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Why #SochiProblems Were Not Putin’s Fault

Building for Sochi. Stefan Krasowski, Flickr, Creative Commons.

As journalists began to arrive in Sochi, Russia for the 2014 Winter Olympics, it became apparent that the venues and infrastructure were not up to par. Roads were unfinished, the Olympic Village didn’t have running water and the ski jump had been rebuilt five times. Hosting the Olympics is an incredible honor for any city, but it can also be an incredible economic burden to build all of the necessary venues and infrastructure. This was particularly true in the case of Sochi – an undeveloped town unconnected to the rest of Russia, much less the world. However, the extensive development necessary in Sochi is not the main problem.

Sochi is just one example of the inevitable problems that arise from an Olympic model that consistently chooses new cities that are not ready to host a major international event. Sochi faced an especially difficult set of hurdles as the Olympic Village was built upon a valley in the non-industrialized and underdeveloped Caucasus region. In addition to the eleven Olympic venues intended specifically for athletic events, Sochi was responsible for building the Olympic Village and the infrastructure to support the new structures. Putin’s plan is to use the Olympic village in the future as a “luxury condominium structure” that would bring future revenue to the country. Other Olympic venues will hopefully function as a winter resort. Russia has created transportation infrastructure to support the anticipated influx of tourists. A new road connecting the southern coast and the northern mountains cost $9.4 billion. While that is an absurd amount of money, Putin views it as an investment for future gains in the tourism market. Sochi has also built three new airports to serve the region – Gelendzhik, Mineralynye Vody and Krasnodar. Russia designed a new transportation program where visitors fly into Moscow – which has doubled its passenger capacity – and then fly to the three new Sochi airports. The most recent estimates put Sochi’s price tag at $50 billion, which is especially outrageous considering the original budget was $12 billion, and even more outlandish since only $6 billion was directly related to Olympic venues. Nearly $45 billion dollars was spent on infrastructure that may or may not be profitable in the future – quite a gamble.

Past Olympic host cities have made similar gambles and lost. Take Athens, for instance. The city hosted the Summer Olympics in 2004 and built venues for sports such as beach volleyball, baseball and table tennis that have become useless. The Olympic Stadium built for the opening and closing ceremonies as well as track and field events is falling apart – the seats are broken, the walls are covered in graffiti and there is no longer any running water. Even before Greece fell into economic catastrophe the country could not pay to maintain the facilities at an estimated annual price of $60 million.

The idea behind hosting the 2004 Olympics was that Athens would be rejuvenated through infrastructure projects and that the venues built would be used in the future for tourism and athletic events. While the infrastructure has mostly been maintained, the Olympic venues have fallen into complete disrepair as they have not been used for anything except local sporting events and have not had permanent tenants in ten years. The former host city has all of the infrastructure and venues to host another Olympic games, but the current Olympic model of choosing a new host city for each Games means that all of the buildings will remain unused and all of the money spent, wasted.

Unfortunately, Greece is not the only example of now derelict Olympic host cities. The Barcelona Olympic Stadium built in 1992 is now only used as a free museum for tourists and Montreal’s Big O Stadium has not been occupied since the Montreal Expos left in 2004. The trend with Olympic venues is post-games abandonment – a terrible phenomenon that creates costs of hosting the Olympic games after the Games are over.

Another issue with the Olympic model is the athletes’ villages, which are typically built to either revamp housing markets in cities or create tourist destinations – as Putin hopes for Sochi. However, these dreams rarely materialize. Again in the case of Athens, the athletes’ village was built to be a separate and self-sufficient town apart from the rest of the city. Unfortunately that separation actually created a low income and undesirable housing complex. While this isn’t always the case for athletes’ villages – Sydney transformed a small town into a successful and thriving suburb – it is likely to be the model for Sochi as the geographic realities are the same.

While the Olympic model is all too often economically unsustainable, another model exists that avoids similar economic pitfalls – the Super Bowl model. Instead of choosing cities to create a venue, the National Football League chooses cities that already have a venue. By choosing cities like New Orleans, Miami and New York City, the Super Bowl mostly relies on existing infrastructure and therefore avoids the obscene costs of the Olympic games. While the Super Bowl requires less specific venues, it still holds that in order to be a candidate, cities must already have the infrastructural requirements in place. The 2014 Super Bowl in New Jersey, for example, was held in MetLife Stadium, while the teams and support staff stayed in the Hyatt and Westin Hotels. Ultimately, Super Bowl XLVIII generated $550 million for the New Jersey-New York region, while no Olympic games – and certainly not the already debt-ridden Sochi Olympics – has been profitable.

Selecting cities that have never hosted the Olympics requires expensive building projects.  While this can bring citizens together as they work toward a common goal, it is unclear if those intangible benefits outweigh the billions of dollars spent on future abandoned athletic complexes. Rotating among several geographically and culturally diverse host cities — as long as they already have most of the necessary facilities — would both be compatible with the original intent of the Olympics and apply to the more prudent economic calculations behind the Super Bowl.

About the Author

A member of the Class of 2017, Brenna is concentrating in Public Policy and Economics.