Saturday, June 9, 2012

Euro 2012: The Cost

As the UEFA Euro 2012 tournament opens and soccer madness grips everyone in patriotic fervor, there are already calls and questions on whether the games were actually worth it to Poland and Ukraine.  (By the way, the games opened yesterday with a 1-1 tie between Poland and Greece.  Russia stomped the Czechs (think 1968 style) 4-1.)  Several articles—a couple are here and here—bring up the enormous cost of the games as well as citing precedents, namely Greece with the 2004 Athens Olympics, but also the Euro 2004 Portugal games.
First off, cost: it's widely claimed that Poland spent $25 billion dollars getting ready for the games.  That's a staggering amount, no doubt, and one should look a little more closely at it.  The real cost was in infrastructure improvements, ($15 billion on roads alone), whilst the cost of the four stadiums (construction and renovation) amounts to something around $1.5 billion.  There are also other costs, such as: security (not just providing security, but also the cost of arrests and trials.  Notably, inmates were moved from host cities to jails in other cities to make room for expected arrests.  Many judges were put on standby to handle the increase in prosecutions as well), building the strefa kibica (fan zone), clean up, etc.  But these are paltry sums compared to the overall total.  Poland spent more than Ukraine, but then again, it did have access to EU money.
The claim that Poland spent $25 billion preparing is ludicrous and wrong.  Much of that money is EU money that was flowed in Poland to help rebuild its decaying infrastructure.  All the projects were already earmarked before Poland even made its bid for the games.  Now, the tournament probably increased the priority of certain projects—the case in point being the semi-notorious A2 Berlin-Warsaw highway.  It gained notoriety for: A) Having the Chinese contractor be kicked out because it failed to pay its sub-contractors.  B) Being opened when still incomplete for the Euro 2012, and will have to be closed afterwards to finish it up (an extra layer of pavement is needed on a good-sized portion).  But the A2 highway wasn't built for the games, it was going to be built anyway, and probably on the same schedule.  The second metro line has as much to do with the Euro 2012 as do the new trams in Lodz, Krakow, and just about everywhere else (cities that are not hosting the games, but renovated their tram lines).  It has not been noticed much, but Poland has also been using EU funds to build small, rural roads (this will be covered in a future post).
That's not to say the games did cause infrastructure and other projects to be done.  There are, but not what everyone thinks.  The real cost that can be directly attributed to the games was building the stadiums, and it's quite shocking to see the main contractor file for bankruptcy protection.  There was a big push to beautify the cities before the games came, and it shows.  Renovations the rail stations, finished just in time, have turned the dank platforms and corridors into hallways of light.  Warszawa Centralna's transformation has eased travel through there and really updated it as a gateway into the city.  Speaking of gateways, it may have been planned long ago, but the recent opening of the SKM line to the airport is sure to be a boon for travelers.
Infrastructure has received much of the attention, but the stadiums themselves have attracted their fair share of criticism.  Most barbs are aimed at the National Stadium in Warsaw.  The high cost of the structure, at almost 2 billion zlotys, has dropped some jaws.  Critics say that it'll turn into a white elephant, a costly building to maintain and will be under utilized.  The Polish National team doesn't have a long schedule to ensure that paying fans will be packing the stands every week, but events have already been scheduled.  From concerts to the Polish Bowl (I think I'll attend that), the building is a prime venue.  It has to compete will the Sluzewiec racetrack (hippodrome) and the Bemowo airport for such events like concerts and music festivals.  Other stadiums have taken the fashionable thing and sold their naming rights to offset the cost of construction and operation.  (Note:  Ironically, when the Polish National Team recently played Andorra, they played at the Pepsi Arena, home Legia Warszawa, and not in the National Stadium, which was under UEFA control.)

Now that we have spent so much time harping on the cost, let's look at the gains.  Poland is betting on two things to recoup the cost of the games: an increase in tourism (not just the short-term spike, but also long term), and an increase in investment.  Tackling the second hope first, Poland is trying to show that it can execute big projects on time, plus show off its shiny new roads and rails.  An influx of foreign capital will cause the ever-growing forest of stationary cranes standing above halted construction projects to finally move once more.  The first hope is for an increase of tourism, on which Europe is increasingly becoming reliant (think Greece and Portugal).  Poland wants to show that they're not all racist anti-semites, regardless of what the BBC aired.  The increase of tourists during the games is a given, and they'll spend big, buying all sorts of bric-a-brac and crap in the form of Euro 2012 souvenirs.  As for the future, Poland hasn't showcased its crown jewels (read: Krakow), here, but the hosting cities are known to be beautiful, Wroclaw and Gdansk in particular.

While the games are costly, the cost isn't so high as is reported.  Most of the work done was financed with EU help, but there were also smaller contributions, such as the EEA and Norway grants.  The great part of the infrastructure improvements were already set forth and would have happened anyway.  What we're seeing is a developed economy rapidly modernize, closing the gap in deficiencies, and increasing its debt.  This happens all the time with developing economies, and is now going on in China (all eyes are on them).  The question is whether the EU money will continue to flow, especially as other countries are one-by-one seeking bailouts.  The spigot could be turned off and Poland could be left with a mess of half-finished projects and join the sad graveyard of countries who were too ambitious in their hopes to host major international competitions.
What will the future be and what will the games leave as their legacy?  I don't know and no one does, but they have served a purpose to strengthen national pride and open Poland to the rest of Europe.  Whether the gamble that they'll increase tourism and investment will pay off, that's something we'll just have to wait and see.


Unknown said...

Good post, well summed up.

The Euro has really built a fire under typically slothful butts to get things done. Even though so much was not completed or not coordinated. It is a typically 'Polish Can't Connect The Dots' issue. Poland has come a long way since I first touched down in 1990 however many things have not changed - effective project management, dealing with the 'dots' mentioned above, attention to detail and forward thinking to name a few.

I think one area that will be problematic as the games end will be what happens to the good venues that were built. They must be filled often to cover on-going maintenance and operating costs not to mention debt. Thus far it looks like a fairly feckless effort to do so and I hope they do not become neglected and end up looking like the old national stadium - we will see.

PolishMeKnob said...

I'm not saying that the projects were well-handled. But then again, not much is in any country (look at the Big Dig, a perfect example).

What will happen after the games is up in the air. The stadiums could turn into white elephants and just be an extra burden. The good thing is, Poland only had to build/renovate four. Also, the most costly happens to be in Warsaw and will probably get some use out of it. How much use? Who knows. I've heard there's talk of selling them to foreign companies to operate, but that was just word of mouth.
It might be feasible in the future to hold events like track and field games (if that's possible in the stadium. They'd have to modify the field.)