Discount Decathlon

Berlin, €62 Billion in Debt, Considers a ‘Cheap’ Bid to Host the Olympics

Klaus Wowereit. Source DPA
Berlin's mayor, Klaus Wowereit, is proposing Olympic Games at a minimum cost to the German capital.
  • Why it matters

    Why it matters

    The Olympics cost London €11.5 billion in 2012 and Athens about €10 billion in 2004, casting doubt on Berlin’s tiny €2.4-billion proposal.

  • Facts

    Facts

    • Berlin already has several existing sports complexes, potentially lowering the cost4s of the games.
    • In the run-up to the Beijing Olympics in 2008, some €5.4 billion was spent just on underground pipes.
    • The 2006 World Cup soccer championship in Germany cost €1.9 billion.
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    Audio

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The Olympics are a game of billions. And whether or not the people of Berlin back an official bid for the 2024 Games will depend greatly on the cost to their impoverished city.

Enormous sums like €34 billion ($44 billion) in Beijing and €39 billion ($50 billion) in Sochi act as a serious deterrent. In contrast, Berlin Mayor Klaus Wowereit this month offered to propose just  €2.4 billion ($3.1 billion) to hold the Olympics a decade from now.

That wouldn’t include the price tag for infrastructure and security, but it’s still a tiny figure.

The city’s sport officials seem to be equally ambitious in going cheap. “Our requirement is to carry out the most affordable Games in the last 20 to 30 years,” said Andreas Statzkowski, Berlin’s deputy sport minister. “We will be especially inexpensive because we can use what we already have. We can in all seriousness utter the word modest.”

The Berlin government has won the support of some experts.

“Berlin could hold the cheapest Olympic Games in a long time,” said Holger Preuss, professor of sport economics at the Johannes Gutenberg University in Mainz.

Mr. Preuss examined the host cities of the past decades and considers the conditions in Berlin to be especially good.

Berlin, unlike London did with the East End, would not have to turn an entire city district upside down.

“The 2006 FIFA World Cup cost €1.9 billion ($2.5 billion),” he said. “Why should the Olympics cost that much more?” He said Berlin already has many sports facilities, and that rival bidder Hamburg would have to invest considerably more. Mr. Preuss sees manageable risks in Berlin, and no danger of exploding costs.

“The highest cost factor would be an Olympic Village, but Germany has very good experience in residential development,” he said.

The city is separating the Olympic bid’s budget into three parts. The first is the allocation for the organizing committee. These are the costs for operating the games and for the temporary buildings. Berlin has estimated €1 billion ($1.3 billion) for the temporary buildings. The costs are that high not just because planning and steel grandstands need to be paid for, but also the electrical and water lines. Many temporary sports facilities are almost as expensive as permanent facilities, but they don’t have the follow-up costs.

Berlin is not calculating public subsidies for this first part, and experience shows that this is not necessary, because most recently in 2012, the International Olympic Committee (IOC) granted London a subsidy of €780 million ($1 billion).

IOC President Thomas Bach is holding out the prospect of a subsidy of €1.5 billion ($1.9 billion) for Rio de Janeiro for the Summer Games of 2016. On top of this come the revenues from ticket sales, merchandize and advertising rights. The London Organizing Committee, for example, ended with a profit of €38 million ($49 million).

 

Berlin's Olympic Stadium hosted the Games in 1936 and the World Cup final in 2006. Source: DPA
Berlin’s Olympic Stadium hosted the Games in 1936 and the World Cup final in 2006. Source: DPA

 

The second part includes the costs for the renovation and construction of sports facilities, the Olympic Village and security. Mr. Statzkowski said the city estimates the costs for the sporting facilities to be €750 million ($970 million), of which the German federal government would subsidize 50 percent. And it remains open whether the remaining costs can be covered through other sources of income. The costs related to the Olympic Village also depend on whether or not the apartments can be sold or rented out later.

The third part includes the so-called “business as usual” costs, such as infrastructure improvements that could have also been made regardless of the Games.

“How you assess these costs depends on the point of view,” said Mr. Preuss. “The pessimist would say that measures such as upgrading train stations to make them handicapped accessible would not happen without the Olympic Games, because the city has no money.”

Mr. Statzkowski estimates that the city will pick up about two-thirds of the costs for such measures, with one-third being externally financed. How much this third part will be depends on how many city development projects can be linked to the Games.

“Athens also cost €10 billion ($13 billion) in 2004 because the city built subways, an airport, pedestrian areas and many sports complexes,” said Mr. Preuss.

In Beijing, €5.4 billion ($7 billion) was spent alone on laying pipes underground.

“And Berlin would not have to turn an entire city district upside down like London did with the East End,” he said. In London, the total costs were €11.5 billion ($14.9 billion).

This article first appeared in Der Tagesspiegel. It was translated by Mary Beth Warner. To contact the author: redaktion@tagesspiegel.de

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