The $50 Billion Gamble

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 costof 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>.

Share this post