Brazil’s Big Mistake: The Rio Games

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A few weeks back the Olympic Games kicked off in Rio de Janeiro. Thousands of athletes from around the world came for two weeks to compete in all different sorts of events. Along with these athletes were legions of coaches, assistants, trainers, judges, referees, translators, journalists, and tourists. Over the course of the games tens (if not hundreds) of millions of dollars were spent, giving a significant boost the the local economy. However, Brazil may not be in a position to handle this temporary boom.

Over the past several years the Brazilian economy has been propped up by government spending. Much of this spending is linked either directly or indirectly to public works projects associated with the 2014 FIFA World Cup or the 2016 Olympic Games. Projects such as stadiums, sports facilities, housing, and other infrastructure improvements. The common thread of all this spending is that the assets purchased had very limited life. And unfortunately for the people of Brazil, when the Olympic torch was extinguished that life ended.

Hosting the Olympic Games has always been a costly endeavor and the vast majority of countries cannot actually afford it. In the past countries found thrifty ways to recycle the facilities they paid for with public funds, thereby getting the most bang for their buck. West Germany turned the facilities at Munich into a public park and it has since been used as a venue for concerts, sporting events, and festivals. Even recently, the British government converted the 2012 London Olympic Stadium into a football pitch.

However, most countries that have hosted have not been able to allocate enough funds to make such projects feasible. Following the 2004 games in Greece the government was 15 billion USD over budget. There were plans to convert the athlete’s village into public housing to try to recoup some of that amount. When the Greek government examined the costs of further renovating the existing structures and then the subsequent maintenance costs they eventually decided to abandon the Olympic facilities. It was simply the cheaper solution to let the buildings rot than invest even more money to repurpose them.

China didn’t even initially consider the option of repurposing the 2008 Olympic facilities. It was only when Beijing won the bid for the 2022 Winter Olympics did the government announce plans to renovate and reuse the iconic “Bird’s Nest” stadium. Today, the vast majority of the Beijing complex is in ruins. The rowing and kayaking facilities have never been repurposed and are now polluted and drained. The beach volleyball stadium is overgrown with weeds as are the baseball and softball fields.

The exact cost of the Olympic infrastructure in Rio has been somewhat obscured the Brazilian government but the official figure is 12 billion USD; 3 billion of which is paid by the state of Rio. There is also an additional 5 billion USD for sports related expenses.

The government of Brazil announced earlier this year that the infrastructure for the games will be dismantled and the materials will be reused for building other structures such as housing and other public projects. However, it is yet to be seen if the government will actually follow through on this promise. The present government has well over extended its borrowing capacity and it is unlikely that they will be able to come up with the capital to make these projects happen. One thing is for sure: the capital won’t come from the revenues from the games.

Caleb Dyer
Caleb Dyer
Caleb Dyer is an outdoorsman, professional musician, and cyrptocurrency enthusiast from Pelham, NH.