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Political economy and the Olympic Games

This is an excerpt from Sport and Public Policy by Charles Santo & Gerard Mildner.

Are the Olympics Games merely a sporting event, or do the Games carry additional economic, cultural, political, and spatial import? The Olympics have since their inception been closely associated with an ideology of social and technical progress. In particular, these international sporting competitions have been used as a tool for expressing national goals and political agendas (Espy, 1979; Hill, 1996; Lenskyj, 2000). In addition, the economic value of the Olympics has increased dramatically over time, largely because of the telecommunications revolution and the increased amounts paid for national and international broadcast rights (Barney, Wenn, and Martyn, 2002; Larson and Park, 1993). Table 11.1 shows the increased revenues from television broadcast rights from 1960 to the 2008 Summer Games. With these increased revenues came greater commercialization of the Games (Magdalinski, Schimmel, and Chandler, 2005; Tomlinson, 2005), and with greater resources and the need to control their brand, the International Olympic Committee adapted as a transnational organization (Guttmann, 1994; Houlihan, 2005). Cities, too, began to respond to the greater prominence of the Olympics, and the competition to host the Games intensified (Andranovich, Burbank, and Heying, 2001; Shoval, 2002). In turn, the increased visibility of the Olympics and its close association with product marketing meant that various movements, both social and sport-related, have been co-opted into the Olympic family or have become a source of resistance (Burbank, Heying, and Andranovich, 2000; Kidd, 2005; Lenskyj, 2000; Schaffer and Smith, 2000).

Table 11.1: Olympic global broadcast revenues
Olympic Games Host city Broadcast revenue,
US$ (millions)
1960 Rome 1.2
1964 Tokyo 1.6
1968 Mexico City 9.8
1972 Munich 17.8
1976 Montreal 34.9
1980 Moscow 88.0
1984 Los Angeles 287.0
1988 Seoul 402.6
1992 Barcelona 636.0
1996 Atlanta 898.2
2000 Sydney 1,331.5
2004 Athens 1,496.0
2008 Beijing 1,737.0

Among assessments of the political economy of the Olympic Games, one topic that deserves particular scrutiny is the economic impact of the Games on their host cities. Kasimati (2003), for example, examined studies of the economic impact of hosting the Olympics and found that before the 1984 Games, no impact studies had been conducted. Since then, a variety of cities have conducted impact analyses during the bidding phase and after the Games ended. Kasimati concluded that the rosy picture painted by studies produced during the bidding phase was “not confirmed by ex-post analyses and this therefore prompts the need for improved theory” (Kasimati, 2003, p. 442). Preuss (2000, 2002), who has conducted extensive analysis of the economics of the Games, suggested that since the 1980s, two things can almost be guaranteed about hosting the Games: First, the local organizing committees can be almost certain that there will be a financial surplus after the Games, largely because of the IOC's negotiation of international sponsorship and television contracts. Second, the Games have expanded to the point where huge sport facilities and new infrastructure for athletes, tourists, and the media are required. This gigantism is evidenced in the number of ticket sales and the fact that media representatives outnumber athletes at the Olympic Games (Preuss, 2002, p. 15). The size of the Olympics also increases the opportunity that cities have to use the Games as a basis for wide-scale redevelopment as Barcelona did for the 1992 Games and as Beijing did for the 2008 Games (Broudehoux, 2007; Essex and Chalkley, 1998). Such extensive redevelopment of cities, however, raises the question of whose interests are being served by the redevelopment because the new sport infrastructure is often at odds with the needs of residents.

The growth of the Olympics has resulted in another challenge for policy makers: the opportunity costs of hosting the Games. Essex and Chalkley (2003) identify crucial questions that local policy makers need to address: (1) Are local funds being diverted from service and education needs to support Olympic infra-structure? (2) Are local taxes being increased to pay for the new infrastructure? (3) Will the Olympics displace poor people or disrupt their neighborhoods? (4) If the costs of staging the Games continues to grow, will cities in developing nations ever be able to host the Games? Essex and Chalkley (2003, p. 14) noted that the IOC's Olympic Games Study Commission examined the issue of gigantism and concluded that it was time to manage the growth of the Games to preserve their attractiveness. All of this is part of the broader context for understanding the political economy of the Olympics.

Cities pursue the Olympic Games for three important reasons: tourism, image, and regeneration (Heying, Burbank, and Andranovich, 2007). The rise of tourism, and the response to it by nations, is a clear indication that the international economy has changed. The pursuit of leisure, both for its own reward and as part of business travel, is a growth sector of the new economy, and the development of an “infrastructure of play” is often the result (Judd, 2003). In 2005, for example, the Travel Industry Association of America (2006) reported that domestic and international travel added $650 billion to the U.S. economy, generating 8 million jobs, $171 billion in payroll income, and $105 billion in federal, state, and local tax revenues. It is no wonder that cities, states, and the federal government encourage tourism development. At the city level, policy makers attempt to attract travelers through the branding of places and by focusing regeneration strategies to attract investment funds and human capital (Smith, 2007).

Although discussion of the Olympics is often couched solely in terms of potential economic benefit, any analysis of the political economy of the Olympic Games, we argue, needs to be situated in the context of the broader issues of the politics and cultural imagination, as well as the economics, of these events. The Olympic Games are not just another one-off event; the bid period, the organizing period for the host city, and the open-ended legacy period following the Closing Ceremonies provide cities with a decade-long planning period and an infinite legacy horizon that can be oriented toward the values of the Olympic Games. The Olympics are a critical opportunity either for development or for exploitation, and the choice is made in policy decisions. Next, we briefly present three cities' host experiences to illustrate the political economy of the Olympics, characterizing each city according to the three modes of allocating resources: the market, the state, and civil society. Each mode illustrates different pressures and contextual influences, and we believe that this exercise demonstrates the importance of using political economy as an analytical frame and not just accepting the idea of hosting the Games as an inevitable, or even a desirable, policy outcome.

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