Friday, December 22, 2017

Birmingham's Bonanza?

The 2022 Birmingham Commonwealth Games are promied to be an economic bonanza. 1,000 new homes, improvements in public transport, 4,500 jobs in the West Midlands every year until 2022, and 950 extra jobs per year thereafter will all follow. Birmingham City Council’s cabinet report has found that the Games will generate a gross economic benefit of £442m to the city and one of £1.1bn to the UK. 

When London successfully bid for the Games in 2005, it did so with a strict budget: £2.4bn. After the Games, the government proudly declared that London was over £500m “under budget”. Sounds great: until you realise that the revised budget was over £9bn. Even the government’s stated final figure of £8.77bn understates the true cost of the Games: £13.5bn, when taking into account the opportunity costs of the use of public officials, according to Andrew Zimbalist, author of a book on hosting sports events. 

London 2012 led to some significant regeneration in East London - it is just that this would have been several billion less expensive without hosting the Games. The lasting victors of London 2012 were West Ham United’s owners, who received a £700m subsidy of taxpayers’ money for their new stadium.

People will certainly come to Birmingham to watch the Commonwealth Games, but history suggests that at least as many will be dissuaded from going. When London hosted the 2012 Games, it actually received 6 per cent fewer tourists than at the same time in 2011. 

The psychologist Daniel Kahneman calls this phenomenon the planning fallacy: costs are downplayed, benefits are exaggerated, and those behind projects are incapable of learning from the abject failures of others. The 2010 Games in New Delhi were particularly shameful. After a promised economic boon - all that was left for Indian taxpayers was a hefty bill, diverting money that could have been far better spent addressing poverty. Think of a racetrack that hosted Olympic cycling at Beijing 2008 that is now weed-infested; the $270m stadium in Manuas built for the 2014 World Cup in Brazil that now hosts fourth division football; or the Olympic Swimming Complex built for Athens 2004 which has never been used since.

For the people of the West Midlands, who are expected to pay £180m (to dilute the financial burden of Birmingham residents alone) and the UK government taxpayers who have so far fronted up to £560m (meaning those in the West Midlands will effectively pay for the Games twice) perhaps the best thing to recommend the Commonwealth Games is that it is not the Olympics. The fabricated benefits are far less, and so are the true costs - even if taxpayers can expect their bill for the 2022 Games to be repeatedly revised upwards on the sly. 

The last Commonwealth Games, in 2014, according the Scottish government’s own legacy report in 2015 said that “at the Scotland level, the immediate economic impact of the delivery of the Games is broadly similar to the impact of…standard government expenditure”. In other words, even the official verdict on the Commonwealth Games was that the public money invested in the event had no greater economic benefits than if it had been spent elsewhere. One year after the Games, only 1 per cent of Scots had become more physically active as a result of the Games. 

“Whether you organise the Commonwealth Games in Delhi or in Melbourne, the state of people living right opposite the Games site will remain the same,” India’s former sports minister Mani Shankar Aiyar lamented.

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