Life in the Classical Era was tough: high child mortality, low life expectancy, early-stage medicine. Not to mention the chances of dying in battle in one of the many petty wars between city-states that plagued the Hellenic Peninsula way before the rise of Rome. However, even back in the day, there was an occasion even the most barbaric tribes held so sacred they would lay their weapons aside for a while and watch in awe: the Olympic Games, held in the Greek city of Olympia, home of the majestic temple of Zeus, to whom the celebration was originally dedicated. Every four years, the finest athletes from all of the Greek city-states and colonies would gather to take part in a series of competitions, including athletics, gymnastics, boxing and ancient wrestling, at the end of which the winners would receive a conspicuous monetary reward, undying glory and the iconic crown of laurel leaves. The ancient Olympic Games ran successfully for over a thousand years, until the Roman Emperor Theodosius I and the Bishop of Milan Ambrose finally dismissed them as a pagan ritual.
Just like the ancient Olympics, the modern ones were designed in 1894 as an occasion to restore peace and brotherhood in Europe after the brutal conflicts that had ravaged the continent during the 19th century, in the spirit of fair competition and the luxuries of the Belle Époque. While they overall failed in their intents of pacification, they did succeed in restoring the quadriennal tradition of the Games. As the city of Olympia is no longer suitable for an event that attracts hundreds of thousands of supporters from all over the world every year and requires facilities way better engineered than the ancient Greek ruins, the host is by convention designed by a vote among all candidate cities. It is organized by the International Olympic Committee, quite a while in advance, years before the actual Olympic Game in question takes place. This year, the vote concerned the designation of the host city for the Olympics of 2024, and it appeared to have finally chosen Rome, the Eternal, as one of the favorite candidates for this prestigious role. The news was welcomed by the Italian National Committee for the Olympics (CONI) as an omen of economic rebirth for the Italian capital and as an opportunity to showcase Italian sportsmanship to the world. However, by what many would define as a fortuitous coincidence, 2016 was also a year of mayoral elections in Italy, and whether to actually carry out such a noble but costly endeavor easily became matter of political dispute.
Now, the mainstream view about the Olympic Games is that they are a great way to advertise the host’s country and culture to the world – thus possibly boosting tourism-related revenues – and also an opportunity to stimulate the local business environment via sponsorships and procurements, especially concerning the necessary infrastructure. However, the extent of these effects largely depends on the characteristics of the host country.
Let’s take a look, for example, at this year’s Olympics, which took place in Rio de Janeiro.
The iconic “green pool” at the Rio 2016 Olympics.
In 2008, when Rio was chosen as host for the 2016 Games, Brazil had one of the highest projected rates of economic growth among developing countries, and many observers believed that hosting the Olympics would give its soaring economy the last push needed to rightfully enter the First World. But eight years are an extremely long timespan in the modern world, and many things happened on the way to 2016 that nobody could foresee: first of all, Brazil’s economy suddenly stopped growing as a result of the deep political turmoil following President Dilma Rousseff’s impeachment and the ongoing corruption scandals within the Brazilian government, as well as the crisis involving petrol giant Petrobras. With a rising inflation – estimated at 10% per year – and unemployment at an all-time high of 11.2%, Brazil is now facing one of its worst economic recessions ever, which automatically sent the Olympics to the bottom of the list of Brazil’s priorities. The fairly predictable outcome was that as of 2016, Rio was absolutely unprepared to host an event of such magnitude: by July, just a month before the start of the Olympics, the Organizing Committee admitted less than a half of the buildings in the Athletes Village had passed the necessary safety tests required to host the competing teams. Anecdotes have it, the US basketball team decided to reside on a cruise ship rather than the Village exactly for this reason. Those who did defy the odds and went to the Village had to deal with leaks, plumbing issues and structural problems of the buildings. In addition, some failures in the hydraulic and sewage systems caused the iconic “green pools” during the diving and water polo competitions, raising health concerns from the athletes. Combine these issues with the unfortunate coincidental outbreak of the Zika virus and the endemic level of crime in the city and you might have a fairly accurate picture of just how disastrous those Games were. If you consider the billions invested in the organization of the event, you would be right in thinking everybody would have been better off if the Games had just been held somewhere else.
Even before becoming mayor of Rome, Virginia Raggi, candidate for the Five-Star Movement, had been campaigning against the burden of the Olympics with her party. However, in early October, the decision became definitive, causing the CONI to withdraw the candidacy of the city to host the Games. The decision raised much concern within Italian politics, as many believe hosting the Olympics to be an opportunity that should not be forgone light-heartedly. But is it really?
The overall cost of hosting the Olympics was calculated by the CONI and predicted to be €9.7 billion, amount that would be reduced to €4.2 billion, considering that part of the infrastructure had already been planned for other purposes. But Luca Cordero di Montezemolo, President of the Italian Organizing Committee, suggested the costs would have been widely made up for by a 2.4% increase in GDP and the creation of 180,000 jobs all over the eight-year period. Italian Prime Minister Matteo Renzi also strongly endorsed the initiative, claiming that the organization of the Olympics had been planned to be “the vanguard of economic and ecological sustainability”.
So why would Ms. Raggi (and her party) be against this opportunity for growth? Once again, it’s related to some very peculiar characteristics of the host country.
The Five-Star Movement, which Virginia Raggi represents, was born in the wake of Silvio Berlusconi’s political demise as a popular initiative to increase the political involvement of Italian citizens, with the objective to fight corruption and create an alternative to the “usual suspects” of Italian politics. Under the leadership of a comedian, Beppe Grillo and a programmer, Gianroberto Casaleggio, the Movement then derailed into some sort of political delirium tremens, even publicly advocating conspiracy-related nonsense such as anti-vaxxer propaganda and alternative cures to cancer; but that’s another story.
The Mayor of Rome, Virginia Raggi.
Now, Italy has a certain reputation for generating quite a lot of corruption in prestigious occasions such as World Cups, Olympics and Universal Exhibition – and the 2015 EXPO in Milan was not an exception – especially when it comes to the construction of the necessary infrastructure. Considering the amount of work required to build an Olympic Village, it is reasonable to believe somebody might find it appealing, for example, to secretly coordinate the auctions of the public procurements for those structures in such a way that all the participants maximize their profit, possibly delaying the process for quite a while and enormously inflating the costs or, for instance, to bribe a few inspectors here and there so they will turn a blind eye on buildings which do not pass the safety checks. This is exactly the kind of concern that finally led Ms. Raggi, who claims to be true to the original intent of the party to fight corruption, to decide against the Olympics. But then, again, aren’t this sort of risks always embedded in this sort of international competitions? And isn’t the Italian economy after all capable of absorbing an eventual loss, considering the possible profits? Should then anybody just give up on hosting great events for fear of corruption?
There are quite a few lessons we can learn from all this. The first is that are no absolute truths in Economics: what is an opportunity for profit for one country does not necessarily need to be for another. The second is that organizing an event eight years before it actually takes place is not really a brilliant idea, as literally anything can happen in such a long time. The third is that poor Olympics are worse than no Olympics at all.