In the last week or so we have been learning more about the cost of Viktor Orbán’s dream project: to host the Olympic Games in 2024.
It’s hard to know exactly when he first entertained the idea. We know that by the time he became prime minister in 1998 he was already plotting to hold the 2012 Olympics in Budapest. Luckily Orbán lost the election in 2002, and the following year the Medgyessy government had the good sense to withdraw Hungary’s bid. But a lot of money had already been spent on the project, which was unrealistic from the start. What a disappointing year it had to have been for Orbán. No fancy palace for the first family in the Castle District and no chance of hosting Olympic Games in Budapest. But Orbán never gives up on his pet projects. He just may live in the Sándor Palace one day. And he is still working hard on his Olympic dream.
Over the course of the last two years, in great secrecy, a team prepared Hungary’s bid. Until recently no one managed to get any information out of the government concerning the amount of money that has been spent so far. A few figures have been known for some time. For example, $36 million was spent just on the bidding process, which included feasibility studies and projected estimates. The total cost of $2.8 billion that PricewaterhouseCoopers came out with is considered by Andrew Zimbalist of Smith College, who is an expert on the economics of the Olympic Games, simply “fanciful.” For recent Olympics “the cost runs from about $15 billion to $30 billion.” He carefully calculated the costs and the possible benefits of holding the Games and came to the conclusion that they were financial suicide for most cities.
Holding the games in Budapest has many opponents, mostly of course from the ranks of the opposition. They even tried to hold a referendum on the question, which was rejected by both the government and the Fidesz-majority City of Budapest. The Kúria followed suit. If the government is at all worried about the outcome of a possible referendum, it makes sure that it will never be held.
In early August Publicus Research published a poll which found that the majority of respondents didn’t want to have the Olympics held in Hungary. Seventy-five percent of them considered the cost too high and 64% thought that the country is too poor for such an extravagance. Almost 60% believed that the money spent on the Olympics would only enrich entrepreneurs close to Viktor Orbán. Two-thirds would spend the money on healthcare and education instead.
After quite a few months and a lot of effort, journalists finally got some information about the money that has been spent already, which is staggering. As 444.hu aptly declared, those figures should convince the government that “it would be time right now to abandon the whole affair.” The money flows through an office which began functioning in 2015 called Budapest 2024 Nonprofit Zrt., owned jointly by the Magyar Olimpiai Bizottság (MOB) and the City of Budapest. The office is well endowed by the government. This year alone it has a budget of close to $36 million. Next year Budapest 2024 will most likely receive the same amount. The nonprofit spends a lot of money on itself. For example, it moved into the Eiffel Palace, one of the notorious purchases of the Hungarian National Bank, which is perhaps the most expensive piece of real estate in the whole city.
The estimate of $2.8 billion, which Zimbalist considered to be “fanciful,” doesn’t include such items as new bridges across the Danube, new streetcar lines, and a new railroad bridge. These items, according to estimates, add an additional $7.2 billion. So, we have already reached the lowest possible figure of $10 billion that Zimbalist was talking about. This figure is 8% of Hungary’s current annual GDP. Moreover, if this is their own estimate, we can be sure that the final figure will be at least twice as much.
Zimbalist published an article, “An Economic Myth of Olympic Proportions,” just about the time the Olympic Games began. He described the Games as boondoggles in the majority of the cases. He called the International Olympic Committee (IOC) “an unregulated global monopoly” which conducts a biannual auction in which cities compete against one another to prove their suitability. “The outcome of this process is predictable: winning cities usually overbid.” Recent Olympic Games have cost $15-20 billion and the total revenue for the host city was about $3.5-4.5 billion, including TV contracts. Why is the figure so low? Because 75% of the revenue from the TV contracts goes to the IOC and only 25% to the host city.
People who are keen on hosting the Olympics argue that holding the games boosts tourism, but this is not always the case. In fact, tourism in London during July and August 2012 decreased by 5% because ordinary tourists don’t want to encounter huge crowds, transportation delays, inflated prices, and possible security threats. And the argument that the country as a result of a successful Olympics will be more attractive to investors is hollow. Why should it be?
Péter Zentai, a Hungarian journalist, interviewed Zimbalist at the end of August, in the course of which he elaborated on his assessment of the economic aspects of the Games. According to his estimate, the Olympics in Rio de Janeiro has lost about $10 billion. The Hungarian organizers argue that the so-called Agenda 2020 of the IOC puts a lid on the enormous expenses associated with the Games. But, according to Zimbalist, Agenda 2020 “doesn’t contain anything new.” The International Olympic Committee has always talked about “flexibility, sustainability, reuse” but at the end there was “always the same megalomania.” It’s no wonder that smaller cities like Cracow, Oslo, Stockholm, and San Moritz changed their minds. And there is talk about the possibility of Rome withdrawing its bid. The sad fact is that a mere 20% of the money spent benefits the economy and society of the city and the country.
One can only hope that Budapest will not win against Paris or Los Angeles, assuming Rome is no longer in the running. Even if the Hungarian government doesn’t have any sense and refuses to realize that the country doesn’t have the financial strength and the infrastructure in place to host the usual summer extravagance, perhaps those who decide the issue will.