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You know what it's like. The party ended late the night before; with a throbbing head, you stumble downstairs to look at the living room — and God, it's a mess. That's how Athenians feel. The Olympic flame was extinguished at the 2004 Summer Games in Athens 10 months ago, ending a carnival in the Greek capital that had lasted 16 days. Now there's just the hangover, and the bill to pay. At Agios Kosmas, the Olympic sailing center, you'd never know that anyone had had any fun at all. "Look at this place," a private security guard says, panning his hand across the 336,289-sq-m marina. "It's rotting." Rather than serving as a home to the sport for which it was built, he complains, the $144 million facility is now used as a depot for a handful of vehicles. The compound is lifeless, with not even a seagull in sight.
Across the road at the Helliniko Olympic Complex, venues for another seven sports — baseball, basketball, canoeing and kayaking, fencing, handball, hockey and softball — gather dust. Posses of stray dogs roam across the expanses of untended grounds, loose electrical cables hang over dented fences and garbage mounds pile up behind chained gates. Greece's military is keeping watch over some of the 22 venues — including the main Olympic stadium — for which the state is trying to find a permanent use. Maintenance and upkeep are estimated at about $100 million a year. "Who knows what they're planning to do with this," huffs a soldier guarding the main entrance to the Helliniko complex.
Flyblown, empty arenas are not the only legacy of Athens' binge. There's the financial cost, too. The government spent $3 billion building and upgrading 36 venues for the Games and another $8 billion on infrastructure and security. Organizers dished out $2.4 billion on operations and in May said they had turned a $9.2 million profit. All told, spending on the Athens Games exceeded the gdps of more than 100 nations, including Jamaica and Malta.
Thanks to its profligacy, Greece now has a 6% budget deficit, in breach of the European Union's stability pact, and its economic growth is projected to slow from 4.2% in 2004 to 2.8% in 2005. "The fact that Greece is in breach of the stability pact is in large part due to Olympic accounts," says Christos Hadjiemmanuil, who is on leave from the London School of Economics to run the state company that is trying to lease out Olympic properties such as the sailing center.
Not everything spent on the Games was wasted, though. When the media circus left town, Athens was left with something it had never had before: the infrastructure of a modern European city. "There have probably been some overruns, but I still consider Athens' legacy to be a very good one," says Jacques Rogge, president of the International Olympic Committee ( i.o.c.). "It's a new city. They have the airport, they have the ring road, they have the suburban trains and they have the metro."
You might think that in light of Athens' very mixed record, other cities would look at the Greek experience and shy away. You would think wrong. On July 6, in Singapore, the i.o.c. will announce which city will next take up the Olympic torch and host the 2012 Summer Games. The competition has been the most intense for years, with five of
the world's most famous cities — London, Madrid, Moscow, New York City and Paris — vying for the honor. Each city has launched a massive, multimillion-dollar marketing effort to get the Games. British Prime Minister Tony Blair will jet to Singapore for a last-minute charm offensive before opening the G-8 summit meeting in Scotland. The French team will screen a short film about Paris directed by filmmaker Luc Besson, and Spain's Queen Sofía and Prime Minister José Luis Rodríguez Zapatero will be on hand to lobby for Madrid. The winning city — you can count on it — will hold a press conference and pop champagne to extol the benefits of hosting the Games. Back home, jubilant citizens will party in the streets. Everyone will claim that the Games will have a profound economic impact on the city that wins — that, of course, is one of the key arguments that has been used to persuade their residents to foot part of the bill. But does hosting the Olympics really help a city? To put it mildly, the evidence is mixed.
Athens' experience suggests that the supposed financial and economic benefits of Olympics can easily disappear. Costs can exceed budgets, job creation can fall short of forecasts, tourists and spectators can fail to materialize, and — especially in the world after Sept. 11, 2001 — unexpected expenses can crop up. Athens spent about $1.5 billion on security, 12 times its original estimate. Montreal turned a significant profit on operations alone from its hosting of the 1976 games. But don't try and convince Québécois smokers of that. Capital and infrastructure expenditures — for venues such as the Olympic Village and the stadium — spiraled so out of control that the city had to impose a $2 billion tax on tobacco to get out of its financial hole. To this day, 17˘ out of every pack of cigarettes purchased in Quebec goes to pay for Olympic construction.
And then there are the legacy issues: the high concentration of specialized world-class venues for sports such as archery and weightlifting can leave a herd of white elephants. Economists call it "the winner's curse": when the successful bidder at an auction so outbids the competition that he can never recoup the price paid. Many economists argue that cities should host the Olympics only out of national pride, their love of sports, the opportunity to regenerate deprived areas or to showcase themselves to the world — in short, for any reason other than money. "If you want name recognition, then it's worth it," says Rajeev Dhawan, director of the Georgia State University Economic Forecasting Center in Atlanta, where the 1996 Summer Games were held. "But if you're doing it for profit, I don't think that it's a good idea."
Of course, for some recent Olympic hosts, the Games seem to have had a magic touch. Before 1992, Barcelona, Spain's second-largest city, lacked decent road access, its airport was antiquated, and its coastline was one of the dingiest sections of the city. The Games gave the city an excuse to transform itself. A honeycomb of roads was constructed and many of them were pushed underground. But the Olympics' greatest legacy was the total makeover of Barcelona's seafront. Obsolete warehouses, freight railway lines and small factories were razed. The railway line was rerouted inland and stretches of it buried underground. The Olympic Village, built on the seafront, is now one of the most sought-after real estate locations in the city. The sandy beach and marina are favorite weekend spots for families, and at night, the bars, discos and restaurants are always packed. On the back of the Olympics, Barcelona has become one of Europe's top tourist destinations.
The Games left a more mixed economic legacy. Ferrán Brunet, professor of European economics at the Autonomous University of Barcelona, says they helped cut Barcelona's unemployment rate from 18.4% in 1986 to 9.6% in 1992. But they also drove up the cost of living, as shown by the three- to fourfold rise in housing prices during the same period. Organizers had a $3 million surplus on revenues of $1.6 billion, but the city and country spent $8 billion on capital projects and at the end were faced with $1.1 billion in debt through 2007.
Are there ways for cities to host the Games without creating red ink? The experience of the 1984 Games suggests that it's possible. Because of financial and security difficulties that plagued preceding Games, when it came time for the i.o.c.to choose the site of that year's Summer Games, it had only one bidder: Los Angeles. A private group led by businessman Peter Ueberroth leveraged that unique position, and Los Angeles refused to accede to the i.o.c.'s typical demand that the host city (or country) assume financial liability for the Games. Just a handful of new facilities were constructed; instead, most events were held at existing venues such as the Rose Bowl and the Coliseum, helping the organizers to keep a lid on spending. The organizers ended up with a surplus of more than $200 million on revenues of $619 million. According to an economic analysis by two American economists, job creation was limited to about 5,000 positions.
Dave Wilcox of Economics Research Associates in Los Angeles, which studied the economic impact of the 1984 Games on the area, says the event produced a small bump — around 2% growth — in the Los Angeles economy. "It was a one-time thing," he says. Wilcox credits private financing and "the clarity of contracting and management" by Ueberroth and his team for the success.
If decent management is one prerequisite for a successful Games, so is a determination that if you're going to shell out for fancy buildings and grounds, you've got a post-Olympic use for them. The 1996 Games in Atlanta were fraught: a nail-bombing by an anti-abortion protester that killed one person and injured more than 100 in Centennial Park, and a kind of hyper–corporate sponsorship was too much for even then i.o.c. president Juan Antonio Samaranch to stomach. Still, 10 permanent venues were built, and all but the tennis and shooting centers get regular use today. Ticket sales broke records at $426 million, two-thirds of them snapped up by out-of-towners. Poor Atlanta neighborhoods were redeveloped into good, low-income neighborhoods. The Olympic Village was converted into college dormitories and the Olympic Stadium is today the home of the Atlanta Braves baseball team. Centennial Olympic Park has become a new hub of downtown Atlanta. "Downtown prior to the Olympics was not an attractive place for investments," says Bill Howard, a vice president of the Atlanta Convention & Visitors Bureau. "You certainly would not have had the growth in central Atlanta because we would not have had the park."
Yet not all cities have a plan for what to do after the fun and Games are over. The 2000 Summer Games in Sydney were a triumph. And the city seemed to have got a boost from the attention. The airport was expanded, many main roads improved and Sydney — which is sports mad in any year — was left with new, state-of-the-art facilities, including the giant Telstra Stadium. The tourist industry expected that Australia's 4.9 million international visitors in 2000 would soar in the years after the Games as a result of the Olympic exposure. It didn't happen. Tourist numbers fell in the three years that followed, largely due to factors beyond local control such as 9/11, the Bali bombing and the 2003 outbreak of sars in Asia. Still, local tourism leaders accept that they didn't ramp up a campaign after the Games. "We saw the job as done," says Christopher Brown, managing director of Australia's Tourism & Transport Forum. "We should have put the foot down instead of taking it off the pedal."
After the 2008 Games, will the world think of Beijing in the same sunny way that it now views Barcelona? As Seoul did in 1988, the Chinese government seems intent on using the Games to promote its image worldwide. And certainly the country could benefit from installing some state-of-the-art infrastructure. Beijing expects to spend about $37 billion on the 2008 Games, including $2 billion on venues. It's building a new international airport terminal with a soaring aerodynamic roof, a steel-framed Olympic stadium in the shape of an intricate bird's nest and a swimming center with five pools enclosed in blue bubble-like walls. In the circumstances of today's China, which wants to use the Games to convince the world of its modernization, profit is not the primary objective.
Yet though it may be fine for cities in the developing world to view the Games as a showcase, why should taxpayers in rich nations be expected to foot an Olympic-sized bill? It's not as if London, Paris or New York City desperately need to build up their tourist businesses. Yet they are respectively spending $55 million, $33 million and $50 million to woo the i.o.c. Following the 1984 experience, the i.o.c. has become quite skilled in playing potential host cities off one another. "After [Los Angeles'] profit, in 1985 there were six cities bidding for the 1992 Games," says Holger Preuss, author of The Economics of Staging the Olympics, and a professor of sports economics and sports management at Johannes Gutenberg University in Mainz, Germany. "It's a competition for the benefit of the Olympic movement, and there's a question of how long the cities can bear this high cost."
i.o.c. officials acknowledge some past host-city excesses but say recent changes in the bidding process should lessen that in the future. "We give a lot of upstream information to the candidate cities saying exactly what the standards and requirements are, and we always warn all the candidate cities against exaggeration," says i.o.c.president Rogge.
Of course, each of the 2012 candidate cities swears that it has learned the lessons of the past. And some of their approaches indicate that they have. "Zero white elephants," vows Philippe Baudillon, chief of the Paris 2012 project. "Every time a venue didn't have a sufficiently precise postevent business plan, we planned temporary infrastructure instead," he said. Organizers plan to erect seven "pavilions" that would host indoor events like basketball and table tennis, and that can accommodate crowds of up to 17,000. By the Eiffel Tower, 10,000 people could watch beach volleyball at
another temporary installation. After the games, they'll all be gone.
London's pitch has emphasized the benefits that British sports and a run-down part of town will get from hosting the Olympics. But if pushed, London bid chairman (and two-time Olympic gold medalist) Sebastian Coe admits that the economics are far from certain: "Anyone who stands up and says hosting the Olympic games is risk-free is either very naïve or playing fast and loose. What I can say in London is we understand the risks."
New York City apparently didn't. Gotham's plan turned on a project to construct a stadium on Manhattan's West Side that would become the home of the New York Jets football team. In late May, a group of 106 economists from around the U.S. sent an open letter to New York City Mayor Michael Bloomberg and others noting that the stadium's astronomical projected cost — some $2 billion — was more than three times the price of any existing stadium in the National Football League. Moreover, they said, a combination of tax exemptions and other subsidies to build the stadium were "both unnecessary for economic development and very inappropriate." The plan collapsed in early June, when New York state legislators declined to support the stadium. Even Bloomberg admitted that this rejection "will seriously damage our chances at winning the 2012 Games."
Most observers agree but, if the ghost towns of Athens' Olympic sites are anything to judge by, New York City may end up having dodged an economic bullet. "I kind of think of it like a wedding," Victor Matheson, an economics professor at the College of the Holy Cross in Worcester, Massachusetts, says of hosting the Olympics. "It's not that it's not a great fun spectacle for everyone involved, it's just not a very good strategy for economic growth. The dollars simply are not there."
Like a newly engaged bride and groom, though, whichever city the i.o.c.chooses to host the 2012 Summer Games is bound to get all excited about the far-off Big Day. And like the couple contemplating marriage, it could also find itself facing responsibilities it never imagined and making a stream of compromises despite careful planning. Worse, when the party is all over, it could be landed with a mountain of debt — not to mention the Olympic equivalent of a bunch of extra toasters.
With reporting by Theunis Bates/London, Anne Berryman and Greg Fulton/Atlanta, Jeremy Caplan/New York, Anthee Carassava/Athens, Mikael G. Holter and Grant Rosenberg/Paris, Susan Jakes/Beijing, Donald Macintyre/Seoul, Jeffrey Ressner/Los Angeles, Jane Walker/Madrid and Daniel Williams/Sydney 
- ANDREA GERLIN / London
- Why cities should think twice about hosting the Olympics