‘Past and present, why hosting the Olympic Games has been so closely linked to strategies for urban regeneration and economic development – and whether it can help.’
On May 24 the International Olympic Committee (IOC) placed London on the shortlist to host the 2012 Olympic Games. London is up against Paris, New York, Madrid and Moscow. Surprisingly, Moscow squeezed on to the shortlist ahead of Rio de Janeiro, generating speculation from the British bid team that second round votes in the final selection process in July 2005 will be crucial in determining the eventual bid winner.
With Moscow a most unlikely eventual winner, the second choice of those countries that place Moscow first on their list could be critical. On the announcement of the shortlist, London was immediately installed as second favourites, behind Paris, for hosting the 2012 Games. The period from May to November 2004 sees the London bid team putting together a candidature file or ‘bid book’ to be submitted to the IOC Evaluation Commission. The Commission, in turn, is required to ensure that the ‘bid book’ accurately reflects what a short-listed city is capable of achieving on the ground to ensure a successful event.
As part of this evaluation process the Commission visits each short-listed city. The Commission visit to London is scheduled for February or March 2005. It will be particularly interested in London’s plans to improve its transport infrastructure, an area of weakness noted by the IOC when the shortlist was announced. Now, however, the London 2012 Olympic bid team has much work to do not just on the bid itself but also on convincing the country as a whole, and East London communities, in particular that bringing the Olympics to East London will realise positive social-economic benefits, a positive ‘legacy’ in IOC terms that will endure beyond the event itself.
London has a long history of using major events to boost its image, attract visitors and promote business and commerce. Great exhibitions were used in the nineteenth century to promote the capital and its role in providing finance, trade and investment to develop industry and expand the British Empire.
In 1948 London hosted the first post second world war Olympics, providing an appropriate venue to celebrate the defeat of fascism and remove memories of the last pre-war Games that took place in Berlin in 1936, then the capital of Hitler’s Third Reich. More recently, in the late twentieth century UK cities, such as Sheffield and Manchester, have hosted international sporting events that have been used as catalysts for regeneration projects designed to propel these cities away from their industrial past and toward a post-industrial, services-oriented future.
Sheffield and Manchester were following a trend evident in other cities that made successful bids for international sporting events in the late twentieth century. By contrast with the Great Exhibitions of the late nineteenth century that typically celebrated the achievements of industrialism, recent bids to host major international events have been informed by a focus on ‘image’ and the promotion of consumption-led industries such as leisure, tourism and the producer services required to support them. For many western cities bidding for the Olympic Games has presented an opportunity for ‘re-branding’ and accelerating a process of urban regeneration and renewal in the face of a protracted period of de-industrialisation. For some this focus reveals a shift away from the Olympian ideals expressed by Pierre de Coubertin, the founder of the modern Olympics in the late nineteenth century. For de Coubertin, the Olympics amounted to a celebration of science, reason, progress and the striving for perfection.
This ‘grand narrative’ or modernist perspective, that dominated the rhetoric of the Olympic movement in the late nineteenth century, has been displaced in the late twentieth century by more prosaic and varied goals, a sense of limits - expressed by the concern over ‘legacy’ – a sense that is reflective of an international society unconfident about its future direction and trapped in a pragmatic post-modern condition (Real: 1996).
The Olympic Games has a logo, the five rings, that is recognised by people from all walks of life across the world. According to some commentators the logo has an even higher profile than such global brands as McDonalds (Adranovich, Burbank and Heying 2001:114; Morgan and Pritchard 1998). It is also a relatively rare global event, happening just once every four years. Its global profile and relative scarcity makes it, in media terms, a mega-event. Entering a bid for the Games, however, is risky and highly competitive. Governments and local policy makers have become more willing to take such risks for a variety of reasons.
Bidding to stage the Olympics commenced in 1908 but relatively few cities participated in the bidding process for much of the twentieth century. There was little need to establish short lists, since the number of cities wishing to host the Games was no more than a handful (Chalkley and Essex 1999).
During the 1960s and 1970s, there was a particular problem in finding willing hosts since the cost and scale of the Games were seen to be prohibitive. When these factors were combined with political and security problems (black civil rights at Mexico in 1968 and the Israeli/Arab conflict in Munich 1972), hosting the Olympics was not perceived as a particularly attractive proposition.
Arguably, 1976 represented a turning point when Montreal was the eventual winner - though even this event and the 1980 Moscow Olympics were subject to official boycotts by African nations in 1976 and the USA and 61 other nations in 1980. The African boycott arose from the participation of New Zealand, a nation that had refused to join the sporting boycott against apartheid South Africa, and the US led boycott arose from the Soviet invasion of Afghanistan. Despite these setbacks, the number of bidding cities increased dramatically in the 1980s with American and European cities dominating the process.
Clearly, the end of the cold war facilitated the reduced likelihood of official boycotts of the kind experienced in the 1970s, but why such a change in the fortunes of the Olympics as an event that over recent decades major cities and national governments have launched huge campaigns to host?
In America and Western Europe the 1970s was the decade in which the post-1945 ‘golden age’ of economic growth came to an end. In 1970s America, federal aid for cities significantly diminished and local governments had to seek new sources of finance for their economic development plans. City planners had a series of complex problems to tackle. First, the decline of urban industrial complexes as a focus for local employment and city identities was accelerated by recession in manufacturing and production-based industries in the USA (and UK) in the late 1970s and early 1980s. Second, reductions in federal aid meant that city governments had to seek new ways of raising funds beyond their traditional reliance on hard pressed capital budgets and traditional forms of local taxation.
Finally, urban centres in cities like Chicago, Los Angeles and Atlanta had large areas of social deprivation and decay that required urgent action if they were to avoid repeated experiences of race riots and social unrest.
The more entrepreneurial US cities often located in regions most affected by de-industrialisation and economic restructuring, adopted a policy of consumption based economic development which focused on the post-industrial service-based industries (Andranovich, Burbank and Heying 2001:114).
Cities such as New York and San Francisco built arts and entertainment complexes, convention centres, museums and shopping malls as well as providing retail, professional and government office spaces (Zukin 1991). Other cities such as Miami and Orlando created what Hannigan (Hannigan 1998) has referred to as fragments of an urban landscape in which Fantasy Cities emerged that were ‘theme-centred, aggressively branded, in constant operation, modular in design, separate from existing neighbourhoods, and postmodern’ (Andranovich, Burbank and Heying 2001:115).
The construction of the ‘Fantasy City’ focuses on visitor attractions, prestigious events and themed festivals. Their construction is primarily designed to conform to the images and expectations of the visitor rather than the practical needs of those living in them. Financing their development has often generated local political and financial problems, in part because of the complex public/private financial arrangements upon which their development depends.
The history of the development of event facilities and, for example, in the US context, Convention Centres, illustrates how the construction of the Fantasy City has often rested upon the dilution of the role of local government in planning processes and the removal of public scrutiny over the financing arrangements required to construct them. In this sense, consumption-based urban regeneration programmes have often been accompanied by a restructuring of local politics in order to accommodate the role of special purpose quasi-governmental agencies and the public-private partnerships that are required to create the financial framework for their implementation (Sanders 1992).
The Olympics provides a compelling prize for the entrepreneurial city that seeks a little ‘fantasy’ in the not too distant future. The growth in importance attributed to the Olympics as a global ‘mega-event’ is reflected in recent times by the huge increase in the number of cities bidding to host the event.
The competition to host the games in 1992 involved just over 20 cities, this rose to over 40 cities competing for 2004 and by 2008 more than 50 cities entered the competition. The Olympics has assumed an increasing significance for entrepreneurial cities that seek to emulate the American approach to urban regeneration and development via, what economists have called consumption-led economic development. The appeal of this approach to urban renewal and development has been underpinned not only by the demands arising from domestic economic restructuring and changing patterns of consumption but also by corresponding changes in the international economy and in particular such sectors as the media industries, telecommunications, leisure, travel and tourism.
These sectors have assumed global dimensions through a complex pattern of technological convergence and an associated development of mass markets for digital and satellite television, global media productions and cheap long distance travel and ‘package’ holidays. While Olympic event organisers may receive some immediate benefit from the selling of media coverage rights, the city that hosts the Olympics seeks to boost its image as an advanced metropolis, a ‘global’ city and international centre for business and commerce.
Of course, such possible gains have to be contextualised. Over recent years, each city and national government that has hosted the Olympic Games has utilised the event to achieve a combination of local and, in some cases, national goals.
For Atlanta (1996), the Games were designed to provide a focus for the city to become a major international business centre, an important location for major American and international companies. Barcelona (1992) and Athens (2004) sought to rejuvenate their respective cities as centres of European commerce and tourism, while Beijing (2008) represents the shop window for a Chinese economy that is experiencing record growth rates and one that seeks international recognition for its relatively recent re-entry into the world economic system through its membership of the World Trade Organisation (WTO) and its growing reputation as the manufacturing workshop of the world.
In summary, the revival of interest in hosting the Olympics has multiple dimensions. A key stimulus for many American and European cities has been the prospect of using the event to catalyse a form of post-industrial economic expansion mainly based on the growth of the service sector and the production industries that serve it. This ‘model’ emerged primarily from city planners in the USA as a response to declining federal government aid and the de-industrialisation experienced by urban centres following the protracted period of economic restructuring that commenced in the 1970s.
The hosting of the Olympics, or other large-scale events, was a highly visible example of the type of regeneration strategy that more often spawned new convention centres, cultural facilities, sports centres, theme parks and shopping malls in many US cities in the 1980s and 1990s. The strategy encompassed new ways of financing and accelerating urban renewal and development while also combining elements of political change and social re-engineering aimed at reducing inner-city social tensions and the potential for civic unrest.
Equally, in emerging economies, such as Korea and China, staging the Olympics signifies ‘entry’ into this (post) industrial world that contain ‘global’ centres in which local cultures and institutions combine with features of the ‘fantasy’ city to create a new and heady mix. Aware of these issues, the International Olympic Committee (IOC) has, over recent years, placed much emphasis on bids focusing on achieving a positive legacy in those cities that host the event.
There have been numerous studies into the economic impact of the Olympic Games and other major sporting events. When focusing primarily upon profit and loss accounts, the Olympics have, at best, achieved mixed results.
The Los Angeles Olympics (1984) raised $145 million for local and state governments, representing a considerable success for an openly ‘capitalistically’ organised event. The Barcelona Games (1992), however, while it was considered to be a success in rejuvenating significant parts of the city, the balance sheet showed an overall loss of £12 million. Montreal (1976) fared even worse, losing around £600 million, with the local population picking up this loss through higher local taxation for several years after the event. By contrast, major international soccer festivals, such as the World Cup, have secured sound profits for their organisers in recent years – USA 1994 £52 million; France 1998 £88 million and South Korea and Japan 2002 £140 million (Chaudhary: 2003).
The profit/loss account for those organisations and agencies responsible for funding the event is, however, only one measure of the Olympic legacy. There are several complex factors involved in measuring the financial outcomes of hosting the event.
First, there are the capital costs which will vary according to the extent to which existing or new stadiums and facilities are required.
Second, there are the operating costs, the costs involved in enabling about 200,000 accredited participants to take part in the event; currently, the IOC estimates the recurrent cost to be approximately $2 billion (IOC:2002).
Third, there is the problem of evaluating the wider economic cost/benefits arising from, for example, increased tourism. The host city may benefit from a significant rise in tourism as a result of spectators visiting the games but this, in turn, may lead to a reduction or displacement of tourism in adjacent towns and cities within the region or country.
Equally, infrastructure facilities may expand to meet increased demand during the Games, but leave the host city with an over-supply of facilities in relation to demand in the years that follow. Finally, there is the problem of identifying the longer term effects of hosting the Olympics, particularly in relation to such projects as housing and transport infrastructure, the impact of which may be more or less favourable to different sections of the host city community. Some brief illustrations from past Olympic host cities may illustrate these points.
The 1984 Los Angeles games provided a model of the profit-centred entrepreneurial approach. The bid was prepared by business and civic leaders operating through the Southern California Committee for the Olympic Games (SCCOC). The bid gained the support of the US Olympic Committee and it was the SCCOC, not the city council that took responsibility for organising and funding the games. Existing facilities were used, volunteers rather than paid staff were extensively involved in the event and corporate sponsors were found. Community groups as well as the sponsors were kept at arms length from decision-making processes and when local opposition arose, the organisers either moved event sites or purchased cooperation through concessions by, for example, providing new facilities for local youth groups.
The event was opened and closed ‘Hollywood style’ and achieved favourable coverage across the world. More tangibly, the economic legacy included an operating surplus ($225 million), tax revenues of $245 million; $9.6 million income from tourism; upgraded sports facilities; a new fibre optics infrastructure and an Amateur Athletic Foundation legacy fund of $90 million (Andranovich; Burbank and Heying 2001:124-25).
The 1992 Olympics in Barcelona was primarily aimed at modernising parts of the city and enhancing its profile as a business and leisure destination. The Barcelona Olympics Organising Committee (COOB) had the support of local government and the Catalonia regional government. Several new facilities were constructed and the city’s centre was extensively rejuvenated.
The transformation of the city was not achieved without opposition from local community groups, some of whom, amongst the poorest in the city, were relocated as part of the preparation for the games. The legacy was perhaps mixed. The city achieved a significant boost in its business travel and convention markets throughout the 1990s and domestic and short-haul European tourism significantly increased. Barcelona, however, experienced a reduction in visitors during the Olympic year, though there was a growth of 20% per annum in the number of visitors in each of the three years subsequent to 1992.
The supply of hotel accommodation increased dramatically for the games and in the following two years, it is estimated that hotel profitability fell by almost 60%, recovering only in the later 1990s through a steady growth in demand. Arguably, the Barcelona games provided an important support for the local economy through the investment of some $16.6 billion; thus providing a counterweight to the economic downturn experienced by Spain and several other European countries in the early 1990s (IOC:2001).
The Olympics in 2000 was designed by its organisers to promote Sydney as a ‘global’ city; enhance international tourism to New South Wales and Australia and attract service based industries from within the Asia/Pacific region. The Sydney Organising Committee of the Olympic Games had support from local, state and national governments. The Committee also carefully established local community relations, particularly with the Aboriginal people, who threatened to disrupt the games with protests aimed at highlighting the Australian government’s failure to recognise indigenous people’s rights.
New sporting facilities were constructed for the Games, including the main stadium and an aquatic centre (opened in 1994, one year after Sydney had been chosen as the venue for 2000). The main investment, however, was in telecommunications, including the Sydney Media Center and the city’s transport system.
The promotion of Sydney was intimately linked to the promotion of Australia by the Australian Tourism Commission (ATC). The ATC established a sophisticated strategy for using the games to, in effect, re-brand Australia as a young, vibrant country rather than a distant nation with lots of ‘outback’ (IOC: 2001). The legacy of the Olympic Games for Sydney appears, to date, to be mixed. Tourist visits to the city were up by 11% in 2000 and £2.4 billion additional income from tourism was raised in 2001-2 according to IOC and official government figures; convention business also increased by 34% over the same period. Conversely, the Games incurred a £1.2 billion loss and leading sports venues have remained underutilised since the games ended (IOC:2001; Chaudhary:2003).
Comparison of the achievements of Olympic cities in relation to legacies is not straightforward. Each local economy is located within a broader national and international economic setting. Olympic events may occur during cyclical booms or recessions; the Olympic effect may moderate a downward cycle or benefit considerably from the expansion of the wider regional, national and international economy.
Atlanta (1996), for example, achieved its goal of securing the relocation of 18 major companies to the city following the completion of the games and hosting the event was one of the key reasons for achieving the designation by the federal government as one of six ‘federal empowerment zones’. On the other hand, the Olympics left a legacy of ill-will amongst particular neighbourhoods that lost housing and experienced severe dislocation arising from the urban developments that accompanied the event.
A central theme running through the achievements of Olympic cities appears to be the boost given to the position of service-related industries in the local economy, especially tourism and business services. At the same time, the intensification of development strategies means that what would otherwise be ‘long-term’ development occurs in a relatively short period of time, thus creating excess capacity in the years following the Olympic event. This miss-match of supply and demand in, for example, leisure, sport and hotel facilities tends to generate closures and job losses unless the broader economy is sufficiently expansive enough to absorb the otherwise excess capacity arising from the ‘Olympic effect’.
In this context, the IOC advice to bidding cities seems prescient; the leveraging strategies deployed by host cities have to be focused upon specific industries and sectors rather than being too diffused and generalised and the intended socio-economic outcomes associated with staging the games have to complement the longer term regeneration and development plans of the city and its region.
The decision as to who stages the 2012 Olympic Games will be made by the IOC in July 2005. London is amongst the leading contenders. The bid is focused upon East London and is aimed primarily at a programme of urban regeneration and renewal, especially in the Lea Valley area adjacent to Stratford in the borough of Newham. Newham like its neighbouring boroughs such as Hackney and Tower Hamlets has significant areas of social deprivation and several ‘brownfield’ sites that were once the scene of traditional manufacturing industries, docks and railroad yards.

Photo by Loraine Leeson
The area is already at the centre of Europe’s most ambitious regional regeneration programme – the Thames Gateway scheme. The scheme was initiated in the early 1990s by the Conservative government and was championed by the then Secretary of State for the Environment, Michael Heseltine.
The decision in 1991 to route the Channel Tunnel Rail Link through North Kent and into central London via Stratford, provided an important catalyst for improvements in road and rail infrastructure and by 1995 the Thames Gateway Task Force drew up plans for 30,000 new homes and 50,000 new jobs being established in the Thames Corridor by 2021 (Buck, Gordon, Hall, Harloe, Kleinman 2002:84-5). Since 1997 successive Labour governments have continued to provide vigorous support for the Thames Gateway scheme through the Office of the Deputy Prime Minister (ODPM) and a variety of partnership agencies, including all the local authorities located within the region.
The ambitions for the development of the Thames Gateway have correspondingly risen with, for example, the proposal to develop a new bridge crossing the Thames and an expansion of plans for house building and the development of new townships along the Thames corridor. The 2012 Olympic Bid has to be placed within the context of this wider regeneration project; it appears that the bid complements an existing, long term, regeneration plan.
If successful in its bid to host the Olympics, London has to set-up a London Organising Committee for the Olympic Games in 2005. In the meantime the detailed preparation of the bid, and the campaign in its support, is the responsibility of an Executive Board, led until recently by ex-airline industry executive Barbara Cassani and now by Lord Coe, the celebrated international athlete and Conservative politician.
Prior to the establishment of the board, an assessment of the cost and benefits of bidding for and staging the Olympic Games was commissioned by the Government, the Mayor of London and the British Olympic Association. The report, produced by ARUP, indicated that the cost of staging the Games would be approximately £1.8 billion (ARUP: 2002). A subsequent government estimate produced a figure of £2.4 billion (Chaudhary: 2003). The funding model to meet this expenditure was established by the Government’s Ministry for Culture, Industry and Sport and the Mayor of London’s Office.
The bulk of the costs, between £1.5 and £2.4 billion will come from Olympic national lottery games and £875 million from increases in council tax. In addition the London Development Agency (LDA) has committed £250 million for the redevelopment of the Lower Lea Valley, irrespective of the outcome of the bidding process. This commitment was essential to provide the IOC with tangible evidence of the capacity to develop new facilities prior to it reaching its decision in July 2005.
The ARUP report was ‘successful’ in persuading government to support the Olympic bid. Its authors were understandably cautious about making projections so far into the future. The report, for example, assumed that bidding and staging costs would be 5% higher than estimated and that capital costs would overrun by between 30-50% in the last two to three years prior to the event. With these sensitivities built into its risk assessment, the report concluded that the total net costs incurred from staging the games would be approximately £494 million. The quantified benefits from additional tourism, estimated at an increase level of 20% between 2011-3, would potentially eliminate the financial deficit (ARUP 2002:6).
The report also indicated that the East London region was likely to benefit through the creation of approximately 3000 full-time equivalent jobs and, successful or not, the Olympic bid would facilitate the redevelopment of the upper Lea Valley with corresponding improvements in land use and values.
If London was successful in its bid, East London would obtain a long term legacy of 4000 additional housing units, 160,000 sq metres of employment floor space and significant improvements in transport and technological infrastructure. Equally, the development of international standard sports facilities would provide a significant boost to several sports, particularly those reliant upon aquatic facilities. The event itself would witness the establishment of a substantial group of 47,000 trained volunteers whose continued activities following event could enhance the skill pool available to the East London economy.
The ARUP report offered a positive view of the economic, cultural and social potential of an Olympic legacy for East London. This perspective is supported by the wider public. A survey of public opinion, commissioned by the Ministry for Culture, Media and Sport in December 2002, revealed that 82% of Londoners favoured the bid, though, when reminded of the possible its costs, that figure dropped to 73% (ICM:2003).
There are several positives arising from the London Olympic bid. First, it complements an existing strategy aimed at the regeneration of the East London and Thames Gateway region. Second, if the bid is successful, the development of the Lower Lea Valley will take place at the same time as the implementation of major infrastructure improvements in the region, thus creating a potentially ‘dynamic’ synergy that could support a sustainable path of economic growth and development. Third, the East London region has already shifted significantly toward the kind of service-oriented industries and activities that tend to benefit from the staging of a global mega-event. Finally, there appears to be a strong level of institutional and political support for the bid from local, city and national agencies.
There are, however, several potentially difficult issues to tackle. With the exception of Los Angeles, past Olympic host cities have experienced very mixed fortunes in relation to managing the overall costs of the Games.
The ARUP report, for example, appears to underestimate the operating costs for staging the games when compared to the IOCs own recent estimates. Second, the virtuous economic legacy ascribed to many past Olympic cities relates to their success in increasing tourism and developing convention and business services; London is already strong in these sectors and East London has already witnessed a significant growth in the supply of these types of facilities over recent years through the development of Docklands.
Finally, the consumption-led services growth model, implicit to Olympic bid strategies, has tended to generate an acceleration of an urban regeneration and development process that has exacerbated income and wealth differentials within cities, potentially creating increased social divisions and tensions rather than reducing them, especially where there is a miss-match between the occupations and skills of the local community and the needs of the new or expanding service industries. The application of a ‘top-down’ model, with its associated ‘trickle down’ economic effects, may be an efficient way of attracting the support of the business world but it may also cause the fracturing of local communities between those who perceive themselves as potential beneficiaries and those for whom the upheaval will be seen as unlikely to realise tangible improvement to their own daily lives.
Whatever its outcome the 2012 Olympic bid has undeniably focused increased national and international attention on East London. The development of Canary Wharf in the 1980s began the process of redressing the century-long imbalance in economic activity and commercial investment between the ‘rich’ west and the ‘poor’ east of London.
The Thames Gateway development plan may receive a significant boost from the Olympic bid by facilitating the accelerated regeneration of the Lea Valley (Lea Valley Regional Park Authority 2003). Whether it hosts the Olympics in 2012 or not, East London is being re-designed, its social spaces re-engineered and its status within the capital re-defined.
The success of the City’s shift eastwards in the 1990s enabled the Olympic bid committee to establish itself on the 50 th floor of Canary Wharf; its staff may soon have the opportunity to transform a large part of the area that it now, literally, surveys.
Gavin Poynter is head of the School of Cultural and Innovation Studies at the University of East London.
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“Whatever its outcome the 2012 Olympic bid has undeniably focused increased national and international attention on East London”
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