Summer of sporting ‘political risk’ Image Credit: Luis Vazquez/©Gulf News

This Friday sees the kick-off of the European Football Championships, the world’s third biggest sporting event, followed hot on the heels by the opening of the Rio Olympics in August. While hosting such major contests still commands national prestige, both events have been plagued by political and wider risks and controversies underlining the potentially massive challenges associated with such tournaments, not least given the huge operating costs associated with running them and maintaining security.

Take the European Football Championships (Euro 2016), awarded to France to great fanfare in 2010 by Uefa, but which now take place in a country operating under an official state of emergency, following the tragic terrorist attacks in Paris last year. Only last month, the United States State Department issued a warning that the event could be a target for further terrorist atrocities — only the third time in some 20 years that such cautionary advice has been issued by the US government for European travel. With this tournament, and also the Tour de France cycling event, potential targets, French authorities are deploying some 90,000 police, soldiers and security guards for Euro 2016 alone.

The forthcoming Olympics in Brazil offer an even starker example of the political and wider risks of hosting major sporting events. When Rio won in 2009 the right to host this Summer’s games, the national economy was booming and the country was enjoying significantly enhanced international prestige as a leading emerging market within the so-called Brics (Brazil, Russia, India, China, South Africa) group of nations.

Today, however, Brazil is mired in political crisis surrounding the impeachment of president Dilma Rousseff and the worst recession in decades, which has forced significant spending cuts to the Olympic budget. Further, more than 100 prominent doctors and professors last month wrote an open letter to the World Health Organisation, asking for the games to be postponed or moved from Brazil “in the name of public health” in light of the widening Zika outbreak.

Zika is the worst health crisis facing Brazil since at least 1918, according to the Oswaldo Cruz Foundation, a leading health research institution based in Rio. The country’s health ministry estimates that up to 1.5 million Brazilians may have been infected and a major concern is that researchers suspect the Zika virus can cause microcephaly, a rare birth defect in which, babies develop abnormally small heads and other neurological problems.

The problems afflicting both sporting contests this summer underline the massive challenge and expense of hosting such mega tournaments. For instance, the total investment in modernising new stadiums, alone, for Euro 2016, is estimated to be some 1.6 billion euros (Dh6.67 billion) which, by itself, is larger than the reported target of 1.4 billion euros for broadcast rights and sponsorship income.

The mismatch between revenue and expenditure is, if anything, even starker with the Rio Olympics. Brazil will spend at least $10 billion (Dh36.78 billion) on this summer’s event, and probably much more in practice, potentially far in excess of any revenue the Games can generate, especially if many tourists are put off from travelling to the country because of the Zika virus.

The problems associated with the huge costs of staging the Olympics are also exemplified by Athens 2004, which occurred just before Greece’s slide into economic turmoil in recent years. Those games, at that stage the most expensive Olympics ever, are estimated to have cost around $12 billion, but only generated about $3 billion in income, of which roughly half came from the sale of broadcast rights, one third from sponsorship and licensing and about one tenth from ticket sales.

Athens 2004 became a symbol for the period of profligate public spending and unsustainable borrowing in the country at the turn of the millennium, and within days of the Olympic closing ceremony, the Greek Government warned Brussels that the nation’s public debt and deficit would be significantly worse than anticipated. And in 2005, the country became the first Eurozone country to be placed under fiscal monitoring by European Union authorities.

So despite the fact that hosting major sporting events continues to be seen as a source of national pride, growing evidence indicates that such tournaments do not generally provide a substantial economic boost to national economies from stimulus like capital investment and tourism. For instance, many of the visitors tend to come from the host country whose spending often simply displaces that on other domestic leisure services.

Moreover, the legacy value can be limited too. In the case of the Olympics, for instance, newly-built facilities (aside from the Olympic Village, which can be sold as high-end apartments) are often too large for most conventional sporting uses and have significant maintenance costs, often leading to these facilities being dismantled after the Games.

After the Greek Olympics, for instance, many facilities built at high cost simply became ‘white elephant’ projects falling into disuse. In Athens, for instance, a multi-kilometre walkway linking sports stadiums became a waste ground where people dumped rubbish.

Despite all these pitfalls, however, there remains no shortage of cities wanting to host the 2024 Olympics, with Los Angeles, Budapest, Paris and Rome amongst current front-runners to follow-up on the Tokyo Games in 2020. Meanwhile, numerous countries have already expressed firm intent to host the 2024 European Championships, including Germany, Turkey, and a consortium of Denmark, Sweden, Norway and Finland.

Moreover, there is also a long list of states that have also expressed interest in bidding for the 2026 football World Cup, which comes after the events scheduled in Russia in 2018 and Qatar in 2022, including Canada, Mexico, Colombia, Morocco, United States, United Kingdom, Australia, New Zealand, and Kazakhstan. What this collectively underlines is that, for the foreseeable future, the perception that hosting such sporting events is a major symbol of national prestige will continue to trump the headaches that can come with staging them.

Andrew Hammond is an Associate at LSE IDEAS (the Centre for International Affairs, Diplomacy and Strategy) at the London School of Economics.