Opportunity cost at the Olympics

The Games are a spectacle of sporting achievement that come with a high price tag

Aerial view of the Maracana Stadium, which will host the opening ceremony of Rio 2016 Olympic Games in Rio de Janeiro, Brazil. Yasuyoshi Chiba / AFP Photo

As the Rio Olympics come to a close in the next few days, questions are being asked about how prudent is it for developing countries to attempt to host what is without doubt the world’s most expensive sporting jamboree. When Brazil in 2009 won the bid to host the Games, its economy was booming. The 2008 financial crisis, however, has finally caught up with Brazil and now the country is facing serious economic challenges. Many developing countries just don’t have the financial leeway to accommodate changing economic circumstances.

The Olympics cost an incredible amount of money. Brazil has already spent about $4.6 billion (Dh 16bn) on venues and a range of supporting infrastructure for which it alone must bear the cost. The budget will likely be exceeded – as is almost always the case – once the final bills are tallied when the competitions end.

The International Olympic Committee has several task forces that try to learn from previous mistakes and ensure that costs are curbed for future host nations. But perhaps it might be useful also to perform due dilligence on whether the Games would be prudent for a bidding nation’s overall interest – does it have the ability to absorb the predictable overruns of unpredictable dimensions?

Coincidentally, this week is the anniversary of the beginning of construction on the interstate motorway system in the United States. The project revolutionised the country and gave birth to the US as we know it today. This made us think. Perhaps Brazil and other developing countries would be better building their equivalent of a motorway network before hosting the Olympics?

At the end, of course, the Rio Games are the Games and they are marvellous, as you would expect. But wouldn’t it be better if the Olympic pooh-bahs also took note of a bidding nation’s ability to comfortably absorb the inevitable cost overruns? And while we’re at it, there is the question in the future for developing nations of balancing the impossible-to-calculate benefits of hosting the Games against the more quantifiable gains to be made from investment in plain vanilla-flavoured infrastructure. Thoughts, anyone?