Before the Olympics started we had lots of negative stories – so-called “Zil” lanes for the favoured Olympic family, the ticketing fiasco, the G4S fiasco, the sponsors having it all their own way with small businesses suffering from not being able to identify with the Olympics, even those who had actually worked on building the Olympic facilities.
There was so much PR and positive spin being put out that I posted a blog last December asking what the Olympics were actually good for“.
And in April 2 out of 3 people in a BBC survey thought the taxpayers had paid too much for the Olympics.
Then we had a slow start before we won anything with even more acrimony about tickets and half-empty venues; and the centre of London was pretty empty too with trade down between 30 and 60% and being branded a ghost town.
Some of this was self-inflicted by hotels which had hiked up their prices and then suffered for their greed when tour companies didn’t take up bookings and people stayed away because of high prices and warnings about traffic congestion. Of course the 5-star hotels were fully booked by Olympic sponsors and officials and their families on tax-free junkets.
The fall in numbers also affected shops, museums, theatres, taxis, and restaurants right in the middle of the peak tourist season.
Then we began to win medals and in the end had a very successful Olympics, perhaps better than we expected.
Of course we had disappointments and failures too. And there were also examples of unfairness. The Taekwondo selection was bizarre, not selecting the World No 1 because he trained independently. And, as he predicted, he had beaten the eventual Gold medal winner. In cycling Victoria Pendleton was unfairly disqualified after her rival clearly nudged her out of the lane.
And unfairness to our armed forces being forced to give up their leave after returning from Afghanistan. This however turned into a PR victory for them as everyone seemed to appreciate their role. But that was no thanks to the mismanagement of the G4S contract by the government.
There was also blatant sex discrimination when male teams travelled first class and the female teams flew in economy.
And the big question remains about the legacy. Apparently sales of bikes and rowing machines are up but we still don’t have sport in schools as a priority.
Will we make any money out of it? Well the gold medallists will be set up for life with their honours and sponsorships. That seems a bit unfair too after the tax payer has supported them in doing something they love and they are the only ones to get rich. But the Olympics is a get-rich mechanism for the International Olympic Committee and the sponsors who don’t pay any tax.
We put in about £10 Billion as taxpayers, paid through the nose for tickets, and yet it’s the sponsors who get the credit for a few measly millions they write off as expenses anyway. And it wasn’t as if it created any real lasting employment. Jobs might have been created during the construction phase but that was two years ago. The games wouldn’t have worked without the 10,000 volunteers who only got free transport and maybe a luncheon voucher.
David Cameron says there will be a £13 Billion legacy from the Olympics and is desperately setting up meetings for investors. He should be reading the in-depth analyses of previous events set out in the business sections of The Observer and the Sunday Times (and probably elsewhere). It doesn’t make good reading.
The Centre for Economics and Business Research estimates that the games could pay or themselves by 2021 by helping London generate an extra £1.8 Billion a year by 2015. Note the reference to London.
A BBC survey in July showed that 3 out of 4 people thought the rest of the UK wouldn’t benefit – not really surprising considering it was billed as the London Olympics. People in power seem to forget that there is life outside London and that Team GB was actually Team GB & Northern Ireland. And where would we have been in the medals table without the magnificent contribution from Yorkshire?
The Centre also estimates that the lost revenue from tourists and the drop in productivity due to 1.5 million people working from home during the Olympics has cost the UK economy £1 Billion this year.
The director of the Greater London Group at the London School of Economics said that the Olympic games were not the way to get Britain out of the recession and that even if there was a short-term boost to the economy it would be very small. The fall-back in tourist activity has damaged estimates of economic activity arising from the games.
We may have already seen any benefits we were going to get two years ago and now we are more likely to see the downside as productivity fell during the games. And there is no guarantee that global companies will want to invest in the UK or buy our products when labour is cheaper elsewhere and taxation even more flexible.
But this is typical of Olympic games. Australia’s economy went flat after the 2000 games as did Greece’s after 2004. Citi examined data from 10 Olympics between 1964 and 2008 and found that growth rose in the run-up but started to fall away as the games began and was weak thereafter. Australia saw a 16% increase in visitors for their Olympics but suffered a drop for the 3 years afterwards
The BBC survey back in April found that just over half the people (mistakenly) thought the Olympics would prove to be good value in terms of benefits. Now a survey shows that a similar proportion of people don’t expect the Olympic buzz to last – and they’d be right to think that.
Professor Stefan Szymanski, a specialist in the economics of sport at the University of Michigan, says there is evidence that there are negligible economic benefits but that it can make people happier. He said; “If you tell me there’s going to be a party, that’s great – but if you tell me that you’re going to have a party and get rich at the same time, then I’m not going to believe you”.
It’s not just the Olympics but any major sporting event such as the World Cup. Organisers (who insist on special tax dispensations for themselves) bang on about the legacy in terms of sport and the economy but it just doesn’t happen. The last World Cup in South Africa is a good example.