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Impact of the Financial Crisis on Olympic bids


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This is such idle speculation. Who knows what economic conditions will be like in Sept. 2013 when bids are chosen, let alone 2020? No one could have predicted the financial crisis in 2006, no one could have predicted that these problems would have been ongoing when most elites were asserting "recovery" was more than certain in 2009. 2020 is nine years from now...nine years ago the US was in the tail end of the previous (post-internet bubble) recession!

It's very likely that the "stable" and/or "robust" country the games are awarded to could collapse in the meantime (I'm looking at you, Turkey). Britain has been battered by the financial crisis since London's economy has been overreliant on financial services - it also has its own serious debt problems and due to the election of what turned out to be a far more radically spending-hostile government than anyone could have anticipated even in early 2010 is now in the midst of implementing shocking austerity measures, but none of this has engendered serious doubts about the organization of the London Olympics.

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The point about Italy isn't the spending gap this year - it is the level of debt in comparison to GDP - which currently is the 2nd highest in Europe (after Greece). The ability to continue servicing this debt is the major problem and is why they are moving forward with their austerity measures at the moment.

It is true that the UK deficit this year may be bigger than Italy - but look at the overall picture and the UK debt to GDP is below that of France and Germany. More important (and I keep talking about it) is that ability to pay the debt. This is why Greece and Ireland are having to pay higher rates for their debt - a risk that Italy and Spain may have to deal with in the short term.

Do we 'know' what the economies of EU will be like in 2020? No - I don't think anyone knows this. However when the state of finance within a country is such that it is implementing major cuts on services in order to reign in public debt spending huge amounts on the Olympics doesn't seem like the greatest idea.

cjs2 - yes - the UK has suffered in the economic situation too - and no it hasn't significantly impacted on the games. That said its all a bit too late to stop doing stuff when the show is already coming to town.

If you are low on money don't book the holiday - if you have the holiday booked and have paid for a lot if it before your circumstances change then you may as well go even if you don't have as much spending money when you are there.

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The financial crisis had two main effects on London 2012:

1. Forced the Olympic Village to become a 100% publically funded project as Lend Lease, the firm charged with building it, couldn't raise funds in 2008 in the immediate aftermath of the banking collapse. Normally such a project would be put on hold till the markets shored up, but with a fixed deadline the government had to step in to make sure the project could go ahead.

2. Made things cheaper. This is why huge savings have been made in the £9.3bn budget and we're likely to come in at £7.5bn instead.

So whilst it had its obvious downside, it also had an upside bizarrely. The other important point to consider is that cannily, or perhaps fortunately, London started its domestic sponsorship programme very early and had signed a lot of big companies on board before the credit crunch and banking crisis. In that sense, LOCOG avoided the difficulties the ODA faced.

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In any case, looking at the big picture, even for economies like Spain and Italy an Olympics is a drop in the ocean. Like London, they will not have problems funding it even if economic conditions make private money harder to come by. The question for Spain and Italy and those on the outside is not one of doability but whether it is right to be spending money on such luxuries right now. I can fully understand why some Germans, for example, wouldn't want to see weaker European nations bidding if they're being given bailout money.

Can Spain/Italy do it even during financial crises? Undoubtedly.

Should they? I don't know, that's up to them and we'll all have our own views as to whether it's wise or appropriate.

So, in terms of the vote (assuming both would easily shortlist), IOC members choosing to take into account the financial crisis should only really be worried about the moral implications of voting for such a nation. I don't think for a second things will get so bad that either country would become incapable of pulling off a good Games.

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2. Made things cheaper. This is why huge savings have been made in the £9.3bn budget and we're likely to come in at £7.5bn instead.

I wasn't aware that the cost had gone down. Last I read (which was some time ago!) LOCOG were on track to use up most of the contingency fund which would mean that the games were closer to the £9.3bn mark.

Would be interested to see the reports that this wasn't the case.

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well, probably it would hurt the support of the bids

would the people support a bid when they have cuts in other departments/social support?

another problem i see is, why should a country like Germany and France pay for Olympic Games in Spain/Italy?

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well, probably it would hurt the support of the bids

would the people support a bid when they have cuts in other departments/social support?

another problem i see is, why should a country like Germany and France pay for Olympic Games in Spain/Italy?

Exactly! Greece is good example.

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In any case, looking at the big picture, even for economies like Spain and Italy an Olympics is a drop in the ocean. Like London, they will not have problems funding it even if economic conditions make private money harder to come by. The question for Spain and Italy and those on the outside is not one of doability but whether it is right to be spending money on such luxuries right now. I can fully understand why some Germans, for example, wouldn't want to see weaker European nations bidding if they're being given bailout money.

Can Spain/Italy do it even during financial crises? Undoubtedly.

Should they? I don't know, that's up to them and we'll all have our own views as to whether it's wise or appropriate.

IMO this is a huge question for South Africa as well, despite not seeming to be affected by the crisis to the same degree as Europe, which is why they're so back and forth on bidding.

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well, probably it would hurt the support of the bids

would the people support a bid when they have cuts in other departments/social support?

another problem i see is, why should a country like Germany and France pay for Olympic Games in Spain/Italy?

ein???????? i think u are a bit confused... noone paid Spain still and i think they wont pay us... and i remember u that we paid for rescue Greece, Portugal and Ireland as every EU country did, so dont say only Germany and France pay ( they didnt do it to Spain still). And too i want to remember that Germany is the guilt in 2nd rescue of greece cause they are speculing ( especulando?) with private money and they are wolves against crisis countries.

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I wasn't aware that the cost had gone down. Last I read (which was some time ago!) LOCOG were on track to use up most of the contingency fund which would mean that the games were closer to the £9.3bn mark. Would be interested to see the reports that this wasn't the case.

Here's one from today, focussing on the construction:

“It would be wrong to deny the recession has helped,” he says. “It was good in the sense that it clearly kept down prices – and labour availability, which we saw as a risk a few years ago, has not really been an issue.

“The whole procurement atmosphere has been better than may have been the case. If you go right back to the beginning there was a shortfall of contractors. There was a boom [in the UK] and there was not a list a mile long of people who wanted to do this [work on the Olympics].

“Companies could see what had happened to the reputation of the guys at Wembley [the 2001 badly-delayed project to build a new national stadium]. Also, if you look at the Aquatics Centre, they knew it was going to be difficult to build.

“So, if you are a contractor, you were saying, 'It’s going to look great on the front cover of the annual report when we have built it but if we haven’t made any money then that is the only return’.”

Before 2007, with the economy booming and other construction contracts available, companies could afford to turn down the opportunity offered by work on the Olympic project.

“Our lists were relatively short,” says Armitt. “Whereas by the time we got to the [Olympic] Village three or four years later, we were more active in choosing contractors because there was a lot more competition.”

http://www.telegraph.co.uk/finance/london-olympics-business/8641977/London-2012-Olympics-The-Olympic-Stadium-made-in-Britain.html

Also an older article about the basketball arena with specific figures:

The ODA estimates that it will spend £7.3bn of its original £8.1bn budget and Hone said that keeping the construction to time had been a key factor in mitigating risk and weathering changes in the economic climate.

"We have had the best of British construction. It has been a showcase for what the best of British construction can do," he said. "The ODA has between £600m and £800m worth of work still to complete, chiefly in "stitching together the landscape of the site".

http://www.guardian.co.uk/sport/2011/jun/08/olympic-basketball-arena-template-future

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we have a saying in turkish for this situation

"ayranı yok içmeye tahtrevanla gider sıçmaya " lol

st like.. he doesnt have anything to drink but goes with a chariot to ****...

i dont know if in english there is st like that.

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RobH - thanks for the links. I do hope that they stick to their budgets now and through 2012. Certainly LOCOG can't complain about not recieving enough from ticket sales (even if this is only a small part of the overall budget!).

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ein???????? i think u are a bit confused... noone paid Spain still and i think they wont pay us... and i remember u that we paid for rescue Greece, Portugal and Ireland as every EU country did, so dont say only Germany and France pay ( they didnt do it to Spain still). And too i want to remember that Germany is the guilt in 2nd rescue of greece cause they are speculing ( especulando?) with private money and they are wolves against crisis countries.

I do agree with you ^^ Anyway, there are two important points about the current financial crisis :

- How will be the European economy in 2020 ? Or even in 2013 ? Nobody can guess it, in fact, even the economists !

- When you see the tremendous French or German public debt (much higher than Spanish public debt), the huge investments made by French and German banks in Greece before the crisis and the current situation for these banks (above all in case of debt restructuring)... you know that NO European country is sure of its economical future.

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2011 first quarter economical growth

spain % 0,2

italy % 0,1

japan % - 0,9

turkey %11

predicted 2011 2012 economical growth

spain % 1,3 - 2,3

italy % 1,1 -1,4

japan % 0,4 - 2,9

turkey % 9 - 7

public debt percentage of annual gdp 2011

spain % 63,4

italy % 118,1

japan %225,8

turkey % 48,1

( greece % 144 ,usa % 92,7 brazil %60,8 )

Revenues / Expenditures / Deficit/surplus (million USD)

spain ? ? ? ( cant find)

italy 960,100.0 /1,068,000.0 / -107,900.0

japan 1,839,000 /2,252,000 / -413,000

turkey 164,600.0 / 176,300.0 / -11,700.0

ppp 2011 / 2016 (million usd)

spain 1,477,840 ( 12th) / 1,643.376 ( 14th)

İtaly 1,908,569 (10 th) / 2,092.489 (11th)

japan 4,332,537 ( 3rd) / 5,145.540 ( 4th)

turkey 1,015,994 ( 16th) / 1,341.145 ( 15th)

(china overs usa at 2016)

population 2010/2020

spain 46,506 / 50,016 ( 27th- 26th)

italy 62,348/ 62,403 (23th - 23th)

japan 126,804 / 121,633 ( 10 - 11th)

turkey 77,804 / 86,757 (17th - 17th)

thats all i can combine for 2011 and future predictions of the 4 candidate countries... if anything else needed i can find as i think :/ but its a hard job ...pfff also useless :D

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