08 Oct 2021

The Olympics is comings, here is what it means for SEQ

Whether you are excited, angry, or just indifferent, you will be wondering what it will mean for the river city now that they have announced Brisbane to host the Olympic Games in 2032. Here are some insights about what it means for the city and for you, and some things you could do now and in the future to prepare for, profit from or influence the games.

How Brisbane won the games

The International Olympics Committee (IOC) announced that they have moved to a new normal for the bidding process. In fact, it is more a reversion to the way it used to be. When the modern Olympic Games started, they would go around begging cities to please be the host of the games. It wasn't even taken that seriously.

But every now and then a city would really want the games as a symbol of national pride. The first person to do this was a guy you might have heard of by the name of Adolf Hitler. Thanks to Adolf you got the building of a purpose-built stadium, the first Olympic torch relay and so on for the 1936 Olympic Games. Of course, then Hitler went on to other sources of national pride like invading Poland, France and Russia, which stopped the Olympics for a while. Post-war, other countries have hosted the Olympics as an example of national pride.

But in 1984, Los Angeles hosted the Olympics for the second time. Being Americans, they worked out how to host the games and make a big direct profit. Now suddenly everyone wanted to host the games and bidding became intense between rival cities, including accusations of corruption.

But recently, the Olympic Games (along with the Football World Cup), are being seen as bloated and too expensive to host to meet the requirements imposed by the IOC. So interest in hosting the games has waned.

So the new normal is basically going back to begging countries to host the games. Brisbane wanted the games, which made it easier and had a proposal that meant the games would be hosted across a region rather than a city and also focused on using mostly existing sporting infrastructure. While it is a modest bid, it was also the best bid that the IOC was going to get for 2032.

What Brisbane has to do to get ready for the games

The obvious major venue upgrade is for the Gabba for a measly $1 Billion. Not just improving the stadium but also building a precinct in the area to be the focus for the games.

They will also be building a basketball venue at South Bank along with gymnastics and boxing venues. The biggest build will be an aquatic centre at Roma Street. The plan here is for a temporary venue which will be torn down once the Olympics is over. Though there have been some temporary venues built for other Olympics that ended up being permanent.

Hamilton will be where the Olympics Village will be constructed. There is a lot of talk about doing this in partnership with investors. After all, both at the Commonwealth Games on the Gold Coast, and at the Sydney Olympics, the athletes villages were sold on as apartments and townhouses.

However, overall, 84% of the venues will already exist, be repurposed or refurbished. This kind of hides some of the facts about what exactly needs to be done and how much it will cost.

There is also the need to improve some infrastructure, especially rail and other transport upgrades. Remember, the region already has 4 international airports, with the main ones, Brisbane and the Gold Coast not operating at capacity. It is likely that rail upgrades or proposed light rail for the Sunshine Coast might be added to the list of infrastructure work.

Of course, the Olympics will inspire various areas to refurbish themselves. So there will lots of additional spending across the region. This is where a lot of cost blowouts occur.

Is it worth it?

The most common criticism of any Olympic Games is that it never makes its money back, which really depends on how you add up the numbers. It turns out that proponents and opponents of the Olympics each use widely different, though still often misleading, figures. People should really be suspicious of Olympics accounting.

First there are direct costs, such as the building of both sporting and other venues for the games. This number is fairly easy to track and I am happy to take bets, giving anyone favourable odds, that this figure will go up between now and 2032.

But most critics of the Olympics will add in indirect costs as well, such as the upgrades to airports, public transport and so on. The best examples is the claims that the Beijing Olympic Games costs over 40 billion dollars. Except to get that figure they included things like upgrades to Beijing Airport, which so severely needed to be upgraded at the time that it was really just playing catchup to Shanghai's Pudong Airport and Guangzhou's Baiyun airport. In fact, only a few years after the Olympics the Beijing government announced the building a whole new airport to handle increased capacity. Beijing also built numerous new subway lines in the lead up to the Olympics, but after the Olympics they kept adding in more and more subway lines, because Beijing really needs lots of subway lines. They were even criticised for upgrading their buses for the Olympics. But in truth in 2007, Beijing had the worst public buses of any city in China. I think the reason is that they avoided upgrading them until 2008 so that by the time of the Olympics Beijing had all new buses.

When calculating whether the Olympics made a profit, they will compare all the direct costs against the direct revenue. This is the ticket sales, TV rights, merchandising and so on. But anyone who even understands basic rules of accounting, knows you can't just add up the direct costs of infrastructure, as much of it will be reused over time. A simple example is the Sydney Olympic Stadium (Stadium Australia), which is still in use today generating income from hosting major sporting events and concerts. In other words, the direct costs have to be compared against the revenue generated over the lifetime of the assets (you know, basic accounting rules, not Olympics accounting).

In addition, most games critics will also include both the direct and indirect costs of the games in their analysis. This can only be included with fairly complex economic analysis and calculations. For example, for Brisbane, we have to assume that they will extend the tram line all the way to the Gold Coast Airport. But this is something that would probably have been done anyway and which will be well used by tourists and locals for decades afterwards.

Of course, politicians love the also talk up the indirect benefits of the games. As we all know the easiest way to determine if a politician is lying is, if their lips are moving, you know they are lying. But the actual indirect benefits are very complex and far beyond the scope of this article to even attempt to quantify. They include increased public profile for the city and Brisbane is not a well known city, so the benefits are substantial.

One area people neglect is that just having international focus on a city will actually increase business deals. Plus, during the Olympics, politicians and business people visit the city and the resulting increase in business also benefits the region. That is to say, every world leader who comes to Brisbane to see people run faster or jump higher brings business opportunities with them. This is rarely even mentioned in any financial analysis.

Overall, every economic analysis, either for or against, of the Olympics, tends to look at selective data or biased calculations. Yet the core conclusion is that the Olympics can benefit certain sectors of the economy and can be an overall benefit to the city or region in certain circumstances. In other words, if the host city is not overspending on venues and infrastructure that they don't need, the Olympics is worth it.

Flow on benefits and costs

Megaevents, like the Olympics, World Expos and other major events can have a huge impact on any city. You can't be indifferent about something like the Olympics if you live in an Olympic city, because it will effect you.

So let's start with a classic joke about Brisbane. Question: What is the most popular thing for international tourists to do in Brisbane? Answer: Leave? Actually that isn't a joke, because most international tourists arriving at Brisbane Airport (back in the pre-COVID times) would get on the train and head straight for the Gold Coast. I mention this because unlike like Rio, London, Beijing and Tokyo, Brisbane definitely stands to benefit from having its profile lifted. Most cities don't actually see much increase in tourism in general, in fact, Mexico City saw a drop in tourism numbers after their Olympics. But Brisbane could easily see more people coming to see the city (though of course then skipping some other Australian city to do so).

One other benefit will be infrastructure certainty for the next 10 years. Instead of political games about who will pay for what and when with development in the region, over the next 10 years we know that things will be done. Maybe even a few additional projects will be added in as well.

But of course, there are lots of costs as well. One of the biggest isn't going to be the Airbnb issue. Come the Olympics, landlords might kick out tenants for 2 weeks, rent out apartments for 10 times the price of normal weekly rents, and then welcome new tenants back afterwards. I definitely would not want to be renting in Woolloongabba in 2032, though could be good to own an apartment in that rapidly transforming suburb.

One of the core flow-on impacts is around business and jobs. But in reality, this is never that good. The best recent example in the region was the Gold Coast Commonwealth Games. It was held during the school holidays, which is normally a busy time on the Gold Coast. But during the games, outside of the games areas, everyone stayed away from the Gold Coast, and many businesses not only missed out on any benefit from the games, but also lost all their normal trade.

One area that is not well understood is the impact on the local construction industry. Not only will there be venues, but infrastructure construction as well as the fact that new businesses, especially hotels, choose to open up just before the Olympics to benefit from the event. This results in an influx of construction workers, but still, it is rarely enough to meet both normal and Olympics demand. So a lot of regular construction work is delayed until after the Olympics, resulting in a long-term construction industry benefit, but issues for businesses and individuals who need construction work done.

I would say that the flow-on effects of the Olympics is often overstated, but they can't be discounted. You would need to be one of the lucky businesses in the right industry or place to benefit. Or maybe you can benefit with some good planning.

The social impact

Most Olympics have numerous high profile social impacts. For example, every city that hosts the games rounds up their homeless and ships them out, maybe to the suburbs, while the games are on. In Sydney, a lot of the inner-city boarding houses closed and became backpacker hostels, permanently reducing the options for low-cost accommodation near the city centre. Of course, there were other social impacts that no one mentioned, like the fact that the Canadian Olympic Village during the Sydney Olympics was built on top of the horse paddocks used by the Ryde Pony Club. In other words, no one cared about the impact of the Sydney Olympics on Sydney's horsey set.

But most of the social impacts are other overblown or reflect changes already taking place. One of the most famous examples from the Beijing Olympics was the demolition of some hutong districts in Beijing. Except, most people are imagining the demolition of beautiful old Qing Dynasty era houses with red lanterns out the front. But the word hutong doesn't refer to the houses, but to a particular type of street. What they were demolishing was a borderline inner-city slum filled with poor quality buildings created from the 1950s to the 1980s, while the beautiful hutongs in the Qianmen and Bell Tower districts, among others, were left untouched.

In Brisbane, the two main areas that will be impacted by development will the Woolloongabba and Hamilton. These former industrial zones have little in the way of historic or character buildings, and those areas are slated for redevelopment anyway. Both suburbs are seeing warehouses being replaced with shopping centres and high rise apartments. By the time 2032 rolls around, these suburbs would have been very different than they are today, and the Olympics will mean the development might be a bit showier with more public spaces, which should be a good thing.

I lived in Sydney in 2000, and the biggest social impact was the city was turned into a construction zone in the lead up to the Olympics. One day you would try and drive down a road but it would be closed for construction and have to take an alternative route. Then the next day the road that you took is now closed and the road that was closed is now open. Brisbane is going to be like that, but mostly because much of the construction is already underway. Maybe we will have to put up with more construction for longer but not much more than what we would have without the Olympics.

Intangibles

One story that I want to share was when I was living in Sydney in 2000. It was the day before the Olympics was to start. I was taking the train home from Hornsby, where I worked, to Ashfield where I lived. I needed to change trains at Strathfield Station near the Olympic venues. As there were many trains from Strathfield on different lines, I had to check the boards to find out which line to take.

As I looked at the boards, an Olympic volunteer came up behind me and said "Can I help you?" I didn't need help and as they were standing behind me in a crowd, I ignored them. But this volunteer was determined to help me and, leaning in close, angrily shouted "CAN I HELP YOU?" At this point, one day before the Olympics, I felt the best thing to do for the next 2 weeks was to hide at home. Except the very next day the Olympics started and suddenly, for 2 weeks, people in Sydney were happy, smiling, and friendly to each other. That is to say, the exact opposite of the way Sydney people are. It was the best vibe I have ever felt in any city in the world. I swear it even continued on for a few weeks afterwards, only slowly fading with time.

Intangible benefits are easily cited, and of course, very hard to measure. Just as the intangible costs can't be quantified either. In Sydney, F**k the Olympics t-shirts were popular in the build up but I didn't see any during the games itself. But overall, hosting an event as big as the Olympics makes you think about the nature and future of the city you live in.

So what is in it for you?

Brisbane has the Olympics, whether you want it or not. But there is over 10 years to go before the Olympics happen, so there is plenty of opportunity to benefit in many ways and opportunity to still have your say in how the development progresses.

Even now, they will be out now searching for people to fill the core Olympics management team jobs. This will be 10 years of job security, and if you are thinking that there will be nothing for you, that team won't just include top managers, but project managers, project coordinators, project secretaries, executive assistants, marketing and public relationships staff and more. The competition might be fierce for these roles, but if you get in at a basic level now, you will have a chance to move on up during the lifespan of the project.

There is also a great deal of politics around an Olympics. Think about how many state and local elections are between now and the event. Let's not forget that the Australian Government will also want some involvement and credit. If you are worried about the impact of the games on your neighbourhood or the city in general, getting in early to have your say is important.

Beyond that, keen business people and investors will be seeking opportunities. Both Woolloongabba and Hamilton are going to attract real estate investors if they haven't already. Both of these areas have been seeing new buildings going up and that means buying apartments from the plan. Let's not forget the continued boom in the construction industry which looks to continue for the next decade.

Past experience of Olympic games has shown that publicity for a region has little impact on tourism numbers in well-known destinations. In other words, it is probably not going to have much impact on the Gold Coast as it is already well known. But it might mean more international tourists are going to want to actually stopover in Brisbane and see the future Olympic city. Others will also consider heading to the Sunshine Coast as well. This may be just what the Queensland tourism industry needs to recover post-COVID-19. You never know, Brisbane might even become a destination in its own right.

Queensland has been attracting people seeking to move from the southern states, especially those escaping Sydney and Melbourne. This is not a new thing, and it is only likely to continue. It might especially bring in people for specific industries. I am thinking construction and the trades, but it could be wider-reaching than that.

Overall

We have plenty of time, so we can slowly let the Olympic spirit fill us. After all, the Olympics are coming, and there is little we can do about it. There are also lots of opportunities to be found as well. There are also a need to reign in spending or stop organisers destroying communities. Having lived in a few Olympic cities, I have seen both the BS and the benefits, and there is something to be said for enjoying the Olympic spirit.

SOURCE: https://www.weekendnotes.com/brisbanes-olympic-win-first-analysis/

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