A Stellenbosch economic history professor argues that Cape Town should host the 2040 Olympic Games. It should not.
Cape Town should bid to host the 2040 Olympic Games, argues Johan Fourie, an economic historian based at Stellenbosch University (paywalled article/free version).
Tim Cohen, the editor of Business Maverick, somewhat hesitantly agrees.
If Fourie’s article is the best motivation that someone who “followed the literature on mega-events for the last two decades” can offer for hosting an Olympic Games, it is far from convincing.
Skipping the preliminaries about Zeus, ancient Greece, and tradition, Fourie begins his argument by offering several reasons why cities might want to host the Olympics, before unceremoniously shooting them all down.
Four reasons
The reasons that Fourie says scholars identified are:
- Economic benefits. “Hosting the Olympics, it is claimed, can stimulate economic growth through increased tourism, job creation, and investments in infrastructure. The influx of visitors and global attention can boost local businesses and create long-term economic benefits.”
- Global recognition. “Hosting the Olympics elevates a city’s international profile, showcasing it as a global destination. This increased visibility can attract future tourism, business investments and international events.”
- Urban renewal. “In preparation for the Games, cities also have to invest in new sports facilities, transportation networks and housing projects, which can revitalise neglected areas and improve the quality of life for residents.”
- Non-economic benefits. “[H]osting the Olympics can foster a sense of national pride and unity, serving as a symbol of national achievement.”
“There is little evidence to support these claims. The truth is that mega-events are largely underwhelming: they are mostly just a good night out that often leaves cities with a headache rather than a heritage.”
Well, then. Case closed.
Eye-watering costs
The Olympics is a massively expensive undertaking. Seth Thorne at BusinessTech went through some of the numbers, and they’re staggering.
The average cost of hosting the previous nine Olympic Games (since Barcelona 1992) was an eye-watering $12 billion (about R219 billion at the time of writing). That includes only sport-related expenses, and not general infrastructure upgrades, press and broadcast facilities, or the Olympic village.
Brazil, despite its precarious economic situation, spent almost twice as much on the Rio Olympics in 2016, and lost $2 billion. London spent 40% more in 2012 but generated just $5.2 billion in revenue. The 2020 Games in Tokyo officially cost $13.7 billion, but including additional costs its ultimate price tag could be as much as $33.4 billion.
Existing infrastructure
Yet Fourie argues that Cape Town should bid anyway, because he believes it to be in a relatively advantageous position.
He cites a report by Cape Town 2040, which describes itself as a “[t]hink-tank and research group exploring the opportunity for Cape Town and the Western Cape to host the 2040 Summer Olympic and Paralympic Games”.
It has an X account and a LinkedIn page, but its website is non-functional.
The headline finding of the 60-page report (summarised here), and the finding highlighted by Fourie and others is “that 84% of the required sports venues either exist or could be built temporarily”.
The 1984 Los Angeles Olympics is one of the few Olympic Games in recent memory to make a significant profit for the host city. This was widely attributed to the availability and sufficiency of existing infrastructure, whereas most other host cities had to spend billions of dollars building stadiums and other infrastructure.
This argument isn’t entirely convincing, either.
A July 2024 study preprint which updates an older study by Alexander Budzier of the University of Oxford and Bent Flyvbjerg of the University of Oxford and the IT University of Copenhagen, asks whether costs and cost overruns at the Olympic Games are coming down.
No, they conclude. They’re not.
Grim reading
The abstract alone makes for grim reading: “We document that the Games remain costly and continue to have large cost overruns, to a degree that threatens their viability. The IOC is aware of the problem and has initiated reform. We assess the reforms and find: (a) Olympic costs are statistically significantly increasing; prior analyses did not show this trend; it is a step in the wrong direction. (b) Cost overruns were decreasing until 2008, but have increased since then; again a step in the wrong direction. (c) At present, the cost of Paris 2024 is USD 8.7 billion (2022 level) and cost overrun is 115% in real terms; this is not the frugal Games that were promised. (d) Cost overruns are the norm for the Olympics, past, present, and future; the Games are the only project type that never delivered on budget, ever. We assess a new IOC policy of reducing cost by reusing existing venues instead of building new ones. We find that reuse did not have the desired effect for Tokyo 2020 and also looks ineffective for Paris 2024. Finally, we recommend that the Games look to other types of megaproject for better data, better forecasting, and better methods for generating the positive learning curves that are necessary for bringing costs and overrun down. Only if this happens are Los Angeles 2028 and Brisbane 2032 likely to live up to the IOC’s intentions of a more affordable Games that more cities will want to host.” (My emphasis.)
This strongly suggests that the existing facilities in Cape Town and the surrounding Winelands will not guarantee that the Games won’t destroy vast amounts of wealth that South Africa can ill afford to squander.
2010 World Cup
I have yet to see a credible analysis of whether the 2010 FIFA World Cup actually benefited South Africa or not. At the time, I was a leading voice for boycotting FIFA, describing it as a deeply corrupt organisation that suborned national governments to subsidise massive tax-free private wealth extraction.
We know that the 2010 World Cup cost South Africa north of $3 billion, and cost FIFA only $1.3 billion. For that outlay, the football body generated $3.65 billion in revenue, and $631 million in profit (despite legally being a non-profit organisation so it can claim tax-free status).
Two and a half years after the event, the South African Press Association reported: “In the absence yet of any final definitive figures on how much South Africa earned in total from being the host, the report said the World Cup had left an intangible legacy of pride and unity among South Africans and had changed the country’s image as undeveloped, crime-ridden and dangerous in the eyes of the rest of the world.”
Well, that’s nice. Altogether now: “Kumbaya, my Lord, kumbaya!”
Tourists and happiness
The most common measure of success for extravaganzas like the World Cup or Olympics is tourist arrivals. A lot can be said about the direct impact of the event on tourism, though it seems the numbers fell short of the predictions.
If you look up a chart of tourist arrivals for South Africa (see here and click on max), you’ll see no sign of the 2010 World Cup. Tourist arrivals were already growing long before the event, and the slope changes very little, if at all, around 2010.
In any case, by 2014, tourist arrivals began to plateau. In 2016, Fourie wrote: “The optimism after the 2010 World Cup has given way to pessimism following the visa regulations saga that … [completely nullified] the additional rise in tourism numbers from the World Cup (on which South Africa spent billions).”
In another article, published in 2012, Fourie tried to estimate who benefited in intangible terms from the 2010 World Cup. “While there seems to have been at least some positive ‘happiness’ effect of hosting the World Cup for white South Africans, there was no discernible impact for South Africans as a whole. Sport – and the passions it inspire – is seemingly a luxury good.”
Football legacy
Prior to 2010, a lot was said about the football legacy that the World Cup would leave. South Africa built five entirely new stadiums and upgraded five more, to seat between 40 000 and 64 000 spectators.
The thing is, even the Premier Soccer League (lately known as the Betway Premiership) can’t attract anywhere near those numbers.
During the 2018/2019 season, before the Covid-19 pandemic disrupted everything, the Peter Mokaba Stadium, capacity 45 000 and home to Polokwane City, averaged 6 768 spectators during home games. The Nelson Mandela Bay Stadium, capacity 46 000 sees on average 7 164 fans during Chippa United home games. The largest club in the country, Kaizer Chiefs, play home games at the FNB Stadium (94 000 seats) and the Moses Mabhida Stadium (56 000 seats). They draw on average 7 433 spectators to their home games. Orlando Pirates, their biggest rivals, who also play at FNB Stadium in addition to their home ground, 40 000-seater Orlando Stadium, draw 9 400 fans on average. Cape Town City, playing at the World Cup final stadium in Green Point, now known as Cape Town Stadium (capacity 55 000), pull 12 500 per home game. No club in the country comes even close to filling their fancy new stadiums, yet all those stadiums need to be maintained at significant expense.
Mega-projects
Cohen’s article cites a Saïd Business School study of over 3 000 mega-projects which found that only 27% were on budget, only 2.8% were on budget and on time, and only 0.2% of the projects were on budget, on time, and delivered the anticipated benefits.
“One of the most obvious flaws,” he writes, “is that they’re mega-projects in the first place. Because of this, there is a good chance that they were politically, rather than economically, motivated. The desire for headlines on the part of politicians is a big reason megaprojects happen – and the reason they often fail.”
That’s not to mention the risk of corruption. The South African Football Association has been too embarrassed even to claim the restitution to which it was entitled after bribing disgraced FIFA vice president and Concacaf president Jack Warner with $10 million for his vote in favour of selecting South Africa as the host of the 2010 World Cup.
Weak argument
The rest of Fourie’s argument, then, that it “would force local, provincial and national politicians towards a shared infrastructure plan”, that “[a]n Olympic village could help fill the demand for much-needed housing”, that it would spur “collaboration between local and national governments”, and that it would “unify people”, seems rather weak.
If Cape Town needs infrastructure, then it should be built on the basis of an economic case that serves its residents under ordinary circumstances.
If the city wishes to invest in housing, for example, then it should build housing that is made for purpose, and not made to house foreign athletes with certain expectations as to quality and luxury.
If it wants to build a snazzy rail service connecting Cape Town with Malmesbury, Paarl, Stellenbosch, and Somerset West (as Fourie proposes), then that rail service needs to make business sense outside of an Olympic Games.
I can see why a Stellenbosch professor might like the idea, but pitching an Olympic Games as an excuse to get national government to pay for new infrastructure in Cape Town is piss-poor policy.
Infrastructure ought to get built where it is most needed, not because one city decided it wanted to raid the national fiscus to polish its global credentials and give its people good vibes.
Angel and devil
All in all, Fourie makes no substantive arguments. He appeals purely to intangibles like “[unifying] people around a long-term vision”.
Cohen says that he has a devil on one shoulder, whispering that South Africa should do it, and an angel on the other saying it’s a terrible idea for so many reasons. But, like Fourie, he says, “I’m going with the devil.”
That is a terrible argument. An Olympic Games isn’t a death by chocolate dessert. It isn’t one for the road.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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Image: The Olympic Games logo over an empty Cape Town Stadium. Composite illustration by Ivo Vegter from public domain imagery.