Hungary puts its money on Olympics bid

Hungary puts its money on Olympics bid
Politicians appear keener than the population to push Hungary's bid to host the Olympics
By Blanka Zoldi in Brussels May 25, 2016

With the Hungarian parliament currently discussing a bill on the country’s bid, officials from the ruling Fidesz party suggested on May 24 that hosting the 2024 Olympic Games "might even be profitable”. Indeed, Prime Minister Viktor Orban argues that bringing the games to Central Europe for the first time is in the interest of the entire Hungarian nation. Critics point to the dangers of huge budget costs and corruption.

However, that's unlikely to deter the authoritarian PM. The sport fanatic, who has already built a football stadium in his home village that offers 4,000 seats to the 1,800 inhabitants, has been chasing his Olympic dream for more than 15 years.

As early as in May 2001, under the first Fidesz government, Orban told the president of the International Olympic Committee (IOC) that Hungary would like to host the 2012 games. They ended up in London, but now with a tight grip on the levers of power, and improved fiscal position, Orban is ready to try again.

Although the Socialist Party, which governed Hungary between 2002 and 2010, also played with the idea of a Budapest Olympics, plans were repeatedly dropped due to the country’s financial capabilities. However, last year the country officially announced its bid. Competing against Los Angeles, Paris and Rome, Fidesz claims Budapest is a "worthy location” for the IOC to consider as it makes its decision next year.

Fidesz argues Budapest's bid reflects the spirit of the IOC’s "Agenda 2020," a new policy that seeks to return to a simpler, smaller budget and a more transparent games.

The cost of hosting the games in Budapest would be around HUF774bn (€2.5bn), according to a feasibility study by PricewaterhouseCoopers (PwC), commissioned by the government. The London event cost around ten times that amount.

“Agenda 2020 is tailored for Hungary,” Balazs Furjes, government commissioner for the bid said in January. In the long-run, the Hungarian Olympics will boost tourism and foreign investment, while creating jobs, the government claims.


Critics, however, insist that such benefits are unlikely to materialize. On the contrary, they say, hosting the Olympics would put an excessive burden on a country that only eight years ago had to rely on IMF’s help to avoid insolvency.

“The cost of organizing the Olympics in Hungary - together with the planned HUF4,000bn extension of Hungary’s nuclear power plant with Russia’s help - would set back the Hungarian economy for decades” Istvan Janos Toth, director of the Corruption Research Centre Budapest, suggests to bne Intellinews.

It's not just NGOs that are worried. While - presumably out of nationalist pride - the far-right Jobbik supports Fidesz’ Olympic aspirations, other opposition parties have been voicing concerns for months, noting the money could be put to better use.

"Hungary should first solve problems of healthcare and education, before starting to consider hosting prestige sport events,” the small liberal-greens party LMP points out. The Socialist Party notes that “hosting the Olympic Games has even played a role in driving some countries into crisis.”

Meanwhile, it's unlikely that the final costs would remain in line with PwC’s estimate. Research from the University of Oxford found that every Olympics dating back to 1960 exceeded the preliminary budget, with an average cost overrun of a remarkable 252% in case of the summer games.

Reports claiming that Hungary is spending HUF90bn - ten times more than the original budget - on hosting next year’s World Aquatics Championship offer little hope that a Hungarian Olympics would be an exception.  

“There is not really a way to organise a cheap Olympics,” Andrew Zimbalist, sport economist and writer of Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup told local press recently. He estimates that the final costs of a Hungarian Olympics would amount to around HUF4,200-5,700bn.

Winner takes all

Critics note that PwC’s study is based on average GDP growth of 3% through to 2024 and hardly mentions any risks. Meanwhile, it only vaguely emphasizes the importance of transparency during the organization of the games.

While big-scale, complex construction projects carry a high risk of corruption in any country, it would be “especially dangerous” to organise such a large event in Hungary, Toth says. “Risks of corruption substantially increase in a country of crony capitalism, where – if you are a good friend of the prime minister – you can steal as much as he lets you without being charged of any crime,” he claims.

The government has been widely criticised due to a recent scandal over the use of public funds by the central bank, which is led by Gyorgy Matolcsy, whom Orban has called his "right hand". More to the point, many questions were raised over irregularities when Istvan Garancsi - an oligarch close to the PM - won a HUF49bn project to build a swimming pool for the World Aquatics Championship.

Toth points to Rio de Janeiro, which will host the 2016 games. The array of economic and political problems the Brazilian city has met only serve to highlight the potential hazards.

"Everything that has happened in Brazil is also likely to happen in Hungary," he says. "The Hungarian state is very vulnerable in terms of corruption; the integrity of its institutions is in no better shape than in Brazil."

"There are only a couple of interest-groups who profit from the Olympic Games," Zimbalist says. "People slowly realize that it is not worth it for a city to spend billions. In democracies, citizens are generally asked whether they want the Olympic Games, and they vote against them most of time.” Boston and Hamburg both dropped out of the 2024 race following referendums.

Although pollster Median reports that only 41% of Hungarians support a bid to host the games, a referendum is not on the horizon. The country's highest court refused a proposal to take a vote on the issue early this year, while Budapest mayor Istvan Tarlos claims “citizens would not be able to make a responsible decision about the issue”.

Orban insists sports "should not become the battlefield of political fights”. But still, the PM claims that the Olympic bid has become "a real passion of the Hungarian people”.