How South Korea managed to keep Olympic costs so low

The 2014 Sochi Winter Olympics were the most expensive in history, with an estimated cost of $ 50 billion. This time around, South Korea managed to keep the price down at $ 12.9 billion, which is still over budget offered in its bid. Even so, how did the Olympics in South Korea cost so much less than those held four years ago in Russia?

From the start, the local Olympic organizing committees in Sochi and Pyeongchang took opposite approaches. Sochi’s major plans for the “Most extravagant Olympics of all time“drove costs up from day one. The conversation leading up to Pyeongchang 2018, on the other hand, was modest, and perhaps that was the key to cutting costs.

The recent Olympics were consistently exceeding their proposed budgets. For decades the costs have spiraled out of control and the upcoming summer games in Tokyo are expected to follow suit.

Considering the magnitude of each game, the actual cost is difficult to calculate. Even the figure of $ 50 billion eternally stuck in Sochi 2014 is not a precise figure. Ahead of the games, a Russian Olympic official said the country was willing to spend $ 51.08 billion, but it’s not like he posted an expense report. No one does. Taxpayers discreetly cover excess spending for decades after the games left.

After hosting the 1968 Winter Olympics, taxpayers in Grenoble, France were still pay the bill in the early 90s. The 1976 Montreal Games were finally paid in 2006. With little transparency in the country’s economy, it is unclear how long the Russian people will continue to pay for Sochi. However, with growing awareness of the pitfalls of hosting the Olympics, South Korea has come under closer scrutiny.

All the Olympics are going over budget

A Research study, of The economist of the Sorbonne Wladimir Andreff, interviewed why mega sporting events so often exceed their bid budgets and find the culprit to be the bidding process itself. Andreff ultimately recommended that the bidding process be completely abandoned and that we establish once and for all a single fixed Olympic site.

Most offers fail because they are overzealous. The organizers made an offer on the basis that the previous games were expensive due to errors that would not be repeated. In the bidding war, where skepticism could cost you your bid, stupidly short predictions prevail.

Sochi’s initial 2007 offer of $ 8.5 billion had more than quadrupled to $ 33 billion in three years.

During the bidding process, Pyeongchang estimated its budget in a range: between $ 3.5 billion and $ 9.5 billion. Once Sochi fell short of its $ 8.5 billion budget, a new budget was established, which ultimately turned into several new budgets. When the Pyeongchang committee fell short of its goal of $ 3.5 billion, it at least failed towards a coherent goal.

Corruption

Investments in the Sochi Games have been subject to a substantial amount of corruption and fraud, push the price higher. A report claimed that between 25 and 30 billion dollars of the Olympic investment fund had been embezzled.

South Korea is no stranger to corruption scandals. But the country’s executive scrutiny may have played down the damage to the Pyeongchang Games. Ex-President Park Geun-hye was removed from office and arrested last year, and the current administration is still in the midst of corruption investigations that are still laying new charges.

After Park’s arrest, the South Korean people’s confidence in the Pyeongchang Games skyrocketed, Dong-A University sports science professor Dr Chung Hee-joon said over the phone.

The center must hold

Boston withdrew from the bidding process for the 2022 Olympic Winter Games aclose Bostonians have expressed concerns about paying the bill in 2015. Stockholm, Sweden; Oslo, Norway; and Krakow, Poland, withdrew for similar reasons. Only Beijing, China, and Almaty, Kazakhstan, remained. The mayor of Boston called the organization of the Olympic Games “a mortgage on the future of the city”. Much of the cost is incurred by infrastructure development, with the dubious promise that the games will earn the local area an increase in tourism for years to come.

More on Forbes: Pyeongchang hopes the Olympics will make it a winter sports capital, but it’s an expensive bet

In South Korea, local governments had none of these. At the end of 2014, the municipal councilor of Gangwon province, Lee Ki-Chan threatened to waive rights to host the 2018 Winter Olympics with the goal of pushing the national government to contribute 75% or more of the total cost of the games. Hosting the Asian Games in 2014, Incheon, South Korea’s third largest city, made a similar threat. After the city’s success in hosting remarkably inexpensive games on a budget of only $ 2 billion, Incheon has declared itself a model for future mega-games in Asia.

Indeed, Pyeongchang has largely emulated Incheon’s tactics, cutting costs by saying no to unnecessary investments in infrastructure. Pyeongchang committee builds temporary stadiums at low cost, for example, instead of permanent behemoths that would go unused, and rapid rot. The Pyeongchang Stadium cost $ 109 million and will be used four times before being demolished. The development of the infrastructure of the Sochi Winter Olympics, on the other hand, includes a Formula 1 circuit.

Although the distribution of blankets during the opening ceremony may bad credit loans in the short term, these measures all help to avoid overspending in the long term.

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