7 things that can go wrong with mega-events like the Pan Am Games

‘Mega event syndrome’ can wreck city planning and create a vicious cycle of cost overruns and cash grabs.

Thestar.com
May 21, 2015
By Robin Levinson King

Mega events, such as this July’s Pan Am games, bring sportsmanship and glory to host cities, as well as increased revenue from tourism.

But not all that glitters deserves a gold medal, according to Martin Muller, a geographer who studies how “mega-event syndrome” can wreck city planning and create a vicious cycle of cost overruns and cash grabs.

“They promise a lot, but they don’t live up to the promises,” he said.

Because mega events carry “great emotional fireworks,” cities forget to make rational calculations about the cost of the event versus its benefits, Muller said.

While he believes large sporting events can be good fun and a valuable showcase for athletes, he argues that governments shouldn’t build their cities around them.

In an article published in the most recent issue of the Journal of the American Planning Association, Muller argues that there are seven common oversights that plague mega events from the Olympics to the World Cup.

“The same mistakes are repeated over and over again in different mega-event host cities,” he said.

1. Underestimate costs: Muller said that organizers and governments almost always lowball the total cost of the event. Mega events are completely different from other large-scale projects, because they have an inflexible deadline. Contractors know this, and can engage in what Muller calls “profiteering” by running up the tab in the final months before the event.

“Costs increase massively the closer the deadline comes,” he said.

“Contractors know perfectly well that the organizers are completely dependent on them to finish construction on time and they can’t change horses at the last minute.”

Pan Am officials say that the $2.5-billion games are on time and on budget, but analysis by the Star shows that some projects, such as the Centennial Park BMX Centre and the shooting centre in Cookstown, are more costly than anticipated.

2. Overpromising: Regions often overestimate the return on investment in order to win the public’s support. New airports, big cash from tourism and funding to help improve the city may lure citizens, but there’s no guarantee that the rewards will live up to the hype.

“It’s only until after that that you really see what has been realized and what hasn’t been realized,” he said.

But because mega events have a fixed deadline, Muller said some of these pledges fall by the wayside.

“When the deadlines hit and you have to rush to completion, usually it’s these promises that fall off the table,” he said.

4. Event takeover: Mullersaid that oftentimes sports infrastructure that has little long-term benefit to the city gets prioritized over other plans. An example of this is the Olympic Stadium in Montreal, which, more than 40 years after it was built, is falling apart and underused.

“This is infrastructure that has very limited public benefit,” he said.

The Pan Am games have more sports than London’s Summer Olympics, and more sports means more infrastructure, in this case totalling $674 million.

But while these costs are greater, the benefits for Pan Am are fewer, because it is a less recognizable sporting event, Muller said.

4. Event fix: One of the biggest problems, according to Muller, arises when needed projects get tied to mega events.

“It completely perverts urban policy and urban planning because it creates incentives to spend money on the event to get these other things done, that wouldn’t get done otherwise,” he said.

The Union Pearson Express intends to launch in early June, just in time for the Pan Am games. But mega events carry with them extra costs, because of the fixed deadline, which ultimately makes these projects more expensive.

In the long run, it would be better to fund infrastructure projects when they are needed, instead of imposing arbitrary deadlines.

But federal and provincial governments also encourage cities to host mega events by providing additional funds only because of the event. This creates a kind of endless loop, where cities compete to host mega events in order to get their projects funded.

“It should be the other way around,” Muller said.

5. Public takes on the risk: Muller said that, while developers and contractors profit from big-scale projects, it’s ultimately taxpayers who have to pay for them.

Private investors are less inclined to build one-off stadiums for lesser-known sports, which mean that local and federal governments often have to pick up the tab.

“Sports venues are often not profitable, especially for sports that don’t often draw big crowds,” he said. And, even when there are investors, if they bail, cities have to pick up the check.

It took the city of Vancouver six years to pay down the debt it accrued when it bailed out a belly-up developer to the tune of $100 million.

“You can bank on the fact that there will be cost overruns, and it’s the public who picks up the bill in the end,” he said.

6. The Rule of Exception: Muller also takes issue with the many tax exceptions and bylaws exemptions that get waved when mega events come to town.

“Law and community regulations are there for a reason,” he said. Bylaws are often bent in order to speed projects along.

In Toronto, Ontario Environment Minister Glen Murray exempted Hydro One from an environmental assessment in order to get a substation built to supply the UPX rails with power.
Sometimes, tax credits for organizers can work as a hidden event cost, losing the government (and taxpayers) millions.

For the 2014 World Cup in Brazil, tax exemptions cost the country about $250 million (U.S.).

“It’s a hidden indirect subsidy, it adds to the cost of the event without showing in the budget, but it’s essentially foregone revenue,” Muller said.

7. Elite benefits: Mega events will make some people rich, but not everyone gets to profit.

“The irony of mega events is that they’re sold and marketed as an event for everyone,” he said. “But money and benefits really accrue to a select few.”

Event organizers, land owners, developers and major contractors stand to benefit the most.

Meanwhile, gentrification in the area around the event can push vulnerable people out.

“It’s what’s called the urban growth machine,” he said.