How much is the Olympics in Pyeongchang

by time news

With a project estimate of $ 11.8 billion, preparations for the XXIII Winter Olympic and XII Paralympic Games have so far totaled $ 12.6 billion. For Olympic facilities, including the PyeongChang Olympic Plaza with a 35,000-seat stadium that will host the opening and closing ceremonies, spent more than $ 2.5 billion. But of the 13 new stadiums, only seven, the other six were refurbished and re-equipped, follows from the information of the Organizing Committee of the Games. Pyeongchang has been preparing to receive athletes for a long time: he received the right to host the Games on the third attempt, losing in 2003 to Vancouver, and in 2007 to Sochi.

Another $ 10 billion was spent on infrastructure, in particular on roads and an additional section of the high-speed railroad. It connected Seoul, located in the western part of the Korean Peninsula, with the eastern province of Gangwon, home to three Olympic host cities and bordering cities: Pyeongchang and Jeongseon are all snow competition venues, and coastal Gangneung are ice arenas. The organizing committee decided not to build a number of hotels that were supposed to be built in 2011, when Korea won the right to host the Games. Developers and hoteliers considered it too risky, as tourist flow to Korea has declined in recent years and the future of the tourism industry is uncertain. In the province of Gangwon itself, only 3% of the 50 million population of Korea live. The organizers “did not want to be left with the idle [гостиничными] objects, “Nancy Park, a spokeswoman for the organizing committee, explained to The Wall Street Journal (WSJ). Instead of hotels, most of the fans were settled in apartment buildings (in total 60,500 rooms), many of which were built for the Games.

Comparison with Sochi

The most expensive Olympics in the history of the Olympics – in Sochi – is estimated at almost $ 51 billion, but there all sports and infrastructure facilities had to be built from scratch in the shortest possible time. “When I first found myself [в горном кластере Сочи]it reminded me of a Bavarian village 50 years ago. And today it is a first-class ski resort. It would take us 50 years to do this. You did it in seven! ” – Willie Bogner Jr., the owner of the Bogner brand, told Vedomosti in 2014. As a result, many objects in Sochi cost much more than if projects not related to the Games were implemented not in an emergency mode, but in a long-term, noted in a 2016 study, Professor of the University of Zurich Martin Muller (stipulating that this is generally a characteristic feature of such events) … In addition, the well-remembered figure of $ 51 billion, made on the basis of the ruble valuation of Olympstroy, is only capital expenditures, he pointed out. Operating expenses for the Games amounted to $ 4.2 billion, that is, in total – about $ 55 billion. This is 347% higher than the planned $ 12.3 billion in 2007, Muller calculated, which, however, is not a record: in the summer The 1976 Montreal Games had an overrun of 1266%.

Reforms are needed

The huge costs of preparing host cities and states for the Olympics in recent years have changed the attitude of some municipalities that previously planned to host the Games. The International Olympic Committee (IOC) in December 2014 announced a reform, which implies, in particular, a reduction in the number of competitions and athletes, as well as the possibility of joint holding of the Olympics by the two countries. Pyeongchang began preparing for the Games prior to this reform, but in 2015 the IOC invited the Pyeongchang Organizing Committee to host some of the competitions at existing facilities in Japan. “They were not open to change at the time and decided to continue building their sites,” IOC Executive Director Christophe Duby told the WSJ. As a result, the bobsleigh and luge stadium for 7,000 spectators cost Korea $ 100 million.

DPRK scared tourists

The task of recouping the costs of the Pyeongchang Olympics is complicated by specific problems. The capital of the XXIII Games is located not only in a remote province, but also less than 100 km from the border with the DPRK. North Korea’s nuclear program, missile launches and escalated confrontation with the United States in the past year have greatly increased the degree of tension on the peninsula. Tourist flow to South Korea fell by a quarter in 2017, which is also explained by a drop in the number of tourists from China: Beijing, according to media reports, instructed travel agencies not to sell package tours to South Korea after the United States installed a missile defense system there. “Tension on the Korean Peninsula scared people, many national Olympic committees returned part of the tickets allocated to them,” Dr. Heather Dichter, sports management specialist at the British Leicester Castle Business School, told Vedomosti. By November 1, 100 days before the start of the Games, 30% of the planned 1.1 million tickets were sold – this is the lowest rate in the history of the modern Games, the WSJ wrote.

But on January 17, the governments of South and North Korea agreed that their teams will go under the same flag and play the same national team in women’s hockey – this defused the situation. Geographic restrictions on ticket sales were also lifted and anyone in the world can buy them directly from the organizing committee, Dichter notes. On February 7, IOC President Thomas Bach announced that 78% of tickets had been sold.

Success stories

Experts identify the following criteria to determine how successful the Olympics (and, more broadly, major international sporting events) were for the economy and the country as a whole. What matters is the extent to which preparation is “embedded” in the broader development plan for the region, according to a PwC study: are the sports and other facilities erected for the two-week sports event, or are they part of a necessary transformation that will improve the quality of infrastructure and life in the long term. What is the legacy of the Olympics? Has it created the conditions for an increase in tourist flow, for the use of sports facilities and after the competition, has it improved the country’s image (by stimulating tourism and the inflow of foreign investment)?

A classic example of success is Barcelona, ​​which used the 1992 Games to transform an old post-industrial city into a vibrant hub for tourists and services, McKinsey notes. London followed in her footsteps: the preparation for the 2012 Olympics was seen by the authorities as a way to revive the economically underdeveloped East End and to position this area and the city as a whole as a world center of culture, tourism, technology, finance and trade.

What Korea will get from the Games

In the brochure of the 2018 Organizing Committee, the total economic effect of the Olympics is estimated at 64.9 trillion won ($ 54.6 billion); however, it is not explained what this figure is composed of. When Pyeongchang was selected to host the 2011 Olympics, the Hyundai Research Institute predicted that the Games would increase the number of foreign tourists by 1 million per year over a decade. And turning Korea into an international winter recreation center and improving its image in the world will bring economic benefits of $ 40 billion. The institute has not updated its estimates since then, but recently admitted that the previous forecast for tourists is no longer relevant. The Olympics could increase private consumption in the current quarter by 0.1% compared to the fourth quarter of 2017, according to the Central Bank of Korea. Citigroup names the Olympics among other factors that could spur GDP growth in the first quarter.

“The question is what will be the legacy of the Olympics,” Robert Bud, a professor of Olympic economics at Lake Forest College in Illinois, told Vedomosti. – If expectations are exceeded, Pyeongchang may become [популярным] tourist destination and ski center. Much depends on the experience of the visitors, their readiness and desire to tell about their impressions later. ” Pyeongchang is located far from Europe and America, but it can attract both Koreans and Japanese and Chinese. But predicting something definite is difficult, adds Bud: the 2002 Olympics in Salt Lake City, which is basically located in a part of the United States where there are many alpine sports enthusiasts, provoked additional interest, but even there it did not last long. Sochi in the very first winter season after the Olympics, in 2014/15, took the second place among the ski resorts in Russia, receiving 800,000 tourists.

Spain’s ForwardKeys, which analyzes international air travel, said on February 5 that Korea’s gain from increased tourism through the 2018 Games would be limited. Air ticket bookings to Korea for February flights rose 15.4% year-on-year, and for March flights fell 24.9%.

The benefits of the new infrastructure may be more pronounced. All the apartments in the houses where the fans will live during the Games have already been sold, “this is a success,” Duby said. Development company Yongpyong Resort has sold all 600 apartments, mostly to compatriots from Seoul, for an average price of about $ 300,000, its CFO told WSJ. High-speed rail could make winter sports easier for Koreans, Dichter said. Over the past decade, the country has closed several ski resorts, “The Olympics can help reverse this trend, but it’s always difficult to predict.”

Different destinies of stadiums

The arena in the seaside cluster of the 2018 Olympics, which hosts the figure skating and short track competitions, was named after the nearest lake – the Gyeongpo Ice Hall. The No. 1 winter sport in Korea is short track, and figure skating is the most popular sport in neighboring Japan. Therefore, the Gyeongpo stadium has a capacity of 12,000, while the Olympic hockey stadium has only 10,000. And the fate of the hockey stadium has not yet been decided – perhaps it will be dismantled after the Paralympics (if there is not enough load for it). While “Gyeongpo” will remain the training and competition base of the South Korean NOC.

Olympiad White Elephants

Often large sports facilities are not used after the Olympics, she adds, citing as an example a site in Athens, the almost unused Bird’s Nest stadium in Beijing (it may only be needed in 2022 at the Winter Olympics), a bobsleigh stadium in Turin, not worked even 10 years after the 2006 Games. The number of winter sports fans in Sochi increased after 2014, Dichter notes, but if foreigners do not come there, “it is difficult to call exorbitant [олимпийские] costs”. It also reminds of the underutilized railway from the airport to Sochi (the construction of it and the road cost $ 10 billion).

There is also the question of the costs of maintaining the Olympic facilities, Mueller pointed out. The Olympic Stadium in Sochi is being converted to host matches for the 2018 FIFA World Cup, but this requires additional money. The expenses announced by the Russian government to ensure the operation of the facilities amounted to $ 400 million, and the lost income (tax deductions for their owners, a moratorium on interest payments on VEB loans) – $ 750 million per year, Mueller calculated in 2016 (the calculation was carried out at the pre-crisis rate of 30 rubles ./$).

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