The Brazilian city of Rio de Janeiro beat Madrid, Tokyo and Chicago to bag the 2016 summer games. With the push of an electronic button in Copenhagen, nearly 100 IOC members supported the expression by Brazil?s president, Luiz In?cio Lula da Silva, that it was the right time to correct the imbalance among world sporting hosts. Last week in New York, da Silva made the case that Brazil?s growing economy, fueled by oil and aircraft factories, had made it more than the nation of the samba and the beaches and the emotional soul of soccer.
The city has its arithmetic well chalked out. Reportedly, the Organising Committee (OCOG) budget is $2.8 bn and the non-OCOG budget is $11.6 bn. That contains a combination of planned and ongoing infrastructure investments in Rio. The bid is strengthened by the $ 700 million government investment directly into the OCOG budget, which means that Rio 2016 can be operational the first day following the Host City announcement, without the need for bank loans or initial sponsorship revenues. The Government?s $240 bn Accelerated Growth fund has been put in place to strengthen Brazil?s development. According to Rio de Janeiro bid leader Carlos Nuzman, more than four billion of that budget is already being invested on important infrastructure enhancements, such as roads, airport renovations and metro extensions. All these will be completed before the 2014 FIFA World Cup, two years before the 2016 Games.
If the returns will be as expected, is amatter of debate indeed. Andrew Zimbalist, Professor of Economics at Smith College and the author of Unpaid Professionals: Commercialism and Conflict in Big-time College Sports feels ?a city looking for an economic boost, would be wise to not host the Olympics.?And he has his reasons: ?Evidence from past Olympic Games hardly suggests that there?s a resounding economic gain from being the host city. Montreal?s 1976 Olympics left the city with $2.7 bn of debt that it finally paid off in 2005. The Barcelona Organising Committee in 1992 broke even, but the public debt incurred rose to $6.1 bn. Similarly, the Atlanta Organising Committee in 1996 broke even, but the bottom line there is not encouraging. An econometric study using monthly data found that there was insignificant change in retail sales, hotel occupancy and airport traffic during the games. The only variable that increased was hotel rates ? and most of this money went to headquarters of chain hotels located in other cities.? However, Victor Matheson, Associate Professor of Economics at the College of the Holy Cross, Worcester, opines ?the 1992 Summer Olympics served to put Barcelona on the map as a world class tourist destination.?
The city has already started to party with the official IOC poll confirming that 85% of Rio State residents had backed the bid.