A chance of a medal for Rio
The Olympic Games will open in August with over BRL 39 billion in spending and questions surrounding its legacy. Nearly 15,000 Olympic and Paralympic athletes will be competing for medals.
São Paulo – The Rio de Janeiro Olympic and Paralympic Games are set to begin on August 5th after over BRL 39 billion in sports-related and infrastructure investment (USD 10.8 billion at current exchange rates). Part of the legacy is already known: a new metro line linking the city’s South Side to the Barra da Tijuca area, on the West Side, where most of the competitions will take place. Revitalization of the port area and the inauguration of the Rio Art Museum (Museu de Arte do Rio - MAR) and of the Museum of Tomorrow (Museu do Amanhã) are other examples of the Games’ heritage before the contest has even begun.
The moment the Olympic flame is lit, BRL 39.1 billion (USD 10.83 billion) will have been invested. According to the Olympic Public Authority (OPA), which coordinates governments’ actions in organizing the Games, the splits costs into three separate budgets. The first one concerns expenditures strictly relating to the competitions themselves, such as the purchase of equipment for the events. The projected spending is BRL 7 billion (USD 1.9 billion), including private funds, International Olympic Committee (IOC) transfers and ticket sales.
Another budget, the Matrix of Responsibilities, includes infrastructure for the games, such as the building of arenas, energy supply to the Olympic facilities, and the Olympic Village. In this case, 60% of the money comes from private sources and 40% are provided by government.
The third budget comprises infrastructural investments in the host city. This category includes construction of the metro line, the Porto Maravilha (Wonder Port) revitalization project, the Tim Maia bike path, three BRT bus corridors and one light rail transit (LRT) system, to a total of 27 projects. Here, investment came out to BRL 24.6 billion (USD 6.8 billion), with 57% coming from state coffers and 43% from the private sector. The bulk of government money is supplied by the Rio City Hall, but the federal and state governments also chip in.
When it was chosen to host the Games, in 2009, Rio de Janeiro beat Madrid, Chicago and Tokyo, which will play host in 2020. On that occasion, the event’s organizers had called on the hosts-to-be to model themselves after Barcelona, Spain, in creating a shift urban planning that would lead to improved quality of life for the population. Whether or not Rio has accomplished this goal is open to question.
In his book Circus maximus, Andrew Zimbalist, an economist specializing in competitions such as the World Cup and Olympic Games, propounds that events of this kind are usually more expensive than planned, and enumerates two places where the Olympics left a fruitful legacy. One is Los Angeles, in the United States, where the Games were held in 1984. The city did not spend much, no Olympic Village was built, and the athletes were lodged at local universities. It even made a profit.
The other case in point is Barcelona. The Spanish city jumped at the chance and reinvented itself. Zimbalist points out the caveat that Barcelona began rethinking its structure as a city before the Olympics. Speaking to ANBA, he criticized the Games’ organizers. He asserted that many of the advantages that are touted as a legacy could have been achieved with less money. He also remarked that cities in developing countries need to spend more cash on infrastructure for the Games than those in developed ones.
“Some of that expenditure is on port modernization and the metro and these will constitute positive legacies. The problem is fivefold: first, it would have been possible at a fraction of the cost to modernize Rio's infrastructure and to have done it in a way that would have been more beneficial to cariocas. The metro, for instance, from the airport, to the beaches to Barra will help travel during the Olympics (assuming it is finished on time and it functions), but will do little to alleviate Rio's horrific traffic. Second, the displacement of over 60,000 favelados and the uprooting of their communities and lives is a shameful legacy. Third, the Olympics might bring in $4 billion of revenue in the best of circumstances. This is a fraction of the costs and only serves to fiscally bankrupt the city and the state. Fourth, the endemic problem with corruption and bureaucratic inefficiency has only been exacerbated by the hosting experience, yielding a politically untenable situation. Fifth, Rio's reputation has been badly tarnished (by events such as the removal of favelas),” Zimbalist said.
One of the biggest negative repercussions of the Olympic legacy was the collapse of part of bike lane Ciclovia Tim Maia into the ocean on April 21st. The structure couldn’t withstand the waves at the stretch in São Conrado. Two bikers were killed. Technical reports indicated errors in the plans, the tendering and the inspection.
A partner at consulting firm 4E, which does assessment of macroeconomic scenarios, Juan Jensen said the Olympic Games will bring a few positive legacies to Rio de Janeiro, like new public transportation lines. Besides, more tourists are likely to visit the city and Brazil if the Games leave a positive impression. However, he claims the event will not lead to financial gains, and notes: “This is an event organized with Brazilian money, to bring benefits to one city, Rio de Janeiro”, he claimed. But Jensen said this is not the time to criticize spending on the Games amid the crisis, because the commitment was made at a prosperous time for Brazil’s economy.
In May, credit rating agency Moody’s released a survey of the advantages to Brazil of Rio’s hosting of the Games. It said that infrastructure-wise, the benefits have already begun, but countered that the impact upon corporate revenue and the country’s economy is “limited.”
Barcelona, Atlanta, Montreal, London. All of those cities have hosted the Olympic Games, and not one of them managed to stay within the budget. And Rio is no different. In 2008, when the city made its bid, the budget forecast was BRL 28.8 billion (USD 7.9 billion). That amount has been exceeded by roughly 27%. In January, the OPA revised the budget up to BRL 39.1 billion (USD 10.8 billion). A previous revision had raised the amount to BRL 38.2 billion (USD 10.5 billion). The Rio Olympics are not the costliest ever, in nominal terms; Beijing cost more, at over USD 40 billion. The 2014 Winter Games in Sochi set Russia back USD 50 billion.
The ICO told ANBA that hosting the Olympic Games is an expensive effort. For that reason, in 2015 the Committee approved the Olympic Agenda2020, a document laying down guidelines for bidding cities, as well as recommendations for formal ceremonies to be held for medal-winners who receive their Olympic medal following the disqualification of athletes who fail doping tests, among other issues. The ICO said the Organizing Committee for the Rio 2016 Olympic Games is “working hard” to make sure that “the legacy of the Rio Games is felt not just in the City of Rio de Janeiro but also around the country.”
“The last stretch is always the hardest. During the operational phase that we are entering now, there are thousands of details still to manage, and their timely resolution will make the difference between average Games and great Games. The Rio 2016 team is ready to rise to this challenge and deliver Olympic and Paralympic Games that will reflect Brazilians’ warmth, hospitality and passion for sports. We believe that Rio 2016 will make the host nation proud,” the ICO said.
The International Committee also said the costs are shared between the operational aspects and the infrastructure a city decides to create in order to host the Games. It also noted that it provides USD 1.5 billion to cover operational costs.
Rio is expecting 10,500 Olympic and 4,350 Paralympic athletes, who will compete in over 40 modalities at 32 arenas in four areas of the city: Barra da Tijuca and Deodoro, in the West Side, Copacabana, in the South Side, and Maracanã, in the North Side. The “epicenter” of activities and the Olympic Village are set in Barra da Tijuca, which was chosen so that a neighborhood far from Rio’s Downtown area could thrive.
Rio’s City Hall will try to attract the private sector to the future management of these spaces. In London, which hosted the Games in 2012, the City Hall tried to do the same, but it it wasn’t until this year that it could find an owner for the Olympic Stadium: West Ham United, a local soccer team.
The international media manager of the Rio 2016 Committee, the body responsible for the Games’ organization, Phil Wilkinson said that the organizers of the Games in Brazil are already working on how the arenas will be used after the Olympics, and recalled that London’s Olympic Stadium welcomed events after the Games, even though it was not leased to the private sector.
With less than 70 days to go before the opening ceremony, the city is not ready for the Rio 2016 Summer Olympic and Paralympic Games yet. The velodrome’s construction work is still ongoing because the contractor was replaced by Rio’s City Hall. The original contractor filed for bankruptcy.
According to Wilkinson, 88% of the velodrome, which will be used for cycling competitions, is completed. Another case is the Guanabara Bay, where sailing competitions will take place. Here, the problem is the pollution. “The velodrome will be ready for the Games. As to the Guanabara Bay, 11% of its sewage was treated in 2009. Now, more than 50% gets treated. This percentage should increase even after the Games,” he said.
For Wilkinson, the Rio Games will leave several legacies. “I believe that the main one will be the overhaul of the transportation network. Besides, 50,000 volunteers will learn new professional skills, a network of suppliers was set up to meet the demand and one million people will learn to speak a second language (English) in little time.”
APO president Marcelo Pedroso told ANBA that the Rio 2016 Olympics are receiving a higher percentage of private investments than previous editions did. He also pointed out that events like these are a chance to get funds to old projects, which is the case of the road system plan developed by former governor Carlos Lacerda in the 1960s that provided for the construction of highways named after colors. From this project came the Red and Yellow lines. The BRTs, says Pedroso, are a legacy from that time.
The APO president mentioned the development of sports in Brazil as another legacy. The velodrome, the Maria Lenk Aquatic Center and the Olympic Tennis Center will be used by athletes from across the country to train and improve for international competitions.
“The Games gather and speed up investments. With them, the city is able to build old projects in the short-term that are beneficial to Rio”, said Pedroso. “Maybe this is the edition of the Games that will bring the most benefits to the population”, he said. He added that Brazil also stands to gain by hosting the Summer Olympics. “The returns for the country can be measured in the improvement of its international image and the increase in tourist numbers after the competitions are over. These are gains that accrue not only to Rio, but to the entire country.”
*Translated by Gabriel Pomerancblum and Sérgio Kakitani