Madrid’s Olympic bid: third time lucky?
After two failed bids, the Spanish capital hopes to bag the 2020 summer games. But it’s hard to make the numbers add up.
By Alan Murphy
On February 14 this year, Italian Prime Minister Mario Monti pulled the plug on Rome’s bid for the 2020 Olympics. “The government doesn’t feel that it would be a responsible gesture, taking into consideration Italy’s current financial state”, he said. “If we find ourselves today in such a difficult financial position it is because similar decisions were made by previous governments without having considered the resulting impact in the following years.”
But despite Spain’s dire economic problems, Madrid has pushed ahead with its own bid.
According to La Razón, Madrid’s bid for the 2012 Olympics cost €60 million. The bid for the 2016 games cost €44 million. This time the process will cost an estimated €31 million, 62 percent of which will be provided by private sector partners.
At the time of drafting the initial proposal, submitted to the IOC in February 2012, the only private sector partner on board was Bankia. The proposal carries the promise that the press centre and pavilions for Madrid 2020 will be financed by “the Madrid City Council, the Region of Madrid, the Chamber of Commerce and Industry, and the banking group Bankia.”
As the Wall Street Journal notes of this group of backers, “Madrid is among the most indebted cities in Spain. Ratings firm Fitch recently downgraded Madrid’s regional government, predicting its debt could more than triple — to €23.7 billion ($29 billion) — in 2014 from 2010”. Bankia’s total debts are unknown, but in May the group requested a €19-billion bailout from the government.
Understandably keen for other private sector partners, the Madrid 2020 team, led by city Mayor Ana Botella, made an appeal for more sponsors in July. The result was disappointing, raising only €7 million of the required €20 million to finance the candidacy, despite a tax deduction of 90 cents on the euro offered by the Spanish government to support an “event of exceptional public interest”. Companies such as Telefónica, PriceWaterhouseCoopers and La Caixa have expressed their support, but it is unknown how much, if at all, they have contributed.
So what will the 2020 Summer Olympics bring to Spain in terms of costs and benefits? The Madrid 2020 games proposal will have a total estimated cost of $2.4 billion, compared to the $17.5 billion cost for this year’s London Games. Monti, as he cancelled the Rome bid, estimated the cost at $12.5 billion.
How will the Madrid Olympics manage to cost five times less than the projected Rome 2020 Games, and seven times less than the actual cost of the London Games in 2012? According to the Madrid organisation, 78 percent of the proposed installations are already in existence, including Las Ventas bullring, which will temporarily become the basketball venue at a cost of only €8 to €10 million.
And the benefits? As we might expect, in a country with a youth unemployment rate of 52 percent, jobs are the main rallying cry and many, many jobs will be promised. The CEO of Madrid 2020, Víctor Sánchez, admits that since most of the installations are built, “it’s difficult to give an exact number of jobs to be created. Some 300,000 to 350,000 come from earlier studies. 320,000 would be the average.”
Perhaps we should take London as an example. In the case of the London Olympics the real employment benefits are highly disappointing. London Mayor Boris Johnson committed 20 million pounds, separate from the actual cost of the games, toward the creation of a more realistic target of 1,400 long-term jobs.
Even so, a spokesperson for the mayor said the 2012 project had got only 300 people into jobs. Mary Coneely of the London mayor’s office put a brave face on their disappointment. “No other Games set targets like London has, and I am sure that eventually London will have a good story to tell,” she said.
Apparently she didn’t know of Madrid’s target to create a thousand times more jobs than London by spending a seventh of the money. Now that’s ambition.
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