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Now we are mid-way through the 2021 Olympics, it is important to consider the commercial impacts of hosting the Games. It is a well-known fact that hosting the Olympics rarely keeps to budget. Historically, Montreal 1976 saw a budget overrun of an astronomical 720%; Barcelona 1992 saw a 266% budget overrun. This trend has continued in modern day with the Sochi Winter Games of 2014 recording a 289% budget overrun and Rio de Janeiro’s 2016 Summer Games running 352% over budget. Comparatively, the London 2012 Games performed well – with a budget overrun of 76%. The most common factor for running overbudget at all of the Games listed was unexpected costs and delays in building the venues.
The high costs of running the Games has deterred some cities from hosting. The most prominent example is Hamburg’s 2015 bid for the 2024 Games, which was rejected after a referendum revealed 51.6% of Hamburg’s inhabitants were against it. The 2024 Games were later awarded to Paris.
Tokyo’s 2021 Games has come in as the most expensive on record. In 2013, at the time of bidding, Tokyo forecast that hosting the Games would cost $7.4bn. This budget will revised in mid-2020 to $15.4bn, taking into account the one-year delay. According to the organising committee, the postponement of the Games is estimated to have cost $2.8bn. Two-thirds of this was covered by Japanese public funding. Since then, total spending on the Games has reached over $20bn. Two of Japan’s financial newspapers: the Kikkei and Asahi predict the final bill will exceed $28bn.
So why do cities continue to bid for the Games? If a success, hosting cities hope to establish an enduring legacy. Perhaps the best example is London. Whilst Athens and Rio’s athletic venues are now overgrown, crumbling and dilapidated, London has been able to generate income from its stadia. Since 2012, barring 2020, over 1 million people have visited the Olympic Park each year. Many of the venues are still used to host elite sports such as swimming, football, rugby and athletics. Stand out examples include the Aquatics Centre which was recently used for the British Swimming Championships; the ExCeL centre, which is used for administration during the London Marathon each year and was turned into a 4000-patient strong hospital in 2020 under the Nightingale initiative; the London Stadium hosted the IAAF Athletics World Championships in 2017, which generated a £79m income for the city and the 2013 Triathlon World Grand Final, hosted in Hyde Park, which generated an economic impact of £8m. Across these events, over 100,000 jobs have been created.
Talking point: Why have the Tokyo Games been so expensive? How does Rio’s legacy compare with London’s, and what can Tokyo learn from this?
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On the 11th July, Virgin Group founder Richard Branson finally passed into space onboard the VSS Unity, a Virgin Galactic spaceplane. Only a few days later, Amazon founder Jeff Bezos followed suit aboard the New Shepherd, built by Bezos’ aerospace company Blue Origin. Tesla Chief Executive Elon Musk is also reportedly planning Crew Dragon flights with private passengers in the next month. Bezos and Musk have a longer-term aim to colonise space through re-locating heavy industry to space. Branson is yet to unveil his ultimate goal.
Whilst their achievements are remarkable, moving space flight away from government-backed ventures to private company operations has not been without controversy.
Here are some of the most common benefits and drawbacks of the billionaire space race:
The race has spurred on space exploration. Whilst resources are limited on Earth, in space, we have the opportunity to tap into solar energy or mine asteroids for minerals, thereby helping to reduce pollution on our own planet.
NASA has benefitted already. Historically, space shuttle transportation of cargo and astronauts has been expensive; Elon Musk has already delivered ‘indispensable cargo and crew to the International Space Station’, relieving NASA of the cost.
Creation of a brand-new industry: space tourism. Although space tourism is currently inaccessible to the masses, over time, through economies of scale and rapid technological progress, cost will be reduced. Analysts predict that the commercial space sector will emerge as a competition industry, at twice the speed of the aviation industry.
Ethical concerns. Critics have pointed out the disparity between the behaviour of these billionaires and the greater population, especially in the wake of Covid’s economic devastation and high level of unemployment. Bezos’ 10-minute trip to space cost $5.5bn.
New corporate tax arguments. With the cost of these space flights in mind, many critics have resurrected arguments that companies such as Amazon, Tesla and the Virgin Group should pay higher levels of tax. Counter-arguments include that by creating a new industry, thousands of jobs will be created and the space race may make huge environmental progress, offsetting the higher tax rate.
Talking point: Do you think private companies should continue to invest billions in commercial space flights when millions are suffering from food poverty in the UK and US?
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