Hosting the Olympic Games: Will the IOC’s Agenda 2020 help cut costs and assist smaller nations?

Traditionally, hosting an edition of the Olympic Games was seen as an opportunity to shine a spotlight on the triumphs of the world’s greatest amateur athletes. More recently, however, as the Olympics has evolved into an ever more commercially lucrative enterprise, hosting the Games also became an opportunity for a nation to try to derive significant financial, economic and political benefit.

As a result, it has been argued that the spiraling costs of hosting may now outweigh any tangible benefit a host nation might hope to derive.¹ And if the Games can be compared to the World’s most competitive (and most expensive) party,² is hosting it an opportunity that is only available to the World’s richest nations?

Recognizing these concerns, the International Olympic Committee (IOC) developed a raft of reforms under a broader initiative to define the Olympic Movement known as Agenda 2020. This article reviews the effects Agenda 2020 hopes to have on the bidding process, the hosting costs and the ability of smaller nations to host the Games.

The costs and risks faced by host nations

While having the potential to deliver short and long term (legacy) benefits, hosting an Olympic Games involves considerable financial risk for a host city and no guarantee that objectives will be met. The harsh reality is that every host city in the past cycle of seven Olympic games has exceeded its original estimated cost.³ Notable examples include:

• Montreal 1976 – though the Games were deemed a sporting success they nearly bankrupted the City in the process and left the city with a debt that took decades to pay off.⁴
• Beijing 2008 – though the Games overran their initial budget by a relatively small 4%,⁵ Beijing was, at a cost of $42 billion, the second most expensive Olympic Games on record. Further, at that time, China’s economy was able to provide sufficient capital to support a budget that was two times the size of Athens without resort to debt.⁶
• London 2012 – in developing the East London site the Olympic Development agency cleared and cleaned 200 acres of contaminated land and buried power cables to create 200 acres of usable parkland. However, the increase in employment was disappointingly short term and has not been sustained. More significantly nearly 4 years after the Games the claimed promise of breaking financially even is some way from being achieved.⁷
• Sochi 2014 – exemplifies both the general increase in the total cost to the host nation. Sochi 2014 Winter Olympics cost $51 billion,⁸ exceeding their original budget of $12billion by $39 billion.

The combination of high initial budgets, the risk of overspend, and no guarantee on delivery of legacy objectives has made governments and their citizens wary of such a commitment.  The IOC have recognized this, and sought to address the issue as part of a boarder initiative to shape and define the future of the Olympic Movement through a package of reforms that are known as Agenda 2020.

Agenda 2020

Agenda 2020 was drawn up following the election of Thomas Bach as the ninth IOC President on 10 September 2013.⁹ The former fencer, who won a Gold Medal for Germany at the 1976 Olympics in Montreal, set out in his candidature for the IOC Presidency that the Olympics needed to continue to progress to ensure it was “relevant in a world that changes faster than ever”.¹⁰ He invited stakeholders to contribute ideas as to how the Olympic movement could change in the event that he was elected President.

Accordingly, Agenda 2020 contains a raft of reforms on a variety of issues such as the protection of clean athletes, discrimination, ethics and good governance.

As part of Agenda 2020, the IOC formally recognized the general perception that the costs associated with hosting an Olympic Games had escalated to such an extent that they were preventing cities from bidding.¹¹

Agenda 2020 seeks to address this problem by changing the process of bidding for and hosting an Olympic Games through a package of reforms unanimously approved¹² by the 127^th IOC Session in December 2014. It’s aims, amongst others, include “Reducing the Cost of Bidding”¹³ and to “Reduce the cost and reinforce the flexibility of Olympic Games Management” for candidate cities thereby increasing the diversity of host nations.

The reforms are wide ranging (to read them in full, click here) and, accordingly this article will focus on:

1. The changes to the bid process that have been implemented as a result of Agenda 2020.
2. Other cost cutting reforms that have been recommended in Agenda 2020.
3. A short analysis of whether points (1) and (2) will allow smaller nations to successfully bid to host a future edition of the Olympic Games.

Changes to The Bidding Process

The previous bidding process for the Olympic Games was criticized¹⁴ when only three cities were deemed to have submitted suitable bids to be shortlisted to host the 2020 Olympics. This, together with growing fears¹⁵ over the requirement for excessive budgets and a public spat with Norway who, on withdrawing from the 2022 race criticized¹⁶ the 7,000 pages of demands that allegedly the IOC previously made of cities, led the IOC to conclude that in order to reduce the costs and increase the diversity of cities bidding for an Olympics the bid process itself required reform.¹⁷

The bid process, as reformed by Agenda 2020, spans approximately ten years and is split into two stages: (1) the Invitation Phase and (2) the Candidature Phase. The Invitation Phase is a new, non-binding one-year process that allows interested host cities the opportunity to engage with the IOC and receive feedback on their initial ideas.

Following the Invitation Phase, those countries that remain interested in becoming a candidate city are invited to enter the binding Candidature Phase. The Candidature Phase lasts approximately two years and is further subdivided into three stages:

• Stage 1: Vision, Games concept and Strategy
• Stage 2: Governance, Legal and Venue Funding
• Stage 3: Games Delivery, Experience & Venue Legacy