Athletes aren't the only ones after gold. The Olympic Games are slot machines. Cities play them, alternating between tension and reward. The house always wins: the IOC bears no cost and controls a bidding process that incentivizes cities to promise more than they deliver. But cities believe that if they keep putting coins in and pulling the lever, they'll eventually win big.
That's why, every four years, cities around the world place their bids to host the Olympic Games. To taxpayers, the bid is always positioned as financial boom to the winning city, promising billions of dollars worth of new infrastructure, hundreds of millions spent on local businesses, and hundreds of millions more in projected future tourism-related revenue. The rationale is always the same: those billions spent hosting the games make for a smart investment in a city's future. But it never, ever works out that way.
The International Olympic Committee demands much of its host cities, including stadiums, parking, roads, public transit and hotels. Those have to be built to the IOC's detailed specifications. After the last medals are awarded, and delegations leave for home, residents are always left wondering how, exactly, that investment in a one-off sporting event serves the future of their city.
And it's a huge investment. An Oxford University study found that from 1968-2010, when adjusted for inflation, the games cost $3.6 billion. The London games in 2012 and the Sochi Winter Olympics in 2014 cost an average of $16.2 billion.. (Cost overruns are factored into contracts, and host cities are responsible to close any financial gap.)
For the 2002 Winter Olympics in Salt Lake City, millions of dollars had to be provided by the Department of Defense for free--but, of course, there is no such thing as free; that money could have been spent on other taxpayer-funded programs. For the 2004 Summer Games, the city of Athens spent $1.5 billion on security alone, a nonstructural expense that leaves no benefit for the host city.
So perhaps it shouldn't come as a surprise when, it came time to bid on the 2022 Winter Games, there were only two cities left in the running, Beijing and Almaty, Kazakhstan; Oslo, Stockholm and Krakow pulled out because of public opposition. Or that for the 2024 Summer Games, Boston Mayor Marty Walsh made the responsible decision, refusing to sign a contract which would have put the city on the hook for cost overruns.
Or that, just two months ago, the governor of Rio de Janeiro declared a state of financial emergency, warning the IOC and Brazilian government of a "total collapse in public security, health, education, transport and environmental management."
Why we need--and want--permanent Olympic Parks
If we believe in the future of the Olympics, then the IOC must consider moving the summer and winter games to permanent, neutral locations.Two permanent locations owned and managed by the IOC would alleviate the enormous financial strain levied on host cities and could, at least in theory, make better use of the monies allocated for the games. It would shift the funding and management burden to the IOC and make the IOC more accountable to its member nations.
The new, permanent Olympic Parks should be modeled off of the world's large, successful theme parks, which have already figured out how to funnel masses of visitors from their cars and planes and cruise ships to attractions. Say what you will about Disney's princesses; that company knows a thing or two about park layout, design and logistics.
But Disneyworld, while it could certainly use an upgrade, is beholden to super-fans who, in 2016, want to experience Space Mountain just as it was in 1975. It welcomes visitors every single day--but the summer and winter games only happen every four years. Which leaves ample time for significant upgrades, track redesigns, and even aesthetic changes. The IOC and its subsidiaries would bear full responsibility for upkeep and renovations--and they would finally have skin in the game, rather than just oversight.
On paper, the IOC earns 47% of its revenue through broadcast rights, and 45% through sponsorship. (The rest is ticketing and licensing agreements.) In its 2008 - 2012 cycle, the IOC brought in an estimated $8 billion in revenue--which doesn't account for the soft revenue that comes in during the bidding process, when IOC members are courted by corporations and cities. The IOC could invest $2 billion of its earned revenue in the development of land and facilities.
Participating nations would also contribute funding. And corporations could further support Park development through grantmaking and sponsorship. London and Sochi required eleven-figure sums to stage their Olympics; once two Olympic Parks are built, ongoing maintenance won't require anywhere near that figure. Moving to permanent locations would mean the IOC would know its fixed operational costs for each Olympics, and that cost burden would be far less--millions, rather than billions, each cycle.
Such permanent locations for the summer and winter games would offer many benefits:
• In the future, security in our public arenas will become more difficult to manage, not less. Successful theme parks are not unlike fortified military strongholds--they have checkpoints with continual monitoring and they're difficult to breach. But they're designed to make spectators forget that they're being monitored by face recognition software and tracking systems sophisticated enough that park officials know when you're in the bathroom. Permanent Olympic Parks would allow the IOC to prepare more adequately in advance, to secure its venues and to allay the fears of athletes and spectators alike.
• A permanent location could also mean stronger oversight when it comes to doping: athletes from member nations could be required to visit the Olympic Parks for drug testing. The World Anti-Doping Agency, which is the global regulator that oversees testing labs around the world, would no longer have to manage dozens of locations. Rather than facing scrutiny about whether it is fairly regulating those labs, it would transparently operate labs within the Olympic Parks.
• One of the stated missions of the IOC is raising awareness of environmental problems. The new Olympic Parks could be built using sustainable resources, and, as upgrades are made every cycle, the IOC should share with the world what it's learning about how to manage stadiums and large public spaces in a more environmentally-friendly way.
• The IOC advocates for the "advancement of women in sport at all levels and in all structures, with a view to achieving equality between men and women." What better way to do this than to design the Parks with gender equity in mind. For example, as hearts and minds continue to evolve, the Parks could be physically altered eventually to include gender-neutral bathrooms.
• To continue the Games' tradition of featuring global heritages, nations would be selected to co-host each Olympics--to showcase their heroes, their cultures and their ideas. For the first time, this would allow nations like Kenya, Poland, Romania, Bulgaria, Cuba and Jamaica, who would otherwise never be able to take their turn in the spotlight.
Just imagine the opening ceremony of the 2032 Summer Olympics at the new Olympic Park. Before the parade of nations begins, spectators in a world-class, environmentally-sound stadium listen to the music and citizens of its host nation, Kenya. Nairobi's officials aren't consumed with fear about unpaid bills. Millions sit at home, watching from afar, knowing that they won't be displaced by future Games. And the IOC is ensconced deep inside its digital command center, making history happen.
This is the first in a series of articles by Inc. magazine's technology columnist, Amy Webb, about the future of key business and public institutions.