Monday, December 1, 2014

The Olympic Games and Asia’s Rise

The withdrawal of Oslo’s bid to host the 2022 Olympic Winter Games has provoked consternation in the West. Only Almaty and Beijing-Zhangjiakou remain in the competition to host the global mega event. As if to underscore a shift in the world order, all seven Olympic Games and FIFA Soccer World Cups after the London 2012 Olympics will be hosted outside the traditional western powers – three of them by Asian nations.

Concern that this is a sign of Asia’s rise and the West’s decline is unfounded. Western economic interests and liberal ideology remain paramount even as the financial burden of mega events is shifted to others.

Norway’s withdrawn bid resulted from public opposition to excess spending. Western media blamed the Sochi 2014 Winter Games for scaring off bidders with their much-cited US$51 billion price tag. This followed the record-setting $43 billion costs of the Beijing Summer Games. Norway had proposed to spend only $5.3 billion on its Olympic preparations – cities in developed countries need not spend nearly as much on capital construction as those seeking to use the Olympic Games as a catalyst to modernize urban infrastructure

A more dispassionate look reveals that the costs of Olympic Games represent pocket change. Olympic expenditures in the six years leading up to the Games are typically such a small percentage of national GDP that they hardly have an impact on the national economy, points out Holger Preuss in The Economics of Staging the Olympics: A Comparison of the Games 1972-2008. By my calculations, Sochi’s $51 billion equalled 0.49 percent of Russia’s GDP from 2008 to 2013. Beijing’s $43 billion amounted to 0.26 percent of China’s national GDP over the previous six years. The figure for London’s frugal $14.4 billion is 0.096 percent – somewhere between that for the Atlanta 1996 and Sydney 2000 Games.

The figures for the Beijing and Sochi Olympics are dwarfed by Harvard researcher Linda Bilme’s calculation that the wars in Afghanistan and Iraq cost the US between $4 trillion and $6 trillion over a 12-year period. Clearly, in the new millennium, the largest national economies are capable of pooling $50 billion if the reasons are compelling enough – thousands of billions if the reason is war.

In the midst of a global financial crisis, Olympic revenues skyrocketed, with the vast majority coming from western corporations and networks. In 2012, of 11 global sponsors, six were American, two were European, and three were Asian – South Korea, Japan and Taiwan. Total sponsorship revenue was $957 million for the 2010-2012 cycle, an 11 percent increase over the 2006-2008 cycle. Total broadcasting revenues of $3.91 billion represented an increase of 52 percent over the previous cycle. The West contributed 80 percent of the television revenues, while Asia’s share was 15 percent. The 2010-2012 cycle set a new record of $8 billion in terms of total revenue generated by the International Olympic Committee’s global sponsorship program and broadcasting fees, combined with revenue from the commercial programs of the Vancouver and London organizing committees.

Tipping the balance of public opinion against games in Oslo was the release of IOC intranet documents describing privileges enjoyed by IOC members during the games. One political commentator observed, “Norway is a rich country, but we don’t want to spend money on wrong things, like satisfying the crazy demands from IOC apparatchiks.”

Last June, the national Olympic committees of Austria, Germany, Switzerland, and Sweden presented a report on “The Bid Experience” to the IOC – describing how potential bids were scuttled by public referenda in the first three countries and by national politics in Sweden. Krakow, a candidate for the 2022 games, had just withdrawn its bid after a 70 percent negative referendum. Likewise, an opinion poll showed that 60 percent of the Norwegian public opposed the Oslo bid.

While the public’s concern seemed to be government expenditures on an event tainted by the whiff of corruption, bureaucrats were also concerned about the shift of the Olympic center of gravity to Asia. In the 118 years ending with Sochi, 45 of 50 Olympic Games had rotated among Europe, North and Central America and Australia – with five held in East Asia. After Sochi, three of the next four Olympic hosts are in Asia: Pyeongchang (2018), Tokyo (2020), and Beijing or Almaty (2022). The South American continent will host its first Olympics in Rio de Janeiro in 2016.

Reactions from politicians and sport bureaucrats revealed a belief that the Olympic Games should go only to countries that conform to the western ideals of democracy and human rights. “It is critical that democratic countries that respect human rights still want to arrange the Olympic and Paralympic game,”  Norway’s leading political parties asserted before withdrawing support for Oslo’s bid. “The Bid Experience” argued that democracies are at a disadvantage in bidding for Olympics because governments accountable to public opinion are reluctant to take on the financial and political risks.  It requested that the IOC develop a mechanism to insure against budget shortfalls. It further proposed that the IOC establish a monitoring agency with power to sanction host cities that do not meet social responsibility standards “including not only environmental but also social, ethical and economical sustainability and thereby also human rights.”

It’s doubtful that such recommendations could pass the IOC Session. However, statements and comments in the western media about giving the games to “dictatorships” suggest that the furor is less about sports and more about maintaining the supremacy of the liberal West and its political ideology.

The West still dominates Olympic finances and the IOC: Europeans currently constitute 44 of 105 members; 10 more members from North America, Australia and New Zealand bring the membership from the cultural West to 54, more than half; Asia has 16 members. The current president is German, and among the 10 presidents in the IOC’s history, the only non-western European was an American. It is in the West’s interest to allow non-western nations to bear the financial burden of hosting a mega-party that provides western-based multinationals with a platform for strengthening their global networks and moving into non-western markets. Western powers still get to dominate the global political economy, while the emerging nations appreciate the coming-out party.

Attention to the IOC’s perks and Asia’s rise has distracted from a more important issue: If Olympic revenues are any indication, the West and the global economy have plenty of wealth, and it’s increasing rapidly. The question to ask: Where does this wealth go and how are priorities set? During the Games, the perks provided to the 105 IOC members – unpaid volunteers with day jobs in their home countries – are trivial compared to the hospitality programs that corporations, politicians and celebrities organize for their guests. Rough calculations suggest that VIPs hosted 200,000 to 300,000 guests during each of the last two Summer Games. To give just one example, during the Beijing Olympics, the Australian-based mining firm BHP Billiton reportedly spent more than $100 million entertaining 170 CEOs and corporate leaders along with more than 1,000 clients. In 2010 the US Securities Exchange Commission opened an inquiry into BHP’s hospitality program under the Foreign Corrupt Practices Act.

Our attention should not be riveted on the periodic festival of the Olympic Games or the erroneous perception that Asia is eclipsing the West. Citizens should scrutinize what’s much harder to grasp – the distribution of wealth and power in the global economy. The seemingly fantastic expenditures on Olympic Games are only the tip of a much larger iceberg. Asia is just joining a world system that the West still dominates.

Susan Brownell is a visiting professor of anthropology at Yale University and professor of anthropology, University of Missouri-St. Louis.

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