Russia to host Olympic meeting because Britain’s too broke

The AP reports that Russia has stepped in to host a gathering of Olympic committee leaders from 200 countries next year after cash-strapped Britain had to cancel the event. The meeting is typically hosted by the next Olympics host as a way of showing off their preperations for the upcoming games, but the British Olympic Association is currently facing a budget shortfall of about $16 million.

I’ve got a short item in the new print magazine looking at the long-term economic impact of hosting the Olympics. The commercial benefits of being an Olympic host are usually pretty miminal in the short-run and don’t outweigh the costs of the new facilities, which are often barely used after the games are over. However, as Andrew Rose and Mark Spiegel argue,  hosting a mega -event like the Olympics can often be a powerful form of signalling, indicating the country is ready to become a major player in the world economy. Beijing was awarded the games in 2001 around the same time it joined the WTO. The Tokyo Olympics of 1964 coincided with Japan’s entry into the IMF and OECD.

According to Rose and Spiegel’s research, countries that have hosted the Olympics have 30 percent higher levels of trade than countries that haven’t. (They also show that countries that tried to host the Olympics, but weren’t awarded the games enjoy the same trade benefit  without incurring the expense of building stadiums and athlete villages.)

So being an Olympic host might be a smart move for emerging economies like Brazil or China. But for Britain, which is already a known commodity in the global economy and has hosted two games already, it makes little sense.   

The story also notes that Russia — which will host the 2014 Winter Olympics and 2018 World Cup — seems to be emerging as the default backup plan for international athletic events: 

Moscow stepped in to host the figure skating world championships this week after Japan pulled out following the earthquake and tsunami last month.

Russia is also expected to be a candidate if Japan’s nuclear power crisis forces it to be replaced as host of the gymnastics world championships in October and World Cup volleyball events in November, which are qualifiers for the 2012 London Olympics.

Russia has also taken over events in other Olympic sports affected by political turmoil in the Middle East.

A women’s World Cup fencing event was moved to Moscow at two weeks’ notice in March when Tunisia pulled out. The capital city also will stage modern pentathlon’s world championships in September instead of Egypt.

Some doubts have been raised about whether Sochi will be ready for 2014, and Russia appears to be working overtime to dispel them.