’s most renowned sporting event to be all about setting fire to a giant pile of money every two years. Though come to think of it, that wouldn’t require a specialized venue or even a bullet train, so bring on the Money Bonfire as an Olympic event!