Why Olympics is a waste of money for India? Economic Case study

The discussion centers on the economic pitfalls of hosting the Olympics, despite the initial allure of global recognition and potential tourism boosts. Historical examples, including Beijing, Vancouver, and London, illustrate the staggering costs and minimal revenue gains, debunking the myth of economic prosperity from hosting the Games. The narrative highlights the escalating security costs post-9/11, the unpredictability of geopolitical landscapes, and the often-overstated job creation benefits. The argument concludes that rather than investing in the Olympics, countries like India should focus on improving ease of doing business and leveraging soft power for sustainable economic growth.

• The 2024 Summer Olympic Games are a major global event, attracting significant international attention.
• The opening ceremony alone garnered 41.5 million viewers in the US, and India is expected to have 150 million viewers on Geo Cinema.
• Indian athletes are performing exceptionally well, with Indian shooters winning multiple medals.

"The US leap of the opening ceremony alone saw a total of 41.5 million viewers. India is expected to see 150 million viewers on Geo Cinema alone, and India is winning a medal every single week."

• Highlights the massive viewership and interest in the Olympics, particularly in the US and India.

"Indian Shooters continue to shine at the Paris Olympics in Blue from India now Bakker scripted history by becoming the only Indian to win two medals in a single campaign."

• Emphasizes the success of Indian athletes, particularly in shooting, and the historic achievement of Bakker.

• Hosting the Olympics is often perceived as a prestigious and economically beneficial event, but the reality is quite different.
• Historical data shows that the costs of hosting the Olympics often far exceed the revenues generated.
• Examples include Beijing 2008, Vancouver 2010, and London 2012, all of which incurred significant financial losses.

"While Beijing's 2008 Summer Olympics cost over $42 billion, it generated only $3.6 billion in revenue. While Vancouver's Winter Games in 2010 cost $7.6 billion, it generated only $2.8 billion. And London's Summer Games in 2012 cost $18 billion but generated only $5.2 billion in revenue."

• Illustrates the financial disparity between the costs and revenues of hosting the Olympics, highlighting the economic challenges faced by host countries.

• Countries host the Olympics for several reasons, including economic benefits, job creation, and international branding.
• The 1984 Los Angeles Olympics were a rare example of a profitable event, generating $232 million in profit, which inspired other countries to host the Olympics.
• Hosting the Olympics can lead to economic benefits such as job creation and business opportunities, as seen in Brazil 2016 and Barcelona 1992.

"In 2016, the Olympics in Brazil impacted around 2,200 micro and small businesses who received 390 million Brazilian real in contracts, eventually creating 18,000 new jobs."

• Demonstrates the potential economic benefits of hosting the Olympics, including job creation and business opportunities.

"When Barcelona hosted the games in 1992, its general unemployment rate fell from 18.4% to 9.6% between 1986 and 1992."

• Highlights the positive impact of the Olympics on unemployment rates and economic growth in host cities.

• Hosting the Olympics also serves as a powerful branding and propaganda tool for countries.
• The Olympics can enhance a country's international image and showcase its culture and achievements.
• Historical examples include the use of the Olympics for propaganda purposes, such as by Hitler in the 1936 Berlin Olympics.

"The second reason why countries host the Olympics is branding and propaganda. And you know this already from our Qatar case study from 2022."

• Indicates the strategic use of the Olympics for branding and propaganda, enhancing a country's global image.

"Here's how Hitler used the Olympics as a genius marketing strategy."

• Refers to the historical use of the Olympics for propaganda, exemplified by Hitler's use of the 1936 Berlin Olympics.

• Despite the perceived benefits, hosting the Olympics can be an economic disaster for the host country.
• The costs often outweigh the revenues, leading to significant financial losses.
• While there are potential economic and branding benefits, these are not guaranteed and come with substantial risks.

"So the question is, how can such a grand world event become a loss-making venture? Why is there such a false hype around the economics of the Olympics, and most importantly, why is hosting the Olympics an economic disaster for India?"

• Raises critical questions about the economic viability and perceived benefits of hosting the Olympics, particularly for India.

• The 1936 Summer Olympics in Berlin were the first instance of a host nation using the event to project its political ideology and power.
• The German athletes were seen as soldiers in a propaganda battle unit.
• Berlin was cleaned up, and anti-Jewish signs were removed to create the impression of a hospitable climate.
• The games were used as a tool for sophisticated propaganda by the Nazi regime.

"Berlin is cleaned up, anti-Jewish signs were removed, everything was done to create the impression that this was a hospitable climate."

• The Nazi regime aimed to create a facade of a welcoming and peaceful Germany to deceive international observers.

• In 1923, Germany experienced catastrophic hyperinflation, severely devaluing its currency.
• The economic crisis led to widespread unemployment and hunger.
• By 1931, Germany had won the bid to host the 1936 Olympics, aiming to showcase its recovery.
• Hitler's rise to power in 1933 marked a significant shift in Germany's political landscape.

"In 1922, 160 German marks was equivalent to $1, but by November 1923, to buy one US dollar, you needed 4.2 trillion German marks."

• This highlights the severity of Germany's hyperinflation crisis and the dire economic conditions at the time.

• Hitler became the dictator of Germany in 1933 and sought to use the Olympics to promote his regime.
• The Nazi propaganda minister saw the Olympics as an opportunity to showcase the new Germany under Hitler.
• The goals were to demonstrate the superiority of Hitler's dictatorship, promote the Aryan race, and gain international respect.

"The propaganda minister of Hitler saw the Olympics as the best opportunity to show what new Germany under Hitler looked like."

• The Olympics were strategically used to manipulate international perception and legitimize Hitler's regime.

• Hitler released hundreds of pigeons during the opening ceremony as a message of peace.
• The 1936 Olympics was the first to be broadcasted on television, amplifying its propaganda impact.
• Anti-Jewish signs were removed, and Germans were instructed to be hospitable, especially to African-American athletes.

"Hitler actually released hundreds of pigeons in the ceremony as a message of peace to the world."

• Despite the regime's oppressive policies, Hitler attempted to present a facade of peace and hospitality.

• African-American athletes experienced unexpected hospitality in Germany, contrasting with the racism they faced in the US and Europe.
• Positive stories about Germany's hospitality and development spread globally.
• The Olympics enhanced Germany's international image and bolstered Hitler's standing domestically.

"One of these athletes even quoted to the press that Germany treated him so well that he didn't have to sit at the back of the bus."

• This illustrates how the Nazi regime's efforts to create a positive image succeeded in influencing international perceptions.

• The 1936 Olympics exemplified "sports washing," where nations use sports events to improve their international image.
• Not all hosts use sports events for negative purposes; some aim for genuine branding and economic growth.

"This is how, ladies and gentlemen, sports washing works. This is the first method of branding."

• Sports washing is a strategic use of sports events to alter or enhance a nation's image on the global stage.

• South Korea hosted the 1988 Seoul Olympics to showcase its rapid economic growth and attract foreign investment.
• From 1975 to 1988, South Korea's economy grew tenfold, driven by companies like Samsung and Hyundai.
• The Olympics acted as a catalyst for foreign direct investment, significantly boosting South Korea's economic development.

"In 1988, the foreign direct investment in the country crossed a billion dollars and kept increasing, reaching up to $1.5 billion in 2000."

• The successful hosting of the Olympics played a crucial role in attracting investment and promoting South Korea's economic prosperity.

• The 1964 Tokyo Olympics symbolized Japan's recovery from World War II.
• The 1972 Munich Olympics aimed to promote the image of a new, peaceful West Germany.

"The 1964 Tokyo Olympics in Japan was meant to symbolize the rise of Japan from the ashes of World War II."

• Hosting the Olympics served as a powerful symbol of national recovery and progress for Japan and Germany.

In summary, the 1936 Berlin Olympics were a pivotal moment in the use of sports events for political propaganda. The Nazi regime skillfully manipulated the event to project a positive image, despite its oppressive policies. This strategy of "sports washing" has been employed by other nations for various purposes, including economic branding and recovery from crises.

• Branding and Image Enhancement:
  • Countries use the Olympics to improve their international image and address negative perceptions.
  • Example: Beijing used the Olympics to counteract the negative image of Muslim persecution.

"Beijing used it to sports wash its image of Uighur Muslim persecution."

• Tourism Boost:
  • Hosting the Olympics can significantly boost tourism by showcasing the host city to a global audience.
  • Example: Barcelona's transformation from the 13th to the 5th most popular European destination post-1992 Olympics.

"In 1990, Barcelona was the 13th most popular destination in Europe, but in 1992 Summer Olympics, the broadcasters highlighted all the non-sports venues in Barcelona. This was a big marketing boost for Barcelona."

• High Costs vs. Low Revenue:
  • Recent Olympic Games have seen costs far exceed the revenue generated, leading to significant financial losses.
  • Example: Beijing 2008 cost $42 billion, generated $3.6 billion; Vancouver 2010 cost $7.6 billion, generated $2.8 billion; London 2012 cost $18 billion, generated $5.2 billion.

"Beijing's 2008 Summer Olympics cost over $42 billion. It generated only $3.6 billion in revenue."

• Potential for Economic Crisis:
  • The financial burden of hosting the Olympics can be so severe that it may lead to an economic crisis in the host country.

"Today, Olympics are so bad for the economy that they could practically cause an economic crisis in a country."

• Rise of Terrorism:
  • Increased security costs due to the threat of terrorism, exemplified by the 1972 Munich Olympics attack and the post-9/11 security surge.
  • Example: Sydney 2000 security cost $250 million; Athens 2004 security cost $1.5 billion.

"After the 9/11 attacks, the security cost increased so much that while the security for Sydney's games in 2000 cost $250 million, just 4 years later in Athens, security expenditure shot up to $1.5 billion."

• Changing Economic Landscape:
  • The economic conditions of a country can drastically change between the time of bidding and hosting the Olympics, making financial forecasting difficult.
  • Example: India's economic crises in the 1970s, 1980s, and 2008, and the impact of demonetization and COVID-19.

"From the time of bidding to the time of hosting, the entire economic landscape of the host country changes."

• Cost Overruns:
  • Geopolitical events can lead to unexpected cost increases, making it difficult to manage budgets.
  • Example: Russia's cost overrun was 289%, Brazil's was 352%, Tokyo's was 128%, and Beijing's was 149%.

"Because of the unpredictable nature of geopolitics consistently, the cost of Olympics has shot up."

• Gap Between Projected and Actual Jobs:
  • The number of jobs and the economic boost projected by PR teams often do not materialize, leading to economic disillusionment.
  • Example: The promise of job creation and economic boost is often overstated.

"There's a huge gap between the projected jobs and the actual jobs created in the economy of a country."

"All of this is just economic delusion."

These notes provide a comprehensive overview of the key themes discussed in the transcript, summarizing the major points and providing relevant verbatim quotes with explanations.

• Job Creation and Economic Impact:
  • Initial positive impacts in job creation (e.g., 5,000 jobs in Atlanta).
  • Mixed outcomes over time: Increase in incomes but no impact on employment in 1972; hotel prices increased in 1996 without impacting taxable sales.
• Household Consumption and Sales:
  • Decrease in household consumption by $2 billion in 2000.
  • Restaurant sales increased by $70 million but merchandise sales dropped by $167 million in 2002.

"In 2002, sales of restaurants shot up by $70 million, but merchandise sales were down by $167 million."

• Highlights the mixed economic impacts, where gains in one sector may be offset by losses in another.

"In 2000 Summer Games, household consumption actually decreased by $2 billion."

• Shows that the overall economic benefit is not guaranteed and can sometimes be negative.

• Cost of Building and Maintaining Stadiums:
  • High construction costs (~$1.3 billion) and maintenance costs (~$67 million annually).
  • Post-Olympics, many venues become unused and fall into disrepair.

"The new stadiums in Rio suffered the same fate after the 2016 Summer Olympics; 12 of the original 27 venues have not been used once since the games."

• Illustrates the unsustainable nature of maintaining Olympic infrastructure post-event.

"The stadiums cost about $1.3 billion to build and used to take $67 million a year to maintain."

• Highlights the financial burden of Olympic infrastructure on host cities.

• Acceleration of Infrastructure Growth:
  • Politicians argue that Olympics accelerate infrastructure growth.
  • The argument is questioned as it does not necessarily reduce costs or generate more revenue.

"Is Olympics really decreasing your cost? No. Is it giving you more money? No. It is only giving you a deadline."

• Critiques the justification that Olympics lead to cost-effective infrastructure development.

"Will we speed up our construction only when there is an international deadline hanging over our head? That is impractical."

• Questions the rationale behind using the Olympics as a catalyst for infrastructure development.

• Economic Disaster Potential:
  • National pride and the Olympic hype should not lead to economic misjudgments.
  • Emphasizes the need for economic sustainability over temporary nationalistic fervor.

"In the race of winning medals and the Olympic hype, the wave of nationalism should not result in an economic disaster in 2036."

• Warns against letting national pride overshadow economic prudence.

• Long-term Economic Strategies:
  • Marketing alone is insufficient for sustainable economic growth.
  • Fundamental economic reforms (e.g., import duties, land acquisition) are crucial.

"People marketing is the smallest element that gets you foreign direct investment."

• Stresses the importance of foundational economic policies over marketing.

"Great marketing doesn't build a strong business; great products do."

• Highlights the need for strong economic fundamentals over temporary marketing efforts.

• Cultural Influence and Soft Power:
  • Soft power (e.g., K-pop) is a more sustainable and profitable strategy than hosting the Olympics.
  • Suggests learning from South Korea's use of cultural influence to boost tourism and international perception.

"Just like South Korea used K-pop to change the perception of South Korea, if China and Russia spent over $40 million into making Hollywood movies, it would change the perception of China and Russia in front of the world."

• Advocates for leveraging cultural exports to build international reputation and influence.

"This is a far better, far sustainable, and far more profitable venture to pursue than the Olympics."

• Argues that investing in soft power yields better long-term economic benefits than hosting large-scale sports events.

• Critical Evaluation:
  • Hosting the Olympics is no longer a great investment.
  • Focus should be on improving ease of doing business and leveraging soft power for sustainable economic growth.

"The Olympics used to be a great investment, but it no longer is."

• Summarizes the declining economic viability of hosting the Olympics.

"Everything that the Olympics can bring with a billion dollars in loss can be acquired with a profit of a billion dollars and with 100x better output."

• Concludes that alternative strategies can achieve similar or better outcomes without the financial losses associated with the Olympics.