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Fireworks are seen during the Opening Ceremony for the Gold Coast 2018 Commonwealth Games at Carrara Stadium. (Image: Bradley Kanaris/Getty Images)
Fireworks are seen during the Opening Ceremony for the Gold Coast 2018 Commonwealth Games at Carrara Stadium. (Image: Bradley Kanaris/Getty Images)

BusinessJune 18, 2018

Mega sporting events suck at creating infrastructure, actually

Fireworks are seen during the Opening Ceremony for the Gold Coast 2018 Commonwealth Games at Carrara Stadium. (Image: Bradley Kanaris/Getty Images)
Fireworks are seen during the Opening Ceremony for the Gold Coast 2018 Commonwealth Games at Carrara Stadium. (Image: Bradley Kanaris/Getty Images)

Spend money to make money? Not really. It turns out there’s very little in the Commonwealth Games for a host other than cost.

In 1896, the first modern Olympic Games took place in Athens and shared a similar fate to many of its successors: the initial costs were vastly underestimated, they were plagued with cost overruns, and a lot of expensive and otherwise unnecessary facilities were built.

Recently, Mark Thomas asked us to imagine what it would be like for Auckland to host the 2026 Commonwealth Games – a regional version of the Olympics. He makes it sound like the ideal solution for many of Auckland’s problems, a “catalyst” for much needed housing and transport development. It will allow the city to cut through the bureaucratic red tape, “unlock” investments and force improvements in the face of a deadline, he claims.

After all, he says, this is exactly what the Commonwealth Games has done for the Gold Coast, leading to a substantial increase in light rail investment, an athletes’ village, and $535 million in additional exports and foreign investment.  

But would it work?

To know whether Thomas’ claims are accurate, one would need to read both volumes of the official bid that was submitted to the Commonwealth Games Federation in March 2011. That’s over 200 pages of government techno-babble.

There is a section in this document that lists existing, planned and additional transport infrastructure developments. Existing and planned developments will happen anyway, and only those labelled ‘additional’ can be directly attributed to it.

Only one relatively minor project was listed as additional, and it’s due to take place in 2020. Everything else was going to happen regardless including the light rail investment Thomas’ argument largely hinges on. The games apply time pressure, but that’s not the same as spurring urban development that otherwise wouldn’t happen.

Thomas also claims the Gold Coast Games provide affordable housing, mainly through the continued use of the Athletes’ Village. However, according to the official document, the 25.83 hectares area will only house 2,100 residents. At a cost of over $550 million, it is hardly great value for money – or space.

As to the notion that hosting the Commonwealth Games will somehow promote trade and foreign investment? Companies don’t select trading partners or investment targets based on whether a city has hosted the Commonwealth Games; they select them on the basis of fiscal incentives, quality of life, proximity, workforce skills, wages, and so on.

Mega Sporting Events 101

The Olympics, the FIFA World Cup, the Commonwealth Games, the Pan American Games and the Rugby World Cup, among others, are commonly known as ‘mega sporting events’ in academic circles. Let’s dive into their world for just a bit.

There exists a multitude of peer-reviewed academic articles on mega-sporting events and econometric studies assessing the true economic impact of hosting them. They have consistently found the overall impact on the cities and regions that host these events is negative.

Boosters, on the other hand, in my view have a tendency to overestimate the benefits, and underestimate the costs (in the form of privately commissioned reports that may have serious methodological errors or are flawed due to bias).

So what is the bidding process like?

The idea of seeing your city proudly on the world stage as the host of the Commonwealth Games is obviously very appealing. But the opportunity is particularly appealing to those with businesses in construction, hospitality and real estate development, and it also offers a chance for politicians to shine. 

Local bidding committees – the above mentioned group of individuals with political or financial interests – will convince each other that hosting a mega sporting event will benefit themselves and the broader community. They will submit a document called the bid book to the company that owns the rights to the event, like the CGF.

Companies like FIFA, the Commonwealth Games, the Olympic Committee and the Rugby World Cup pit these committees against each other in order to find the best proposal. One that offers the most lavish event, the best concessions and, of course, the legally binding assurance the host will make sure the event takes place on time, no matter the cost. And that extra cost, of course, falls on us.

These are the considerations that will carry more influence with the event owners than the accuracy of the bid’s cost estimates, or how the event will fit with the city’s long term development plans.  

Cities around the world have already grown wary of these bidding dynamics; when the cities engage in a basic debate of the pros and cons of a bid, most of them decide to pass on the opportunity. Unfortunately, in most cases bids are not publicly debated, and communities usually only find out about a bid once the winner is announced.

There’s already a general consensus among policy makers, advocates and the public in general that Auckland’s transport infrastructure and housing affordability is in need of significant attention. We don’t need to wait for the Commonwealth Games to get it done, and we shouldn’t let it be used as an excuse to host an event that is extremely expensive and gives little back to our city.

Mijail Erojin wrote a thesis on the economic and social impact of the 2011 Pan American Games in the city of Guadalajara, and is co-authoring a paper on the impact of mega sporting events on tourism, during the World Cups of Germany, Brazil and South Africa.

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