A big, fat financial Olympic disaster could threaten the future of the Games.

Amid this city of endless scaffolding and ear-splitting construction are a few strangely quiet spots. The Olympic swimming pool is nearly done now––since workers have been told not to bother with a roof. Construction crews have been pulled off the unfinished light-rail line because Greece has given up on completing it before the Games begin on August 13.

But frantic work continues on Athens’ security measures. On a recent Sunday, gangs of workers were busy digging holes for a chain-link fence around the mountain-biking circuit above the city and wiring security cameras inside still-unfinished athletic venues. Meanwhile, guards in unmarked cars were tailing athletes training in Athens. Terrified that the massive international TV audience, as well as the presence of large numbers of American athletes, will make the Games a prime terrorist target, Greece has been jettisoning “luxuries” like roofs to free up $1.2 billion and 70,000 workers to provide security.

Of course, athletes and fans must be protected. But terrorists may not pose the biggest threat to the Games. The Olympics survived two world wars, cold war boycotts, and Munich’s Black September attack. After all that, however, the Games were almost scuttled four years after Munich when Montreal threw a poorly organized and financially disastrous Olympiad that scared cities off from hosting future Games. The bigger threat to the Olympics, it turned out, was something security fences can’t prevent: unsustainable economics. And now, history may repeat itself. After being temporarily rescued by the Los Angeles Games in 1984, which made a profit of at least $230 million, the Olympics have again spiraled into economic trouble. In fact, it is becoming obvious that Athens, like other recent Olympiads, will be a financial fiasco. The dithering and corruption of the Greek government, in addition to international demands for massive security and more events, will likely push the final cost to nearly $12 billion.

NO ONE KNOWS exactly how much the 2004 Games will ultimately cost or how Greece has managed to spend so much money with so few results. But there are some good estimates. Greek officials announced last month that the Games would cost taxpayers at least $7.2 billion. Beyond that, another $4 billion in Olympic-related taxpayer contributions has been buried in the budgets of Greece’s government agencies.

Greece’s long delays in starting construction contributed to these high costs. Racing to make up for lost time, the government is now paying workers up to 100 percent bonuses to spend nights and weekends paving the road to Marathon and planting trees and flowers around sporting venues. Expenses were probably also illegally padded . Greece is rated the most corrupt country in Western Europe by Transparency International (TI), a global anti-corruption watchdog. Virginia Tsouderos, the chair of TI’s Greek chapter, alleges that Greece’s Olympic contracts required large-scale bribes: “That’s where the big money under the table was circulating.” Tsouderos is convinced that Greek construction companies working on Olympic venues slowed their pace in 2003 and early 2004 to extort the government into giving them more money to finish on time: Traveling around Athens in early 2004, she noticed the companies “had only one worker on every project.”

But the massive expense is not entirely Greece’s fault. Post-September 11 security, likely to top $1.2 billion, added to the costs. And costs have been inflated by the increasing size of the Games. The Atlanta Olympics had 271 events, and yet it didn’t face the expense and hassle of providing venues, staff, and crowd control for new Olympic disciplines like triathlon, trampoline, or Tae Kwon Do. By comparison, Athens will have a record 301 events.

Nobody would begrudge these high costs if there were any chance the investment would pay off. But that looks increasingly unlikely. True, Athens will be an improved city because of Games-related investment. Its new metro lines and roads will ease its infamous traffic problems. Its city squares will be beautified. But those improvements could have been made for much less, and on a more reasonable timeline, without the Olympics. And the expenses associated with the Games look unrecoverable. Only about half the event tickets have been sold, and regular tourists to Greece have been scared off by reports of pre-Olympic construction: Visits to Athens are down nearly 20 percent this year. And Greece, like many Olympic cities, has no concrete plans for how to use the Olympic sporting venues after the Games. In fact, many Olympic investments will be purposely scrapped: Citing concerns about privacy, the Greek government recently announced that the 1,500 new Olympic security cameras will be disconnected after the Games.

As a result, Greeks are girding for a depressing Olympic hangover. The European Union, which mandates budgetary discipline for members, last month gave Athens four months to clean up Greece’s increasingly ugly balance sheet. Thus, just when thousands of Olympic-related workers lose their jobs in September, the Greek government will have to institute painful budget cuts.

SO FAR, THE CITIES bidding for future Games don’t seem scared by Athens’ troubles. Dan Doctoroff, a deputy mayor of New York and the prime mover behind that city’s bid to host the 2012 Games, says that while there are less tangible reasons—such as unifying New Yorkers—for hosting the Games, “the first reason is financial.” New York, he says, will follow the example of better-run Games like Los Angeles, which used private investment to reduce the burden on taxpayers. He calculates New York would gain $12 billion in additional economic activity from hosting the Olympics.

But Philip Porter, one of the few academics to examine Olympic economics, says Doctoroff’s argument is “bunk, with a capital B.” The only analyses that show economic benefits exceeding costs are produced by consultants paid by boosters for a bid, says Porter, who heads the University of South Florida’s Center of Economic Policy Analysis. Indeed, while the Athens fiasco is extreme, every other recent Olympic city has suffered from similar financial problems. And skyrocketing security costs have permanently worsened the financial calculus by adding a massive expense that doesn’t bring in revenue, says Holger Preuss, a German economist who analyzes Olympic finances. In addition, there is continuing pressure to further expand the Games. Golf, rugby, and even tug-of-war are all lobbying to become Olympic sports.

And, as Salt Lake City’s scandal-plagued organizers can attest, Olympic graft is endemic. There is so much money sloshing around the Olympics, and Olympic organizations are so secretive and unregulated, that corruption is almost inevitable, says Kevin Wamsley, director of the International Centre for Olympic Studies at the University of Western Ontario. Case in point: Last month, a South Korean vice president of the International Olympic Committee (IOC) was convicted of embezzling millions of dollars. His defense: He didn’t keep the money. He spent it on Olympic-related expenses, such as bribing North Korean Olympic officials to march with South Koreans in Sydney’s opening ceremony.

So future Olympics likely won’t be any less of a financial burden. No Games since Los Angeles have come anywhere near covering their costs with revenue raised from ticket sales and broadcasting rights. In Atlanta, for example, the General Accounting Office found that American taxpayers spent $609 million in subsidies for the Games. Taxpayers got no economic return on that investment, says Porter—”Hotel occupancy didn’t increase, retail sales didn’t increase, and arrivals at the airport didn’t change.” The story was sadly similar in 2000. The auditor of Australia’s New South Wales province found that its taxpayers wound up paying about $700 million toward the Sydney Games. Sydney enjoyed a jump in tourism shortly after the Olympiad, but it did not last very long.

WHEN ATHENS adds yet another red-ink blotch on the Olympics balance sheet, it may well serve as the tipping point that persuades Olympic fans to do something to save the Games from financial ruin. Olympic officials have already started to take baby steps to rein in costs. After the Salt Lake City bid bribery scandal, the IOC adopted rules against gifts. And IOC President Jacques Rogge has refused to add new sports between 2004 and 2008.

But there is growing agreement among economists, fans, and athletes that more drastic surgery will be needed. “The Games have gotten too big,” says Preuss. The Olympics will have to jettison some sports to make sure future Games are held, he says. Olympic soccer, for example, could be canceled because it is expensive and far inferior to the World Cup. Regionally popular sports like baseball, softball, and Tae Kwon Do may not belong in a global event. A few athletes are even starting to question their own sports’ inclusion. Russian tennis star Marat Safin last month reluctantly agreed to play in the Olympics but said the competition was pointless, since Grand Slam events really determine the sport’s champions.

Of course, some broadcasters, advertisers, and sports fans might fight any attempt to cancel their favorite events. So any attempt at rationality will have to be imposed by the average citizens, who are increasingly subsidizing the Games. A century ago, the founder of the modern Olympics, Baron Pierre de Coubertin, rejected the money-saving option of choosing a permanent home for the Olympics because he wanted to spread around the world the Olympic creed: Citius, Altius, Fortius—faster, higher, stronger. If they want to keep spreading the noble gospel of human achievement and international cooperation, today’s Olympic officials may have to add a few more Latin words: Minus, Humilius.

This article appeared in the July 26, 2004 issue of the magazine.

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