Economic Expediency of Holding London Olympic Games - Essay Example

Is it necessary to spend huge amounts for London Olympics? Introduction (Brand protection, p.6) Olympics victories often develop nationalism and proud. Moreover these victories are symbols of developments in a country. Olympics provide an opportunity to the host nation to demonstrate their financial, infrastructure development and technological abilities whereas for the participating nations, it is only a sports event to exhibit their abilities in sports and games. As time goes on, host nations of Olympics are trying to make this event better than the previous event. Last Olympics was held in Beijing, China and the current Olympics is going to be held in London, Britain. Beijing Olympics is believed to be the best Olympics held in the history. Britain wanted to conduct the coming Olympics even better. The competition between host nations caused huge financial burdens upon the host nations. “London’s Olympics has become the subject of fierce debate four years before the torch is even lit. Time Out explores the pros and cons of the 2012 Games, arguing that the event will significantly boost the capital and the nation”(Hodges, 2012). Many people already questioned the logic of spending too much money for London Olympics, especially at a period in which Britain is struggling to revive its economy. It should be noted that recent recession caused huge damages to British economy and Olympics like expensive events may worsen the problem further. This paper argues against spending too much money for London Olympics. Is it necessary to spend huge amounts for London Olympics? Hosting is very expensive. In recent times the Olympics have never made a direct profit. The bidding process alone for 2012 will cost each bidding city around £20m and whichever is selected will expect to pay at least £6.5bn (Paris). With increased security fears Athens spent $1.5bn on security out of a total of $12bn on the 2004 games. The burden of this cost falls on government (and therefore the taxpayer), companies and individuals. Both Paris and London’s local governments have put aside around £2.4bn which will mean £20 per year extra in tax for every household in the cities (Bailey, 2008). Some of the recent reports showed that the total expenditure of London Olympics may cross even 9.3 billion pounds ($13.54 billion). It should be noted that many people in Britain are currently struggling because of the negative impacts of recent recession. The organizers of London Olympics are of the view that Olympics may stimulate the country’s economy. In their opinion, tourism revenues could be increased a lot as result of London Olympics. But, they are keeping a blind eye towards the fact that Olympics games may be finished within few weeks and after that tourism revenues may return to its normal level. In other words, the expenditure made for the success of these events may not balance with the revenues obtained from other sources. Apart from Sidney and Los Angeles Olympics, none of the recent Olympics have made any profit and the destiny of London Olympics could also be the same. It should be noted that London Olympics committee is currently facing an additional burden of increasing the security of the athletes and tourists who participate or visit London. Terrorism is growing day by day and normal security measures are not enough to provide adequate security to the tourists and athletes. It should be noted that spending for the security measures may not yield any income. In other words, spending in nonproductive sectors is going to be increased a lot as far as London Olympics is concerned. Ability to reduce spending on nonproductive sectors determines the success of any business event or business. Since London Olympics organizing committee is particular about the commercial aspects of this event, too much spending on nonproductive sectors may not help them to yield the desired results. Infrastructure development is another argument cited in favor of conducting Olympics. Bailey (2008) pointed out that “The demands of the Olympics are very particular, an 80,000 all-seater stadium, pools, horse tracks, beach volleyball etc. Many of these stadia will never be used again after the end of the games” (Bailey, 2008). Same thing is going to be happened in London also. London already has enough stadia for playing football, cricket etc. In fact each football club in Britain have their own stadium. Under these circumstances, more stadia may not help London residents in any ways. Some people believe that road and rail like transportation facilities may increase a lot as part of London Olympics. London already has enough transportation facilities and more spending on this sector seems to be needless and wastage of money. Many people believe that Olympics may destroy the environment considerably. In order to conduct this Olympics successfully, huge construction works are necessary. Construction works always cause harm to the environment in one way or other. Moreover, visitors of London Olympics villages may dispose large volumes of plastic materials in and around the Olympic stadiums. These wastages can cause huge damages to London’s environment. India, Brazil, South Africa are some of the most rapidly developing nations in the world at present. These countries never hosted an event like Olympics and they are not showing any interests in hosting such events still. This is because of their awareness about the possible negative impacts Olympics like events may cause to their economy. It should be noted that Britain is not hosting Olympics for the first time. Little wonder that the costs kept going up. Within two years, the original budget of £2.4 billion had more than trebled to £9.3 billion. In 2008, the press got its hands on a classified Government report – signed off by Tony Blair as far back as 2002 - which had investigated all the pros and cons of ‘mega events’ like the Olympics. The conclusion was that the economic benefits were, er, actually nil (Hardman, 2011). The organizers of London Olympics are struggling to convince the public about the economic benefits of hosting an event like Olympics. The budget for London Olympics has been revised many times in the past and many people are of the view that the current budget should also be increased further to meet the growing expenditure. London Olympics committee has no clue at all about the possible expenditure of this mega event. Only at the end of the event, one would get a clear picture about the expenditure. In short, nobody, either the government or the organizing committee have any idea about the possible expenditure of this event. Some people argue that Olympics provide an opportunity for Britain to demonstrate its technological excellence over other countries. It should be noted that China mesmerized the external world in 2008 with the help of surprising technologies used in conducting Olympics. Now, it is time for Britain to show that they are not behind any nations with respect to technological excellence. However, there is no point in showing such things to the external world. Israel is believed to be a nation which has nuclear arsenal. However, they never tried to convince the external world that they have these things in their armory. In other words, spending too much money for exhibitionism is illogical especially in the current recession times. The benefits the Olympics brings to the area are numerous, however there is a risk that the public is being misled of the opportunities for jobs, as nearly all of the jobs are likely to be short-term, and after the games it could leave the area still with a high level of unemployment (Olympics games: Disadvantages for London, 2012). One of the claims put forward by the London Olympic committee is that Olympics may bring lot of employment opportunities. However, they are keeping a blind eye towards the fact that majority of these jobs would be temporary and those who got employment as part of this event may lose it within few weeks. No country has ever solved their unemployment problems with the help of hosting an expensive event like Olympics. In fact the organizers also know this fact. They wanted to cool down some of the arguments against hosting Olympics and for that purpose they are deliberately spreading exaggerated claims about Olympics. London Olympics marketing is currently facing too many challenges in the form of ambush marketing or guerilla marketing. Ambush marketing is where a company or an individual gives the impression that the product or service they are selling are in some way associated with the Olympics without having an official sponsorship agreement. Already, according to media reports, between 50 and 100 cases, many in video, print and online, are being examined at any one time by the London Organizing Committee for the Olympic Games (Knight, 2011). It is evident that outsiders may earn more money from London Olympics than insiders. Business people know the shortcuts in making money by exploiting events such as Olympics. Ambush marketers may not pay the sponsorship fee to the Olympic committee and still they will be able to exploit the brand value of Olympics using illegal channels. Conclusions In all probabilities, London Olympics may not make any profit and Britain is going to be suffered a lot because of the huge wastage of money for this Olympics. The huge expenditure made for this Olympics, especially during these recent times could cause more damages to British economy. The authorities should try to reduce the expenditure as little as possible to reduce the possible damage cause by London Olympics to British economy. References 1. Bailey, J. 2008. Olympic Games, Hosting of. [Online] Available at: http://www.idebate.org/debatabase/topic_details.php?topicID=306 [Accessed 18 April 2012] 2. Brand protection. 2010. [Online] Available at: http://www.london2012.com/documents/brand-guidelines/guidelines-for-business-use.pdf [Accessed on 18 April 2012] 3. Hodges M. 2008. Why London needs the Olympics. Time Out London. Aug 12, 2008. 4. Olympics games: Disadvantages for London, 2012. [Online] Available at: http://olympics.pthimon.co.uk/londondisadv.htm [Accessed 18 April 2012] 5. Hardman, R. 2011. The painful truth about the great Olympics con. Daily Mail. 1 December 2011 6. Knight M. 2011. Ambush Marketing Outlawed at London Olympics. Huffington Post 21/12/11. Read More