Were The Olympic Games An Economic Disaster?

Mo Farah OlympicsMo Farah

Photo: Clive Brunskill / Getty

So, two weeks of Olympic Games are over. There was a huge amount of expectation on London (we were one of many nay-sayers) but did the British deliver?Let’s take a look.

The good news — it restored British pride

Team Great Britain outperformed the somewhat meager expectations to win 29 Gold Medals and 64 total medals (weirdly almost exactly Goldman’s estimate) — making it the best GB performance since 1904, back when the Games included sports such as biking polo.

It was a huge boost for a country that believes (wrongly or rightly) they underperform in sports, and created new sporting stars for the UK — most notably the dominating, mod-attired cyclist Bradley Wiggins, and the charismatic long distance runner Mo Farah.

Most Brits and Londoners — even the “Olympic Grinches” negative about the games before their start — seem happy with the way the games turned out. Expatriate CNN host Piers Morgan proudly proclaimed the event the “greatest Games in the history of the Olympics”.

The rest of the world seems pretty happy with the games too. The Times of London has collected some of the “global acclaim” for the Games today, and one report from the Melbourne Age is particularly striking:

“The only conclusion heading out of the stadium for the final time was that the most beautiful opening ceremony launched the best Olympics which were brought to a close by a smash hit epitaph.”

Even if it wasn’t the best games ever (we’re not sure exactly how that can really be measured anyway), one thing is clear. Despite the enormous problems with security, and the outrage over the Olympic branding requirements, nothing went wrong!

The problem is the legacy
Few countries really make a great return on their investment during the Games, as London’s shops and hotels discovered this year. Instead, the key factor in determining a games long-term economic success is the legacy it creates for a city.

The greatest example is Barcelona, which completely transformed a post-industrial second city into one of Europe’s key tourist hotspots. Other recent host cities haven’t seen such a great transformation — Beijing residents have expressed a great deal of anger that the city had spent so much money on stadiums that now sit empty, when the entire city’s sewage system is so antiquated it helps creates deadly flooding,

London is thought to have spent at least £8.4 billion ($13 billion) on the games — which is a huge 107% over budget. If that is to be a wise investment, the planned regeneration of the East End of London has to go well.

London’s Mayor Boris Johnson announced this week that 6 of the 8 structures built for the London Olympics have fully-confirmed plans for after the games (and negotiations continue for the remaining two). Construction will begin soon to change the Games-focused Olympic Park into the London-focused Queen Elizabeth Olympic Park. The plan is to open one part of the new park by next summer, and over the next 20 years 5 new neighborhoods are due to be built (though there has been significant criticism that these neighborhoods could destroy local communities through gentrification).

The area where the games were largely held — Stratford — has historically been underdeveloped. As recently as 2005 Reuters described the Olympic Parks site as “a patch of polluted wasteland”. Any investment in the area is bound to produce some good — but will it be $13 billion good?

Unfortunately, we probably won’t be able to answer that question for 20 years or so.

See also: 43 Signs That The London Olympics Will Be A Disaster >

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