Hosting the Olympic Games can lift a city to new heights in terms of public awareness and prestige – but what goes up often comes crashing back down. Athens, which hosted the games in 2004, is a classic example of post-Olympic economic woe.
“In all Olympic Games there’s tremendous investment in the city and regional infrastructure. That dries out immediately after the event, so there’s a slowdown in economic activity,” said Dr Eleni Theodoraki, a sports management lecturer at Loughborough University in the UK who was an advisor to the Athens games.
With some estimates putting Beijing’s Olympic spending at a record US$40 billion, the stakes are high. But experts say the city’s strong economic fundamentals, underpinned by a surging national economy and massive population, may allow it to dodge a downturn.
One of the greatest financial risks posed to any host city is the Olympic sporting venues that often fail to turn a profit once the games move on, leaving massive debt in their wake. Montreal famously spent 30 years paying off outstanding debts relating to the 1976 games.
Beijing’s track record in maintaining sporting facilities, such as those built for the Asian Games, is less than stellar, according to Stéphane Vernay a Beijing-based partner at law firm Gide Loyrette Nouel, which advised the Beijing National Stadium Consortium.
“Chinese property developers’ history of neglecting maintenance could add to the city’s post-Olympic hangover,” he said, noting that as of now there was no definite plan for the venues after the games.
Nick Griffith, a director with sports marketing firm Octagon in Beijing said the Olympic venues could benefit from a range of sponsorships and marketing options commonly used in sporting venues in the west.
These strategies include offering naming rights to the stadium, VIP hospitality, and even opening a museum to the Beijing Olympics. The venues can add revenues by serving as hosts to non-sporting events.
“Management will be the key to the venues’ success,” he said.