In the Olympic race, Athens fell short of the line

One of the beauties of the Olympics is that it provides cut-and-dried answers to questions like “Who is the fastest?” “Who can jump the longest?” and “How high can they reach?” But while such queries are answered on the track, the field and elsewhere, the success of the Games themselves is a much more subjective thing.

Few can doubt that London2012 exceeded expectations. So surely it must be classified as a success. Well, it’s not that simple. Athens2004 also blew people away but its legacy has been in doubt almost since the moment the last athlete left the city. Today, the Athens Games are the bogeyman deployed to scare any other cities that might be inclined to see the occasion as a carefree celebration rather than a precision-timed exercise in planning and public spending.

“When anybody thinks of the Athens Olympics, all they see are rusty stadiums and a swimming pool with weeds growing out of it,» Paul Mitchell, executive director of sport at consultancy Arcadis, which advised on the construction of the London Olympic stadium, told Reuters recently.

This is an unfair representation of the Athens legacy and underlines that the assessment of the Games’ aftermath is not as easy as measuring a long jump or which sprinter crossed the line first. A number of the stadiums built for 2004 are in regular uses. Also, there are five pools at the Olympic swimming complex in Athens: two of them indoor, three of them outdoor. Only the biggest, which was used for competition during the Games, is not in use. The others are all used on a daily basis and are a testament to the Olympic spirit as professional swimmers and water polo players use the same facilities as young children learning their first strokes.

But the criticism that Athens built too many facilities, which it had no hope of maintaining is valid. Of the 9 billion euros spent on the Games, more than 2 billion went on new venues. This included provincial soccer stadiums with capacities their teams couldn’t fill if they were playing for free and several indoor arenas for which there had been no post-Olympic planning.

Against the backdrop of the Saronic Gulf, the beach volleyball and tae kwon do stadiums serve as memorials to the lack of organization and foresight. The promenade that links them should have been by now a must-visit for all tourists. Instead, it’s a place that even locals avoid. The Elliniko site, once slated to be Europe’s biggest metropolitan park, is still in search of an investor. It may yet be saved, but a decade of missed revenues tells its own tale. The International Broadcast Center, meanwhile, had its state-of-the-art guts ripped and replaced with high heels and chiffon dresses s it was turned into a luxury shopping mall.

Contrast this with London, where 257,000 out of 745,100 seats at London’s 34 Olympics venues will be dismantled and some venues could be packed up and used again in other cities. In its 2020 Olympic master plan bid, Madrid says it will build just six permanent and two temporary venues as 84 percent of the sites already existed.

Ultimately, numbers count when assessing the success of Olympic Games, just as they do for the athletes who take part in them. There is a balance to be struck between thinking big and working within a budget. The temptation for any city hosting the Games is to reach further than its coffers allow.

“The Olympics are an opportunity to invest a huge quantity of funds in infrastructure, an amount that would normally take 15 or 20 years to invest,» Brazilian Deputy Sports Minister Luis Fernandes told journalist in London at the end of the Games. «The Olympics give us an opportunity to concentrate resources to build this infrastructure a bit sooner.”

For Greece, the infrastructure of the Athens Games is one of the most significant legacies. A new airport, highway and metro system transformed the city and helped it become a modern European metropolis. This came at a cost, though. Of the 9 billion euros spent on the Games, 7 billion was taxpayers’ money. According to the figures published by the government in 2004, this didn’t include the cost of these major infrastructure projects.

Greece was using borrowed money to fund these schemes at the same time as it was losing control of public spending. Rather than being the springboard to vault to higher levels, the Games became part of the process that dragged Greece down.

Greece’s debt at the end of 2004 reached 110.6 percent of GDP, which was the highest in the European Union and along with a 6.1 percent public deficit triggered a closer monitoring of Greek public finances by the European Commission.

The Athens Olympics slotted into a pattern of rising public spending without the revenues to justify this generousness. Between 2001 and 2004, Greek debt rose by more than 30 billion euros, partly on the back of the spending on the Games, which ended up costing more than double the original budget. By the end of 2009, when the crisis struck, another 116.5 billion euros had been added to the country’s debt pile, taking the debt-to-GDP ratio to an astronomical 129.4 percent.

Had the Olympics been a launching pad for Greek tourism or exports, perhaps they would have helped counter this negative effect. But, as it turned out, there was no plan in place to capitalize on the greatest, albeit costly, advertisement Greece could have hoped for. The doomsayers were proved wrong, the mold for opening ceremonies was broken, thousands of visitors were entertained, a connection between ancient culture and modern verve was established and a positive image was beamed around the world.

All this dissipated in the ensuing months and years. Today, it seems like the balmy, carefree and hope-filled days of Athens Games existed in a parallel reality. With the finishing line in sight, Athens stumbled and fell. What a missed opportunity it proved to be.

Nick Malkoutzis

6 responses to “In the Olympic race, Athens fell short of the line

  1. Informative and interesting, thanks.
    But, like most commentators, you miss what seems to me (as an outsider / visitor) the main ‘legacy’. Athens got, with minimum delay, a huge highway network, new airport and metro which opens up vast areas for future property speculation. From the point of view of Attica land owners and developers that must have been worth the rotting venues and the rent charged by (¿German) concessionaires of the infrastructure.

    • As a mention in the piece. the infrastructure is the most important aspect. The point you make with regard to this adding to real estate value, especially in eastern Attica is a very good one. The new airport, metro and Attiki Odos led to property in this area shooting up in value. The problem is that it has proved to be part of the bubble Greece experience in the previous decades. The land and homes in this part of Attica gained value very quickly (to unrealistic levels) and are now deflating along with the rest of the country. Some people made a killing but there was nothing sustainable about it (much like the economy at large). It is an issue worth exploring but would probably need a piece of its own.

    • Let’s convert the values to dollars to make a comparison you would understand.(and then we will go back to euros).

      The Greek Olympics upon award (circa 1998) were estimated to cost $4 Bil. or whereabouts. Given various cost overruns and a last minute US request for beefed up security( the contract of which went to mostly US firms) the final cost came close to $10-$12 Bil. (depending on the conversion rate used). Therefore, we had a 300% cost overrun.

      The Beijing Olympics cost upwards of $60 Bil. Therefore, hosting the Olympics are not for small countries (except Greece due to the tradition connection and the founding spirit of the Olympics). I am not sure about the London Olympics economics (even though Nick was quick to laude them as successful which they may turn out to be anything but).

      As to the argument of value-add on in terms of increased real estate, that was not the main purpose of the Athens Olympics. The main purpose was Tourism; to showcase Greece as a place with a new look and as an upgraded vacation spot.(Tourism and Mechant Marine fleet are the two pillars of the Greek economy; the third column being services such as banking and other professional services).

      Here is how they teach us to calculate such in the MBA school, namely the Net Present Value of the tourism add-on. You are to take the delta(difference) in tourism revenues before and after the event. Say as an example the Olympics of 2004 translated for Greece in a demonstrable case of an extra euro2Billion in tourism annual revenue power. Since this is a benefit in perpetuity and to make things simple, we are asked to calculate the value of an annuity (in other words what is the Net Present Value of an an indefinite stream of annual income of an extra euro2Billion). Despite the fact that such delta would increase from the base year(will not be fixed or constant to 2 Bil), let’s say it’s constant to make our back of the napkin calculation easy).

      The formula then is: NPV = A/i whereas NPV = Net Present Value, A = annuity amount and i = interest (let’s assume 6% since the ECB cost of money is close to zero – so is the German financing cost today by the way).

      NPV of Athens 2004 Olympics = 2 Bil euro/ 0.06 = euro 33.33 Bil.

      Therefore if you subtract the cost of the Olympics of 12 Bil then the net benefit for Greece in this example becomes: 33.33-12 = 21.33 Bil. euro.

      From such POV undertaking the Olympics of 2004 for a Tourism country such as Greece made quite a bit of sense. Not that we had to spent and wasted additional billions in mismanagement, but overtime such costs are absorbed and forgotten.

      Under no circumstance I am advocating we undertake the Olympic games again, but I am just saying that the issue we discuss is all about framing.

  2. Now we know. Modern Olympics(aka the fabricated commercialism we refer to as modern Olympics) is not meant for countries with less than 50 Million in population.

  3. Pingback: In the Olympic race, Athens fell short of the line | Greece Solidarity Campaign

  4. If I need to create new infrastructure, I’d rather do it at my own pace, at a price I can afford and not with a blanc check and a gun in my head. So the idea that the olympics were good in order to build new infrastructure is just stupid.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s