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The 2004 Olympics Greece’s $11-billion Mistake

Greece held the first-ever Olympics in 724 BC and the first modern Olympics in 1896. Given their rich history in the international games, the Summer Olympics of ’04 were seen as an opportunity for Greece to restore the games’ historical values. More importantly, it was a chance for Greece to show itself on a global stage. While the games themselves were called a success, the financial situation was dreadful. The event went drastically over budget, but this has been the case at literally every modern Olympics. So what made Greece so different?

The financial crisis of 2008 pushed Greece Into a dramatic economic recession, arguably the worst in Europe. As the country became a punching bag for world leaders and newspapers, some experts pointed to the 2004 Games as the tipping point for the Greek economy. That year’s Olympiad has since been hailed as one of the worst failures in Olympic history. The 11 billion dollar price tag became the scapegoat for Greece’s future financial difficulties.

The truth is much more complicated. Athens has struggled with the same problems that face so many Olympic hosts. Today, the city is home to a handful of former Olympic venues that have since become dilapidated or expensive to maintain. Yet, economists now point out that the fiscal deficit of the Games, likely around a few billion dollars, is about 1 percent of Greece’s debt. In fact, infrastructure investments from the games may have benefited the Greek capital and limited the consequences of the recession. So, where the 2004 Athens Games an 11-billion dollar mistake? 

Background and Preparation

Following the 1896 Olympics, Athens went a century without hosting the games. As the 1996 Olympics approached, Greece made a bid to hold the centennial celebration of the games in the city where it all started. This proposal came in 1990, and it was thoroughly rejected by the International Olympic Committee (IOC). But, the Greek committee did not give up. Over the following years, they did their best to address concerns that came up in the earlier bid, mostly surrounding corruption, pollution, and infrastructure. Athens hosted the 1997 World Championships in Athletics, which was a huge success. Though much smaller in scale, this boded well for the city. Later that year, Athens was selected to host the 2004 Summer Olympic Games.

They won the bid because of the city’s history. The IOC felt that the public’s perception of the Olympics was veering away from the traditional values of sportsmanship and international cooperation. So, Athens was selected as a means of bringing back that tradition. But, the IOC also chooses hosts based on their ambitions, hoping that grand displays attract more viewers and increase profits. The Greek committee made sure to accommodate, revealing an enthusiastic plan to prepare their infrastructure for hosting duties.

The summer Olympics would include competitions in 28 sports, from basketball and badminton to taekwondo and table tennis. Within these 28 sports were 301 medal events, each event including a series of rounds before the medal events. More than 10,000 athletes from more than 200 countries would compete.

The wide variety of sports called for a plethora of new venues, 31 in total. The influx of athletes required high-quality housing near the arenas and stadiums. New roads and train stations would be necessary to transport participants, officials, and press. The expanding media corps would need a massive headquarters to meet the increased demands for round-the-clock coverage. Most importantly, the influx of people would require an entirely new airport. It would be an enormous undertaking for just 7 years, but the Greeks convinced the IOC that they could achieve such a feat. With the world watching, preparations began.

Construction and the Games

velodrome Greece Athens

The Athens 2004 Organizing Committee set the project’s budget at 3 billion dollars. If that seems unreasonably low for such an undertaking, that’s because it is. As is tradition with the Olympics, the budget only includes projects directly related to the games. In other words, the new airport, rail lines, and roads wouldn’t count for the final cost.

As such, work on the new airport began before the IOC chose Greece to host, perhaps to signal the seriousness of the Greek committee’s intent. The brand new Athens International Airport was finished well ahead of the games, in 2001. With 8 kilometers of runway to serve the upcoming influx, the project cost more than 2 billion on its own. While its early completion seemed to indicate that all was going well, the rest of the preparations would not go so smoothly.

At the start of 2004, with the Olympics scheduled to begin in August, vast portions of the project were drastically behind schedule. This included work on several key venues, including the main stadium, which would host the opening ceremony. A tram line to connect stadiums to the Olympic Village was also drastically behind schedule. With the progress in Athens being reported on the news worldwide, criticism quickly flowed in. Many sources questioned whether the games would begin at the scheduled time. 

Miraculously, they did. Construction teams met deadlines by working around the clock and by scrapping non-essential aspects of the plans. The Aquatics Center was initially designed with a glass roof, but that aspect was abandoned. The main Olympic Stadium was completed two months before the opening ceremony, as was the tram line. The final touches were put on several of the arenas in August, mere days before the Olympics were set to open. 

Not only did the Games begin on time, but the opening ceremony was widely praised. It was held in the Olympic Stadium designed by Spanish architect Santiago Calatrava, who had his hands on several key projects. The stadium’s defining features were a retractable glass roof and two massive arches that bear the roof’s weight. The opening ceremony seemed to bring an end to the question of whether the Greek’s could pull off hosting the games. However, there were other vital questions in the years leading up to the Olympics. 

As early as 2002, western media began questioning whether Athens was a safe enough city to host the games. The criticism was extreme at times, with one news report claiming that “the only place worse than Athens to hold the Olympics was Baghdad.”

The reports seemed to spook a small handful of countries, particularly the US and UK. So, the two countries demanded that the Greek government spared no costs in providing additional security to ward off terrorist attacks. The price to meet these demands was over 1.2 billion dollars.

This security cost, combined with event administration and essential infrastructure, brought the total cost of the Olympics to 8.5 billion euros, or 11 billion dollars. Keep in mind, this doesn’t include public infrastructure, especially for transportation. The initial budget of 3 billion dollars had been completely shattered.

As the Olympics came to a close a couple weeks later, they were hailed as a huge success. Participants and spectators remained safe throughout, Greece had its best Olympic tally ever, and everything ran smoothly, including the fancy new tram system. In the immediate aftermath of the Olympics, all seemed well in Greece, and things did go well for a few years. Then, it all changed.

Financial Crisis, White Elephants, and Legacy

Photo: Arne Müseler.www.arne-mueseler.com.hallo@arne-mueseler.com

For several years after the Olympics, Greece basked in the glory of its success. Sure, ticket sales, though promising initially, were down dramatically from 6.5 million at the 2000 Sydney Olympics to 3.5 million in Athens. During 2004, tourism declined from 13.9 to 13.3 million annual visitors. However, the games were a success, and the new airport and rail systems proved essential to the local economy. In fact, by 2007, Greek tourism was at an all-time high of 16 million, thanks in no small part to the Olympic-inspired publicity and infrastructure upgrades. However, with the global financial crisis of 2008, that came to an end. 

Of all the countries hit hard by the crisis, Greece was among the worst. By 2009, government debt reached 300 billion dollars. Though a relatively small number compared to countries like the United States, this figure dwarfed the size of Greece’s economy, putting them in dire financial straits.

At this time, reports began to surface about the financial impact of the Olympics. No matter how many pundits called them a success, Athens suffered from an ailment that plagues many Olympic hosts. The city was now filled with decrepit, unused sporting stadiums. By 2010, more than half of the 31 venues were reportedly in disrepair. These facilities included a baseball stadium, a humongous kayak course, and facilities built for less popular sports like table tennis, field hockey, and judo. 

As troubling as it was to see the structures decay, the alternative was hardly better. The facilities that survived required extravagant costs just to maintain. This conundrum, common among Olympic and World Cup hosts, is called the White Elephant problem. A “white elephant” is something too valuable to be disposed of yet too expensive to justifiably maintain. The Athens Committee had a plan to avoid this outcome, but the financial crisis curtailed that strategy. 

The plan was simple. Arenas for popular sports would continue to be utilized for their original purpose. Other venues, like the one for kayaking, would be purchased by the government or private equity firms, then repurposed into a space with more utility. The kayaking course would be converted into a water park, for instance. However, given the scale of the debt crisis, there was no longer enough liquid capital floating around for anyone to make these necessary purchases, and the buildings fell into disrepair.

With these massive reminders of the costs of the Olympics, the games quickly became a scapegoat, not just within the country but worldwide. Publications like the Wall Street Journal asked, “Can Greece Blame its Finanical Crisis on the Olympics?” Before long, this narrative spread like wildfire. Of course, it’s also demonstrably false. 

Remember, the total cost of the Olympics was 11 billion dollars. Revenue from broadcasting rights and ticket sales totaled 2 billion. About 3.5 billion was covered in a gradual tax from the previous years, leaving around 5 to 6 billion dollars in uncovered costs. While this isn’t chump change, by any means, it was still a drop in the ocean of Greece’s debt. Even as economists pointed out that the crisis couldn’t be blamed on the Olympics, the argument changed. If it didn’t cause the crisis, the Olympics symbolized the same issues that the Greek government struggled with for years. In the words of one paper, “the 2004 Olympics were a microcosm of Greek economic dysfunction: missed budget estimates, poor planning, financial mismanagement.”

Despite the pushback, the legacy seemed set in stone. The Olympics were a massive mistake and an expensive one at that. With each successive Olympiad, the Greeks were lambasted and paraded as an example of what not to do. However, with more years of hindsight, a more nuanced truth has come to light.

Another Look at the Olympic Question

Following the photos of some of Greece’s abandoned stadiums, it seemed that the verdict was in. Yet, while some infrastructure has become unnecessary, much of it is still in use today, including the largest stadiums and venues. 

The Olympic Stadium complex, the largest of all the buildings, became the home for two football clubs. It’s hosted countless concerts and athletic events, including the 2007 Champions League Final. The basketball stadium was also turned over to Athens’ best basketball team. The velodrome, aquatic center, tennis center, and other stadiums are still used for their original purpose, hosting professional teams or private sports clubs. 

Even the international media center remains in use today, having been converted into a fully-fledged mall. Other venues have become convention centers, and one building was converted into the headquarters for the Greek Ministry of Health. The Olympic Village became public housing, now home to thousands of Greek citizens. So, while some stadiums have fallen into disrepair, there is no question that much of the construction is still being put to good use. If not for the Greek financial crisis, then the unused buildings would likely have been fully converted, and the Olympics would be a landmark success story for Greece.

Yet, the country has found it difficult to shed this reputation, and perhaps that’s for a good reason. Compared to Summer Olympics after 2004, Greece managed to keep expenses reasonably low. The cost per event in Athens was 9.8 million dollars. Compare that to 14.9 million for Rio 2016, 22.5 million for Beijing 2008, and a whopping 49.5 million for London 2012. By all accounts, the Athens Olympics were among the best run Games of this century. They were just unfortunately held in a country that was already on shaky financial ground, and that is why, in the end, it seems that they may have been a mistake.

Thankfully for Greece, a series of much more colossal failures have ended the conversation around Athens 2004. The Olympics held in London, Rio, and Sochi are the newest examples of just how hard it is to host a successful Olympiad. Today, the IOC is changing the way that hosts are chosen. Instead of selecting ambitious plans in developing countries, the committee is beginning to favor cities that already have the infrastructure. 

They’re considering allowing whole regions to host games and taking a friendlier view towards repeat hosts. Perhaps before too long, then, Athens could host again.

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