It is hard not to read the economics of the London 2012 Olympics as a morality play for our times. The ever escalating budget was born of an accounting era so louche that the government failed to include the VAT costs. The finances were based on the assumption that cheap credit would go on forever. The PFI deals that were to underwrite the construction of the Olympic village and the media centre have now both collapsed; the little private capital available is not going to be invested in the London property market at the moment. Most of the contingency fund will be required to take care of this and the black hole that is the security bill remains to be properly calculated.
There are calls—not entirely tongue-in-cheek—to restage the show in Beijing. China has still got all the kit and the Games have been moved before (the 1906 Olympics changed venue from Rome to London—albeit after the eruption of Vesuvius). But the money has been committed and we would say goodbye to hosting anything ever again. No, like the rest of our debts and obligations, the games aren't going anywhere. It's time to stop panicking and deal with it.
First, let's put the cost of the games in some perspective. Assuming a total cost of £9.3bn spent over six years, that's just over £1.5bn a year: less than 0.5 per cent of annual public expenditure. Even if all of that money had to be borrowed by the government on the bond markets (which it won't) that would amount to less than 0.1 per cent of total national debt.
Second, let's be constructive. The government's indecent haste in repackaging an exercise in urban regeneration and global branding into a counter-cyclical investment doesn't help. Nor does it help to harp on about the 1948 London austerity Olympics, when athletes brought their own towels and soap. A measure of practical thrift is to be welcomed but the numbers involved this time are too big for these kind of efforts alone.
Most importantly, all the books, projections and costings should be opened to public scrutiny. The recent review of the games venues by KPMG, which will form the basis of decision-making, was paid for by public money but is not publicly available. What we do know is that the badminton venue will be scrapped and Wembley arena will have to suffice instead. But the £60m basketball arena is to be built and then ripped down. Whatever the economics of this, as symbolism goes it's a non-starter.
KPMG has also concluded that the Greenwich-based equestrian and shooting venues should still be built. Despite the plausible alternatives at Bisley and Windsor, KPMG argue that both would require the creation of satellite Olympic villages and such high levels of renovation that there will be no savings. Yet many other sports are happening outside London (football and sailing for example) and are wisely making use of existing hotel and conference accommodation.
Whatever the outcome of those debates, the savings from these venues will be reasonably small. We need to bite the bullet and scale back the Olympic village. The media centre should be abandoned. In 2012, there will probably be an awful lot of empty offices and properties in London; these could be utilised instead. Given that this is now a publicly financed project, the smaller village should have a much higher component of the best social housing. And it would be a pleasing legacy of the 2012 Games if some of the land then freed up in the Olympic park could be returned to the displaced allotment holders who were brusquely removed to make way for it.
European bust-up avoided
Despite the promise of an old fashioned European bust-up—a promise relished by much of the British press—recent French efforts to regulate European sport have fizzled out. France holds the EU presidency and Europe's sports ministers met in Biarritz on 27th November. On the table was a proposal to create a European level of sports regulation and, in particular, a system of financial regulation that paralleled France's own.
The British government and sporting bodies (above all the Premier league), waded into battle waving the flag for light regulation and the wisdom of the market. They have a point. Regulated French football has produced the same champion for seven years—Lyon. Worse, Lyon remains too small to challenge for European honours, while the remaining small clubs are locked into a cycle of underinvestment and underperformance.
To the surprise of the British press, Frenchman Michel Platini, president of UEFA, came down on the side of the Anglo-Saxons. I suspect this was less a matter of ideological sympathy and more a calculation of power. European regulation of national football would surely be followed by attempts to control UEFA.
However there must be a quid pro quo for staving off control from Brussels. European sport—especially football—must put its own house in order and look at enduring competitive imbalances, irresponsible forms of ownership and socially exclusionary ticket prices. UEFA claims that its system of licensing clubs is an adequate mechanism for regulating the worst excesses of European football. I look forward to seeing them use it.
