LONDON (Reuters) – India’s Commonwealth Games debacle shows the risk of such high profile sporting events — there are limited benefits if you get it right but a vast investment and political downside if it all goes wrong.
Indian officials would have hoped a successful games might have helped build on India’s narrative as an emerging superpower, perhaps drawing comparisons to rival China’s 2008 Olympics. Instead, the Commonwealth Games — due to start on October 2 — have become a national embarrassment.
Several big-name athletes have already pulled out of the games, while the Commonwealth Games Federation complain of a “filthy” athletes’ village littered with rubbish and stray dogs.
Most seriously, a footbridge to the main stadium collapsed, injuring 27 workers — inevitably highlighting India’s wider infrastructure problems and raising concerns about the quality of new construction.
“India is suffering from a public relations disaster here in that it looks less ‘competent’ than China,” said Nikolas Gvosdev, professor of national security studies at the United States Naval War College in Rhode Island.
Organisers still say the problems are only minor glitches and the games should be a success. But media coverage is clearly inclining towards an overarching story looking at India’s wider problems from poverty to security.
Established investors might already be aware of those issues, but it will shape the expectations of others.
“It’s quite probable the Commonwealth Games issue will feed into existing negative perceptions on India’s investment environment,” said Rebecca Jackson, analyst at political risk consultancy Maplecroft.
The most successful games in terms of national branding have been those — such as 2008 Beijing and 1988 Seoul Olympics, as well South Africa’s World Cup this year — used as “coming out parties” for developing states, analysts say.
But a poorly conducted event can have the opposite effect — and even success can have its problems.
Organisers in Delhi liked to point to the example of the 2004 Athens Olympics, which bounced back from global media predictions of failure. But the financial cost helped fuel the current Greek debt crisis.
Debatable value
“There’s always been a debate about this kind of event,” said Jonathan Wood, global issues analyst for London-based consultancy Control Risks. “They cost a lot of money — particularly on the infrastructure and security front — and it has never been entirely clear that they are worth it.”
That might be a sobering thought for London — where the 2012 Olympic stadiums already tower over nearby housing — and Brazil, due to hold both the 2014 World Cup and 2016 Olympics.
“These sporting events have become bloated behemoths, where there is little chance of achieving long-term benefit from the initial investment,” said Christopher Meyer, a veteran diplomat and former British ambassador to the United States.
“But there is little chance of reversing the trend.”
Most observers agree South Africa’s World Cup could have been a disaster. Had the naysayers being right and the tournament suffered from crime, power cuts and construction failures, South Africa’s reputation might have sustained long-term damage affecting both investment and political clout.
But some wonder whether the money might have been better spent in a country still suffering deep poverty and HIV/AIDS.
“If anything, South Africa got more out of the World Cup than most countries hosting such sporting events,” said Razia Khan, chief African economist at Standard Chartered bank. “It showed they could host a real world class event. But the economic gains will probably still be less than many had hoped.”
South Africa says it believes the tournament added 0.4 percentage points to annual growth for 2010. The Beijing Olympics may actually have slowed the economy through the temporary closure of factories to reduce pollution.
Governments deluding
themselves?
A review this May in the British Medical Journal of 54 studies written between 1976 and 2008 found “insufficient evidence” to show that they benefited, harmed or otherwise affected the health and economy of the host population.
“Governments invest a great deal of effort because they think these events bring prestige,” said the US Naval War College’s Gvosdev. “They delude themselves into thinking that massive state spending will produce a tourism boom — even though it actually produces large amounts of debt that lag.”
It’s not that there are no benefits — particularly for the immediate local area. Barcelona helped build a reputation as a cultural and tourist centre with its 1992 Olympics.
London’s East End boroughs — among its poorest — will benefit from new transport links regardless of whether 2012 is a success or failure that undermines the wider city’s reputation. Hosting the games will cost some nine billion pounds ($13 billion), providing it runs to budget.
For former Greek finance minister Stefanos Manos, looking back on a widely praised Olympics but ruined economy, cost management is the key lesson.
“If you ask me with hindsight if we should have bid for the Games, my answer is yes,” he told Reuters, citing the boost to Greece’s national confidence and the impetus given to vital infrastructure building. “What wasn’t good was the incredible sloppiness and total absence of financial control. The Games accelerated Greece’s fiscal derailment.”
