“What good will a nicely managed global event really do for residents when so many of us are struggling so much to make ends meet?” asked Lee Do-Sung, a restaurant owner in Gangneung, the city which will host many events in the 23rd Winter Olympics. “What will the games even leave? Maybe only debt.”
Given the Olympic Games’ complex financial history, such pessimism is understandable. Yet at a cost of $12.9bn, the Pyeonchang Winter Olympics are hardly expensive – this is roughly a quarter of what Russia spent on its grandiose production four years ago in Sochi. In 2010, Vancouver made a modest profit after investing $6.4bn in its Winter Olympics.
The intangible factor that is hard to quantify in any profit and loss statement is what such events do for a country’s image. World Cups and Olympic Games (winter and summer) have become exercises in soft power, for countries that want to rebrand themselves at home or abroad. The rest of the world was thoroughly underwhelmed by Sochi 2014 but that didn’t bother Vladimir Putin who sold, through state-controlled television, the image of a globally powerful, respected and successful Russia to the masses.
The rationale behind Pyeongchang’s Winter Olympics is less obvious. The recent rapprochement with North Korea – and the participation of that country’s athletes – is an unexpected bonus. South Korea’s new president Moon Jae-In, the former UN secretary general, hopes the event will help change the global narrative that depicts his country chiefly as a security risk and promote the nation’s cultural products and technology.
The county of Pyeongchang, roughly 180km east south east of Seoul, is already popular with mountain hikers and skiers, and the provincial government hopes the global spotlight will boost tourism.
Unfortunately, only about 36% of South Koreans say they’re interested in winter sports. Officials in Nagano, Japan, talked up the prospects of a tourist boom ahead of the 1998 Winter Olympics but it never materialised, forcing the city to raise the equivalent of £20,000 per household in taxes to pay its debts.
That said, South Korea’s tourist industry is relatively underdeveloped – accounting for only 1.8% of GDP – and, from such a low base, growth is feasible. The 2018 Games may also safeguard Alpensia ski resort, the venue for many events, which was rumoured to be close to bankruptcy in 2012.
The facilities built especially for the 2018 Winter Olympics include: a $100m stadium in Pyeongchang; a speed skating centre, hockey centre and ice arena in Gangneung Ice Arena; another hockey centre in Kwangdong; an alpine centre in Jeongseon; a sliding centre and an Olympic Village.
This investment has been controversial. The downhill racing course in Jeongseon, built in a pristine forest regarded as sacred by some locals, will then be knocked down. The Gangwon provincial government is arguing with the national government over who will pay to replant the forest.
A proposal to turn the speed skating centre into a refrigerated store for seafood has, local officials insist, never been considered seriously. Yet the fact that it was mooted suggests that the provincial government does not know what do with these facilities after the Games. Ideally, officials want to keep some of them – as long as the national government pays for their upkeep.
Their confusion is understandable when you consider the fate of many facilities built for previous global sporting events.
• The main Olympic stadium for the 1976 Summer Olympics in Montreal is now a refugee centre for asylum seekers.
• The Olympic Aquatic Centre in Athens has remained vacant since 2004.
• The Cesana Pariol track, the venue for the bobsled, luge and skeleton events at the 2006 Turin Winter Olympics, has been partially dismantled.
• The Brasilia stadium, built for the 2014 World Cup, is now a parking lot for buses.
• The Olympic stadium for London 2012 is rented out to Premier League club West Ham United for £2.5m a year.
• The Sochi ski jump and resort has been given to the regional government because Sberbank, Russia’s largest bank, cannot afford to run it.
Faced with these dismal precedents, South Korea’s national government seems to have concluded that the best way to manage the new facilities is to demolish them. This sounds absurd. Yet spending $100m on a new stadium for Pyeongchang, using it four times – for the opening and closing ceremonies of the Winter Olympics and Paralympics – and knocking it down may make more financial sense than spending millions to maintain it in order to promote what members of the International Olympic Committee reverently refer to as legacy.
Everyone agrees that sporting events, such as the Olympics and World Cup, should have a lasting, beneficial impact on the cities and countries that host them. The difficult bit is making it happen.
The infrastructure required to stage these events does not necessarily match the host’s needs. The Pyeongchang stadium is a case in point: with a capacity of 35,000, in a county with a population of 40,000, it will be impossible to fill once the Olympics are over. The race to host these events incentivises bidders – and the construction companies advising them – to devise elaborate plans. Invariably, says Olympic historian David Wallechinsky, organisers must steel themselves for ”financial surprises and debt”.
Montreal took 30 years to pay off debts from the 1976 Summer Olympics. The last winter Olympics, Sochi 2014, cost $51bn, exceeding the original budget by just $39bn. In Putin’s increasingly opaque democracy, only a few people know how that tab is being paid – and none of them are likely to say so publicly.
Yet some events pay their way: London 2012 broke even and the $225m surplus from the 1984 Olympics in Los Angeles was reinvested in American sport.
Pyeongchang could mark a tipping point in the evolution of the Olympic Games. The reluctance to pour money into stadiums that become white elephants will be reflected, on a grander scale, at Paris 2024 and Los Angeles 2028 which will, the IOC says, use a “record-breaking number of existing and temporary facilities”.
The headlines ahead of what is forecast to be a chilly opening ceremony in Pyeongchang convey how tricky South Korea’s rebrand could be. USA Today explored the country’s trade in dog meat, National Geographic magazine suggested the future of the Winter Olympics is threatened by climate change and British tabloid The Sun asked: “What is the difference between Pyeongchang and Pyongyang?”
None these headlines are likely to bring much cheer to the dismayed restaurant owner in Gangneung.
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