While London gets the opportunity to shine as the host city for 17 days during the 2012 Olympics, it will also spend a large amount of money to do so. The cost for London? It has been estimated at $15 billion.
Not exactly small change and factored into this amount is infrastructure costs, including the new Olympic park in East London. This encompasses $850 million for the new Olympic stadium, the Aquatics Centre for $426 million and the Velodrome coming in at $166 million, according to Matthew Black of CBC News.
Khrom Capital Up 61% In 2020: Buys This Pandemic Winner [Exclusive]
Eric Khrom's Khrom Capital returned 61% net of fees and expenses in 2020, according to a copy of the firm's full-year letter to investors, which ValueWalk has been able to review. Q4 2020 hedge fund letters, conferences and more Following this return, since inception 13 years ago, the fund has returned 877% gross vs. 255% Read More
And if that wasn’t enough, there is the $1.6 billion in security costs. This comes in at the high end as compared to previous Olympic game venues.
Take a look via CBC News.
- 2010 Vancouver – $1 billion
- 2008 Beijing – $6.5 billion (estimated)
- 2006 Turin – $1.4 billion
- 2004 Athens – $1.5 billion
- 2002 Salt Lake City – $500 million
- 2000 Sydney – $180 million
At this sum, you’d hope there’s no problems at the games but before they even started, it had already started.
The British company G4S plc (LON:GFS) (OMX:G4S) (LSE:GFS), the world’s biggest private security firm, had signed a £284 million ($440 million) contract to provide 10,000 security personnel for the Olympic games but was only able to provide 6,000. To fill the void, thousands of British troops had to pinch hit.
For G4S plc (LON:GFS) (OMX:G4S) (LSE:GFS), it has now faced losses as high as £50m (€41m) from paying the personnel.
This was only the beginning for the company as its shares have plummeted, its Chief Executive Nick Buckles has been asked to resign and analysts cut their forecasts.
According to a July 24 Wall Street Journal story by Peter Evans, analysts cut 2012 and 2013 profit forecasts while Credit Suisse cut its earnings per share estimates on G4s by 12% for this year and 2% in 2013 to “reflect a more cautious view on future U.K. government contract wins.”
Nonetheless, most analysts stayed as buyers on the stock, noting G4S’s global reputation and the strength of its business in these tough economic times.
Aside from the business world, even U.K. Prime Minister David Cameron couldn’t hide his displeasure with G4s, commenting via Metro.com, “Let’s be clear, if G4S don’t fulfil their contract we will go after them for the money to make sure that they help pay for the military personnel that have been brought in.”
But all the fingers can’t be pointed at G4s for a security problems. The London police also had its own recent gaffe.
On July 24, it had been discovered that London police had lost internal security keys to Wembley Stadium, the venue for the Olympic soccer games.
According to a London 2012 spokesman, there had not been a security breach and explained via The Independent, “Keys being used by police officers on searches at Wembley Stadium were reported missing on 24 July. These were internal keys, locks have been changed and the security of the venue has not been compromised in any way.”
A Scotland Yard investigation has been opened and the keys had to be remade at a cost of £40,000 ($62,800).
With 13 days remaining in the games, what other additional costs will London incur from it security blunders? Is it worth it to a city to host the games when such a high cost is incurred?
Stefan Szymanski, a University of Michigan professor of sports management, said that politicians face pressure to link Olympics to economic gains since taxpayers ultimately pay to host the games.
Szymanski said via CNN, “I think the Olympics is and should be a great sporting event, but it is not and should not be considered a major economic event. It’s a lot like having a party. It’s a good time but it doesn’t make you rich.”