Written by Sri Kodali
When most people think of gambling Las Vegas comes to mind.
People are putting ones month’s salary or more on the line but nothing too
overboard. Vladimir Putin and Russia decided to take gambling to a whole other
level. The 2014 Sochi Olympic Games is expected to cost the country of Russia
close to $50 Billion dollars in developing the perfect Olympic city. The
previous record holder for a city hosting an Olympic games was the 2008 Beijing
Olympics, which cost the city upwards of $40 Billion dollars. The main
difference between the two cities is the fact that Beijing had proper resources
around it to handle the necessary events minus the actual stadiums and some
housing. Sochi on the other hand had close to nothing in development. The city
of Russia has been working around the clock in trying to create a much more
livable Olympic city up to the standards of the world.
The
problems start to arise right from the location of the Olympics. The city of
Sochi may be the ideal location in regards to weather and climate, but the town
itself is not in the best of shape. Everything was revamped to hold the massive
tourist increase in the area, as well as actually build the Olympic stadiums.
The reason the other Olympics were fine, was because some basic infrastructure
was there. But there legitimately is nothing. The mountainous terrain surround
the city doesn’t help as well. Still through this entire struggle the Russian
were able to pull off the impossible and create a well-planned Olympics
Setting. Sure Vladimir Putin wants to makes his country look good on the
national scale, but the opportunity cost
of hosting such an event was appalling, because while the revenue is created
for many countries through advertisement and such, the country hosting the
event has never been able to actually make a profit once
factors besides revenue was taking into consideration.
The
following is a link to a video that explains in more detail all the cost of the
event and how it will affect Russia. http://www.economist.com/blogs/charlemagne/2013/07/rocky-road-sochi
At first
picking Russia to hold an Olympic game was a preposterous idea; however, once
the economy started to stabilize after the 1998 crisis the country felt. Over a
period of 7 years (1999-2006), Russia was able to create a growth rate in the
country’s GDP of ~6.8%. While this may be good news in gaining the ability to
host an Olympic Name and spread the world about your country, the negative
downfalls will always be there. In order to increase the marginal benefit to marginal cost ratio of the event, Russia is helping
manage the bill by getting both wealthy people and private investors to put
their time and effort into making this the most popular Olympic games yet. All
of this is to essentially to rebuild an old run down city, that could in fact
had a different less fixer-up city. Linking back to the previous point the
choice of city caused the government to bring in those private investors and
wealthy businessman to put forth that money into what could be a non-profitable
venture. Overall, the facts are there to support the choice of holding the 2014
Winter Games in Sochi, but the problems arising around the country and its
choices causes me to believe that Russia should not have taken on this venture.
The following link is a full 56-page essay on the various
economical impacts of the 2014 Sochi Olympics Games. https://www.utu.fi/fi/yksikot/tse/yksikot/PEI/raportit-ja-tietopaketit/Documents/2013/Pilipenko%204-2013.pdf
Works Cited
"AAG
- 2013 AAG Annual Meeting, Los Angeles, California." AAG - 2013 AAG
Annual Meeting, Los Angeles, California. N.p., n.d. Web. 4 Feb. 2014.
<http://meridian.aag.org/callforpapers/program/AbstractDetail.cfm?AbstractID=49369>.
"Counting
the Cost." The Economist. The Economist Newspaper, n.d. Web. 4 Feb.
2014. <http://www.economist.com/blogs/charlemagne/2013/07/rocky-road-sochi>.
Grove,
Thomas. "Special Report: Russia's $50 billion Olympic gamble." Reuters.
Thomson Reuters, 21 Feb. 2013. Web. 4 Feb. 2014.
<http://www.reuters.com/article/2013/02/21/us-russia-sochi-idUSBRE91K04M20130221>.
Koba,
Mark. "Olympics: Going for the gold, spending in the red." CNBC.com.
N.p., n.d. Web. 4 Feb. 2014. <http://www.cnbc.com/id/101163701>.
Pilipenko,
Igor. "The Sochi 2014 Winter Olympics: cost-benefit analysis of the
project and ways for improving its efficiency." PEI Electronic
Publication. N.p., n.d. Web. 4 Feb. 2014.
<https://www.utu.fi/fi/yksikot/tse/yksikot/PEI/raportit-ja-tietopaketit/Documents/2013/Pilipenko%204-2013.pdf>.
"Sochi
2014 Olympic games wallpaper | HD Wallpapers." HD Wallpapers. N.p.,
n.d. Web. 4 Feb. 2014.
<http://hdfons.com/sochi/sochi-2014-olympic-games-wallpaper/>.
"Sochi
Theme Park." Themeparx Construction Board. N.p., n.d. Web. 4 Feb.
2014. <http://www.themeparx.com/sochi-park/?page=6>.
Vladykin,
Vitalij. "The Impact of the Sochi Olympic Games on Russia's Economy and
Image - Analyst Insight from Euromonitor International." Analyst
Insight from Euromonitor International. N.p., n.d. Web. 4 Feb. 2014.
<http://blog.euromonitor.com/2014/01/the-impact-of-the-sochi-olympic-games-on-russias-economy-and-image.html>.
"Why
Sochi Olympics is worth the $50 billion." CNBC.com. N.p., n.d. Web.
4 Feb. 2014. <http://www.cnbc.com/id/101385144>.
I've heard the same problems with Sochi, but even more so with the hospitality. The places hosting the athletes didn't have pillows, so a city wide call for pillows followed. I even saw the water that someone was using while in Sochi was a brownish yellow color, which not exactly the best choice. Basically it sounds like all of the problems that might have happened did happen.
ReplyDeleteThat does seem like a very big risk for a country to be taking on a stadium that will likely only be used once. It sounds very similar to Hitler and his plan to build a huge stadium to hold his own games after he took over the world. I'm not sure why Russia would invest so much money into it. Do they really expect to make it all back? Or is Putin just trying to show off the new Russia?
ReplyDeleteI feel like Putin is trying to prove to the world that Russia has something more than just nuclear weapons and such. He wants to prove himself on the national stage, that they have made it in this world as well. However, bringing up Chris's point all the struggle will go down the drain if the hospitality of the athletes is not to Olympic standards.
DeleteSri, I agree with you completely when it comes to Putin trying to show the world that they aren't only about nuclear weapons and violence and that they have something for people to come and enjoy. But the thing that I am wondering is why would you spend 50 billion dollars for an event inside of a city without basic infrastructure? But going to Joel's comment I personally don't think Putin is doing it for himself like Hitler but for the Russia as a whole.
DeleteI agree with you, Sri. I think that Russia should not have taken on this big of a risk. If they so desire to get there country on good terms with other countries they should gradually take on responsibilities that may not put them into debt and trouble as much as this could possibly do to them. Alyssa Newcomb says on abcnew.com, "Billions of dollars have been poured into Sochi ahead of its big moment on the world stage. According to the Official Sochi 2014 guide, that includes: More than 200 miles of roads and bridges and more than 125 miles of railway tracks. At least 690,000 jobs were created or maintained due to Olympic projects." Why is Russia doing all of this damage when they can simply do something simpler and get recognized for it.
ReplyDeleteThis is a really cool topic and it's goof timing because the games start today. I didn't realize that the Olympics will cost around 50 billion dollars. That is insane. Even with all the ticket purchases and all the people supporting the games in Sochi, I feel like it will be really hard to make all that money back and make a profit.
ReplyDeleteThis is very good Sri, it was very interesting. The facts brought about in your writing were very interesting. The fact that Russia put over fifty billion dollars into these Olympics is mind blowing and the question of 'will it be worth it' still remains. I agree with you, I do not believe that hosting the Olympic Games was worth it for all they had to put into it. It's a lot more convenient to host it in a city that already is home to some of the infrastructure required, but as you say, Sochi started from scratch. The opportunity cost of holding these Olympics is unimaginable and hosting the games will not pay off. Putin took on a major task and we will see shortly if the games are a success.
ReplyDeleteI love this topic! It is so interesting! I had no idea that Putin was putting over 50 billion dollars into the construction of the 2014 Winter Olympics. That is not easy money to come by. And it will be really hard to get all that money back. Even after the Olympics conclude and the tourists go back home, Sochi won't make a fraction of what they had to spend, to make that city more modern. I also thought it was very interesting that Putin was also trying to bring in private investors and wealthy businessman to put forth their own money into the Olympics. That is insane! I couldn't imagine what kind of change the people of Sochi had to go through.
ReplyDeleteI found this post very interesting, because I recently heard of the courses at Sochi to be dangerous, especially for the snowboarding. After one boarder broke his collar bone during practice, other boarders are contemplating dropping out and Shaun White already did. I didn’t realize that there were so many other problems going on. Thank you Sri. <3
ReplyDeleteJake, please be sure that your post has something to do with economics.
DeleteThis is a very good topic, when a city decides to host the Olympics, I didn’t know it would cost anywhere between $40-50 billion dollars. The overall location for the 2014 winter Olympics was a perfect choice. What wasn’t the ideal choice was the city it’s being hosted in. Relating to what Carter said; Sochi started from scratch. I was watching the news a few days ago and they started talking about the city of Sochi. They were saying that Sochi was still not ready for the Olympics. One thing that disgusted me was a picture that they showed containing two glasses of water from surrounding hotels, the water was amber in color. I really hope they fixed that problem.
ReplyDeleteThis was a quite the intriguing topic and I found it very interesting. It’s astounding how Vladimir Putin decided to spend over 50 billion dollars towards the construction of the 2014 Winter Olympic City. It is agreeable that spending this amount of money is going overboard, especially because this stadium/ city is most likely only being used once. Putin is overspending but it’s a good thing he is trying to change Sochi for the better, just wish he could do it in a less expensive way.
ReplyDeleteI personally enjoy the thought of Russia taking such life changing gamble trying to convert a rundown city into something that is crucial for the Olympic Games that I think start today. But the important fact of the matter is this is not much of a good idea, not only will I have a detrimental effect on Russia’s economy if all things fall through, but the mere fact that they are making an attempt to make this happen shows that they have confidence in themselves. Plus if things go well the amount of revenue created by hosting this event will repay their economy back and even more so make it better.
ReplyDeleteI couldn't agree more with what everyone else had to say. 50 billion dollars is a enormous amount of money and even though Russia’s GDP has been increasing for the last couple of years, I personally do not think they will get that money back. Sure it is nice to say that your country is hosting the Winter Olympics, but building the structures on top of a city with unreasonable resources is unacceptable. I have to agree with you Sri that the opportunity costs for hosting the Olympics is not looking to good for Putin and Russia. With all of the issues about sanitation that people have been stating above, coupled with the fact that many countries believe there could be terrorist attacks do not add for a comfortable or profitable event.
ReplyDeleteI thought this was a very fascinating topic. I never thought so much planning went it to the winter Olympics. I can’t wait to see if Sochi will be able to pull it off in time. I found it inserting that the country that host the Olympics don’t make a profit for it because of all the money that goes in to getting reedy. Hopefully they can get each money from the events to pay off the new stadiums and everything they had to build
ReplyDeleteI really enjoyed the fact that you had picked this topic. I agree that it is crazy that Russia has put over fifty billion dollars but I still wonder if it is even worth it. Since they took on a huge project by turning this city into an grand Olympic city I truly believe that it wasn't worth it. Recently on the news I have heard that the spectators were staying in hotels that weren't exactly finished (no door knobs/bad plumbing). Not the mentions that the opportunity cost of holding these Olympics is crazy which means that it will probably not pay for itself.
ReplyDeleteThe way that Russia chose to give greater privileges to private investors is reminiscent of a free market or mixed economy, although Russia has been notorious for the opposite. Albeit very expensive, perhaps holding the Olympics in Russia will push their economy even further by providing hotels, which will likely increase in price, and a greater inflow of tourism.
ReplyDeleteThis is a really interesting post Sri. It seems like this massive spending comes around every time an event like the Olympics are held, the countries that are hosting the event use this opportunity to build up their infrastructure. However, Russia has an even bigger problem, because Russia is also hosting the 2018 World Cup, and unlike the Olympics, the World Cup takes place in cities around the whole country. Brazil, who is hosting the World Cup this year and the summer Olympics in 2016, has also had a lot of problems with people protesting all the spending on new stadium, and not enough on improving the living conditions of the people.
ReplyDeleteThis topic was a very smart pick. I completely agree that it is a big risk for Russia to be hosting the Olympics and it is a big deal that they put 50 billion dollars into building the right place to hold it. I wasn't aware of all of the trials Russia had to go through to be able to host the Olympics, but this might be the chance for them to get their economy back together because of the major increase in tourists and the amount of money that will be coming to the city.
ReplyDeleteIn my opinion, Russia has not been successful at all in making an Olympic city. Photos posted by athletes staying in the newly constructed buildings are revealing that most of the buildings are hardly complete on the interior. Sure the outside of many of the buildings look decent, but this is just a façade. There are wires running through hallways, routers hanging out of the ceiling, and even broken water mains in the new buildings, one athlete didn’t even have a door knob on his room’s door. 50 Billion dollars is a lot of money to spend to have things in this condition, and also considering the new structures will hardly go used when the Olympics pass, it probably would have been better for Russia to either allocate more time to the project beforehand, or maybe even spend the money elsewhere.
ReplyDeleteLately I have been hearing a lot about the 2014 Olympics, so this really captured my attention. When most people think about the Olympics, it seems to be all about the games. No one really thinks about how the money situation greatly impacts the Country it is being held in. The amount of money put into the games can sometimes determine the quality of that years’ Olympics. I like that you brought up marginal cost and marginal benefit. Although I believe that Russia may be the ideal spot, I do not think the decision for the country was wise. The money that they have spent on this will outweigh the benefits in the end. This was a great read!
ReplyDeleteIt was really interesting hearing about the Olympics and the negative impacts it has on Russia this year. Many believe that this is a huge step for Russia, and that they are becoming a more stable country because of it, but many forget about all the preparation that has to go into the area so tourists can stay, and the environment for the variety of events is top notch. Russia was already a country that was on the poorer side and now they have to put all this money in to make driveable roads, nice hotels, etc. Also, since there are many different cultures coming to this place to see the Olympics, Russian citizens have to be prepared to accept other religions and customs into their country for that period of time. Your article had really good evidence of why Russia was a poor choice to host the Olympics this year. Nice job!
ReplyDeleteBefore reading your post about the gamble that the Olympics had taken by letting Russia host them, I thought I understood for the most part what was going on. But when reading your post it gave more in site one how much trouble they are having with hosting them. To see that they have choose to host it in yes a great weather and climate for them but not for the people. Overall reading you post gave me a better understand on how much this really has affected the economy here with the U.S and Russia.
ReplyDeleteRussia took on a huge responsibility hosting this years Olympic games. Besides the games itself, having the athletes along with all the people traveling from around the world, having an enjoyable time and being comfortable with their stay is probably the second more important thing about hosting a big event like this. This was a good topic to talk about because Russia is spending more money than they probably had to, and rushing to get things done making it stressful for the workers and possibly even the travelers and athletes.
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ReplyDeleteRussia did not handle their situation very well. There are so many things wrong with Sochi that just couldn't be fixed in time. This is very similar to the Superbowl. People think that hosting something huge like this will bring in a huge amount of money and "revive" the economy. However, in reality most of the money is only going to go to bigger businesses, like all of the companies advertising. So rather than this being a $50 billion gamble, in my opinion, its a $50 billion bust.
ReplyDeleteI highly agree that allowing Russia to host this year’s Olympics was a plan that was not thought out properly. The Olympic location needs to be a location in or near a city. This allows restaurants and hotels to benefit in terms of profit because of the high demand for facilities close to the games. We are already beginning to see that the venue is not one that can sustain the sheer amount of people. Drinking water problems as well as an increase in terrorists threats are ever so present in the games because of the fact that resources in the area are too scarce to accommodate the growing amount of people coming into the area. This in addition to a failing government system, are all reasons why this years games pose many risks of disaster.
ReplyDeleteI have read a few other article/news reports on the Russian Olympics and I have come to the conclusion that it is an absurd gamble for Russia to be holding the 2014 Olympics. Russia should not be even attempting to hold the Olympics, one because the 50 billion dollar coast that they are spending on rebuilding the city is probably much greater then what they are making by hosting the Olympics and two they were nowhere near ready to hold such a massive worldwide event in their country. It is completely crazy that they thought they could rebuild and remodel a whole city and build the Olympics stadium in just a year or two to create a livable standard for tourists in their country.
ReplyDeleteI would have to agree with you on this Sri, it seems like Russia has experienced little to no benefit and an incredible amount of cost. Starting from scratch is not likely to turn out well. Yes the Olympics will draw in many tourists, but will it really be enough to cover the massive debt that Russia has plunged themselves into. I haven't read a ton about this topic but I have heard that many of the rooms in the Olympic Village remain unfinished and the water quality is poor which mean there are still costs to be covered. Great topic Sri!
ReplyDeleteHolding the Olympics in Sochi, Russia was not a good decision. I agree with you Sri, with the marginal cost of the Olympics of these conditions is not worth the benefit. I have learned, over the past week, Russia has had problems developing roads and correct conditions for the athletes. In defense to many undeveloped countries, the problems with the Olympics in Russia, just shows the dedication and perseverance, that many countries have to making the world one. However, no matter what condition, Russia may also be focused on their own self-interest in attracting (like Sri said) wealthy people and private investors to help improve Russia. The risk in trying to hold the Olympic Games in Russia is too much of a responsibility for Russia.
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