London Calling

The London Olympics are now under three weeks away, and all the usual media frenzy is gearing up.  Soon, all round the world TV audiences will be subjected to in-depth analysis of major sports like beach volleyball, described breathlessly by people who know nothing about such sports but are major players in their networks.  They have to be there because this is not automatically about sport so much as about spectacle, promotion and personality.  David Beckham is out of the football, but he has to be found a place in the program so, for many, the Games highlight will be discovering exactly where he turns up.

For a very long time athletes, paradoxically, have almost become secondary to the enterprise.  There will be sensational performances well worthy of attention but in the current lead up there are the usual controversies.  Finally, the Saudis have allowed female athletes to compete in London, though any who do must dress in Islamic fashion, be accompanied by a male guardian and not mix with any other men. ( )    Elsewhere in the world, the normal pre-Games selection fights are under way, some athletes falling back on the now weapon of choice to pursue their cases, the Court of Arbitration for Sport. ( )      Once the Games begin, though, the real athletic prowess will become a focus, even if athletes’ cars to venues will be outnumbered in the special express ways by those of the officials and the media.

At a deeper level, though, London provides the latest but deepest example yet of the question about “public good” that has come to haunt the Olympics over recent years.

In 2003 the cost of the Games was projected at £1.8 billion.  Two years later that estimate was revised to £3.4 billion.  In 2007, when London won the bid, the cost was set at £9.3 billion.  In the four years from concept to reality, that is, the cost increased by almost 800%.  In a recent assessment, the figure was said to be heading towards £11 billion while an independent research agency suggests that will more likely be £13 billion.  Yet another version includes all public transport upgrades to produce a figure of £24 billion.  ( )

Those figures are serious enough, but become even more interesting when framed against the British economy.  According to one recent report, Britain is in technical recession with two quarters of negative growth following the 2011 performance when the economy registered just a 0.9% growth.  In fact, the UK is in a “double dip” recession, the first since 1975 when the economy underwent huge turmoil. The average expectation is for a 0.4% growth in 2012 with some gloomy analysts seeing perhaps even a -1% contraction.  As always, there is enormous debate around the minutiae but, to use a technical term, things do not look flash.  Britain has had a national budget deficit in excess of 10% which placed it about on par with the much-maligned Greece which has been at the heart of the Eurozone crisis.  ( ).      One count has Britain with a public debt level standing at 82% of GDP.  It goes on: Britain has a terrible trade deficit, one of the highest in the world.

The obvious point, then, is how does this stack up against the Olympic outgoings?  Not well, obviously, especially when it is considered that the Cameron-Clegg Government has committed to a serious austerity drive by slashing jobs, budgets and all the rest.  The UK is in the forefront of the “austerity drive” that is now at the heart of the debate about how best to get Europe back into that wonderful jargon position, “going forward”.  This is where it gets murky, because the argument is essentially about whether the Olympics will stimulate Britain economically or impose even more brakes.

Ever since the financial disaster that was the Montreal Olympics, bid cities and governments have been at pains to convince their countries that the Olympics will be a “good thing”.  It worked in 1984 at Los Angeles but nowhere else in any meaningful sense.  Remember, it was as late as 2004 that Athens had the Games with the same mantra and, at this point, that seems to have worked really well!  Every bid city has had serious arguments over its budgets and, especially, later on its results.  It is hard to justify the outlay when stadiums fall into disuse immediately after the Games, as in Sydney and Beijing to name two, and when other infrastructure suffers the same feat.  That is when governments fall back on the argument that the event produced better roads and airports (or in the London case, railway stations), but that then raises the question: if the infrastructure was needed, why had it not happened already and why were the Olympic needed as an excuse?

The International Olympic Committee provides the lifeline here these days, through its “legacy” requirement.  Sensitive to criticism of rising costs, not to mention the need to resurrect its image after the corruption scandals around Salt Lake City and elsewhere, the IOC asked that bid cities show how their expenditure would improve the futures of the cities in question.

The London bid emphasized it would use the Olympics as a force for “social regeneration”, principally of East London and this has been pushed hard by the UK Government. ( ).   However, the fine print shows a lot of the development occurring over the next twenty years, which immediately renders it an uncertain prospect, especially under the austerity drive provisions.   The leading organisers in London suggested that 75% of the total budget would be spent on regeneration rather than directly on sport activity.  If so, would it not have been cheaper to spend that 75% and forget about the Olympics to achieve the same goal?

Among some of that legacy will be the huge Stratford shopping mall complex, built courtesy of Australian Frank Lowy’s Westfield group and destined to be one of the UK’s biggest developments – on a direct line to the stadium it is thought to be well placed, but that depends entirely on what happens later. Other “benefits” are said to include “a spectacular new waterside park”, “new state of the art utilities”, over 100 acres of “development land”.  Some of this is nebulous, to say the least, and critics have not been comforted by the Games Village story.  The Global Financial Crisis put paid to that being completed by private enterprise so Government had to step in.  Last year, the village was forward sold to the Qatari royal family’s property arm, reportedly £275 million below cost. ( ).

It is against this backdrop and context that athletes will compete over the next few weeks, but it will be no surprise if some of these issues figure prominently in discussion and argument.  Let the Games begin!

4 Responses to “London Calling”
  1. Max Walsh (Manila, Philippines) says:

    Food for thought Brian.
    There is no doubt that many nebulous promises are made to secure the Games and then various “get-out” clauses are subsequently invoked down the stretch.
    It is such a pity that so many of these side issues take away from the absolute splendour of the athletic performances. With World Records in just about everything now pushing the limits of incredulity we can but contemplate whether U. Bolt and any other unbelievable sportsperson will stretch these limits even further.

  2. Another in depth, perceptive and well informed article by the learned professor Stoddart. Congratulations! These games have long since been an exercise in self-agrandisement by politicians, especially Blair and Brown. They forgot just two things. The first was the fact that they had a general election to win, or lose, between securing the games and 2012. The second was to appreciate that all their calculations should have had VAT added to them.

    So as it became more and more clear that Labour was not going to win in 2010 it deteriorated into a race to add whatever financial burden could be piled onto an already unsustainable commitment so that when the Conservatives came back into power the money would all have run out, not to mention the continuing liabilities. In the kingdom of the blind the one eyed man is king, as they say.

    Are these games intentionally, therefore, a financial timebomb deliberately set by Labour to make GB Limited an even more indebted enterprise to add to the two aircraft carriers we can no longer afford and probably never needed, the high speed railway track, and lots more besides?

    Will they never learn that Keynes got it all wrong and that those who earn money are the ones who spend it most wisely, not politicians or other civil servants, who by the way seem to be neither civil nor to serve these days? Keynes’ General Theory is entirely predicated on growth and if you do not have that it cannot even appear to work. And it requires an army of politicians, Treasury officials and tax inspectors and collectors, all of whom have to be paid out of the tax take, to administer..

    And to add insult to injury G4S seems not to be up to the job with the result that HMG has had to ‘send in the troops’. I will be an irony if Tommy Atkins finds himself fighting Bin Laden junior on the streets of London rather than Kabul.

    But write on, Professor Stoddart, you are as always dead right, sport is now only a minor player with a bit part completely upstaged by other hangers on and also rans far less worthy than the athletes.

    David Crawford.

    • Ah David, thank you very much. It is alarming to think that the “investment” in the Games was either Machiavellian or Heath Robinsonian. Either way, it says nothing for the architects of the strategy as you point out, and the consequences are frightening in an economic sense, and I suspect in a social sense. The ‘regeneration” of East London seems a rather arbitrary matter, as Gavin Poynter at the University of East London has been saying for some time. The athletics will be great, the legacy unlikely to be so

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