Rio de Janeiro is hosting what appears to be – for the global television viewer – a largely successful Olympic Games. In the mega events league, Russia is up next with the 2018 Russia FIFA World Cup. In 2022 Durban, South Africa will host the (much smaller) Commonwealth Games
Making a compelling case for South America’s and Brazil’s readiness to the International Olympic Committee (IOC) to host the current Rio games, former president Lula da Silva asked the IOC: “If not now, then when?”
So, with South Africa’s success in hosting the 2010 FIFA World Cup for the first time on African soil (“Ke Nako – it is time for Africa”), is it time for the next Olympic Games to be staged in Africa? Three major economies, Nigeria, Egypt and South Africa could, conceivably, host the Games. The prestige, political, and national pride, the global marketing opportunity is enticing for many.
A responsible government should, however, make a very careful and considered, strategic, long-term, economic and business decision whether to aim for the Games.
Research shows more host cities lost money than made money and profits or surpluses were much smaller than deficits.
It also shows that a reliance on business to contribute the greater or a significant part of the funding requirements through sponsorships is misplaced. With global financial uncertainty, few businesses can afford the risk and fluctuations over the many years from winning a bid to hosting the event.
It is therefore better for the bulk of the funding to come from government institutions and, ideally, from cash surpluses. Host cities who have to service debt at commercial rates after all the athletes, visitors and news crews have left, could face major difficulties and development constraints.
It is equally important that any mega event should not be the end, but only the means to an end. The mega investment required for a very sophisticated and effective public transport system, other infrastructure, stadia, sport facilities, accommodation and all of the support venues can only be justified if it is an integral part of the long-term development plan of the city.
The investment should be viable (affordable and worth investing the resources), sustainable (able to pay for its use and maintenance through income and subsidies) before it can become part of a true Olympic legacy.
Once a city is locked into the huge contractual obligations and deliverables of the IOC, construction companies and commercial partners, it becomes from difficult to near impossible to stop the process. With drop-dead deadlines approaching ever faster, the only way to compensate for scarce time is more money, people and machines. Supply and demand kick in and time has a price premium. That is why most Olympic host cities way exceed their original budget. It takes a long time for the true financial figures to emerge and sometimes they never do due to complex accounting methods.
When Brazil won its bid, it rallied South American support, its economy was strong, it had cash reserves, socio-economic legacy programmes, maturity and passion. The recent political and economical problems the country have experienced are well-known.
According to the London Olympics broadcast report half the world’s population of 7 billion watched at least one minute of coverage a thirty-day World Cup event. Millions more see media coverage of the preparations and aftermath over several years.
Clearly, this is the biggest stage to showcase a city and country. It presents a marketing opportunity money cannot buy. If, however, you experience terrorism, crime, strikes, internal dissent, fatalities, construction, time and financial problems expect the world’s news and social media to showcase that too.
Every host city and country has to jump through many hoops to comply with the stringent requirements of governing bodies. The IOC effectively holds a powerful franchise. Failure is not an option. Risks have to be limited to the minimum.
Beyond technical compliance, a safe, enjoyable and memorable event lies something more: a unique, powerful and international opportunity to replace negative perceptions with positive ones.
Here are some pointers for aspiring Olympic host cities.
- If you decide to host a world sports event understand the huge opportunity, the risks, the resources, the skills and the monumental work it will require.
- Make sure you can use or leverage the event to attain the development goals of your city or country.
- Choose the right finance model to avoid onerous debt.
- Start the event legacy plan upfront to ensure lasting benefits from the infrastructure, upgrades, capabilities and expertise.
- Have a plan to use, maintain and upgrade your event facilities – and a budget for it.
- The sporting bodies will deliver the action in stadia or venues. Visitors spend more time outside than inside match venues. Craft a home grown, authentic experience for them. That is what they will remember.
- The visitors, business people and potential investors come long before the event. Be aware of their presence and interest, offer help.
A mega event host city or country that applies these principles will have a good chance of success, long-term benefits and a positive image. The reverse is also true.
So is Africa ready to host the next Olympics? With its current economic state, South Africa is not. Egypt and Nigeria may aspire but could well decide to focus on other priorities.