Spain’s economic and political stability will be the main concerns for the IOC, according to Ferran Brunet, a Barcelona University professor who has written about the economics of hosting the Olympics. Barcelona was the last Spanish city to stage the games in 1992.
“There was an economic risk when Barcelona was awarded the games but it wasn’t as big as there is today” for Madrid, Brunet said. IOC members “will have to study what the credit rating agencies and political analysts say.”
Madrid, which would share about $5 billion of budgeted costs with the Spanish government, is least likely of the three bidding cities to win at odds of 4-1, according to Dublin-based bookmaker Paddy Power, which rates Tokyo as the 8-13 favorite and Istanbul at 2-1. A successful $1 wager on Madrid would yield a $4 profit.
Subway workers three days ago called off a three-day strike that was scheduled to start tomorrow, though workers at public sports facilities in Madrid are planning to protest municipal government cuts outside the hotel where IOC members are staying, El Mundo newspaper reported on March 15.
Spain made five rounds of austerity cuts in less than a year, including reductions in public-sector wages and unemployment benefits while raising the value-added tax, as it tries to reduce its budget deficit.
Madrid is making a third straight bid to host the Olympics after losing out to London and Rio de Janeiro in the last two votes. In 2009, Madrid was second to Rio in voting to stage the 2016 Games after beating out Chicago and Tokyo in earlier rounds.
Spain’s economic woes have worsened since then, with the unemployment rate rising to a record 26 percent from 18.5 percent. Public sector debt last year surged 20 percent to 884.4 billion euros ($1.15 trillion) -- 84.1 percent of gross domestic product -- according to the central bank on March 15, as the government backstopped municipalities, tax-funded pensions and jobless-benefit systems.
Madrid’s bid leaders, who say about 80 percent of venues are already built, have cut planned spending on stadiums and infrastructure by 24 percent to $1.9 billion compared to its last bid, according to Bloomberg News calculations. Organizing costs are budgeted at $3.1 billion.
“You can stage the games without throwing money around,” Alejandro Blanco, president of the Spanish Olympic Committee, told the As newspaper on March 15.
Rome pulled out of a bid to host in 2020 in February of last year when then Prime Minister Mario Monti said it would be a drain on public resources.
When Barcelona got the games in 1986, its textile and manufacturing industries were in decline and the city needed regeneration, Brunet said. A six-year economic upturn and low interest rates allowed the city to pay off its debts by 2000 as visits by tourists surged, Brunet added.
“The big question is not whether Madrid can afford the games but what kind of impact they will have,” Brunet said. “Some cities don’t get as much out of it as others.”
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