The costs of Budapest Olympics would push Hungary into a huge financial debt

a) The blank cheque

Imagine that you have serious reasons to doubt someone’s financial responsibility and trustworthiness, and yet they take your credit card away on a shopping spree to the store of friends and business partners. What they will buy and what the budget will be is not shared in advance – welcome to the Budapest Olympics!

The government is proposing a blank cheque to cover the costs of the Olympics held in Budapest. The cheque contains the name of the drawer and payee but it does not discuss the sum, which its recipients can determine at their own will. Should Budapest win the rights to organise the 2024 Olympic Games, we would accept the liability of planning the event at a given time and at all costs. The expenses are not covered by the International Olympic Committee, nor by the Fidesz government which attempts to politically and financially exploit the event, but it is going to be paid by us, Hungarian tax payers – even if no one has asked about the opinion of the public yet.

 b) Unrealistic estimations

It is hard to tell in advance where the costs of the Budapest Olympics would come to a halt. Entrusted by the government, PwC gives an estimation of total costs around 774 billion forints (cca. $2,7billion), but this figure is unequivocally questioned by experts. This number is a result of the periodic reconstruction of the study under government pressure, where many investment projects for the Olympics were deemed already ‘necessary’ in order to hide the actual costs. Besides, the study has elementary shortcomings: for instance, it does not account for safety costs, although the threat of terrorism has always accompanied the games.

At previous Olympics, the average costs of organisation were $5,2billion (1524 billion HUF), and this excludes investments in infrastructure. The government expects that developing the country’s infrastructure from its current state is going to take major expenses, so we can realistically expect a total sum of $10-17billion. For a point of reference, Hungary’s complete national budget for 2017 is cca. $60,5billion, while the expected deficit is cca. $3,8billion.

As a result, it is already apparent that we are not going to profit from the Hungarian olympics, and in fact we are likely to lose an enormous sum. The data of previous olympics are quite telling: planning the event has never been profitable for the host country; since 1960 the Games have always surpassed the previously expected budget; and since 1976 the average spending level relative to the expected budget was 156%.

c) With Fidesz, costs might shoot up

In Hungary there are two more factors that would increase the olympic budget: first, corruption, and second, the fact that venues have to be provided for many olympic sports that are practically absent in the country. There is a need for large investments in new facilities to match the infrastructure of eg. the London, Paris or U.S. Olympics. In addition, experience tells that one of the safest and most profitable forms of corruption in the country is through construction tenders which favour companies crony to the governing elite.

It is instructive to look at non-Western points of reference to better understand the dangers of the Hungarian corruption model: the final bill of the notorious Sochi Winter Olympics (2014) was around $52billion, while the costs of the first Azerbaijan European Games (2015) were $8,1billion.

In Hungary the costs of application alone were initially fixed around $52million, but after the mayor in Rome announced the decision to withdraw the city’s bid, the government extended the Hungarian budget with an extra $5million of ‘advisory fee’. Rome’s move was neither sudden nor any relevant to the case of Budapest, and the remaining applicants did not at all consider a similar move. Our bid is a demonstration in small of how much waste we can expect should the government win the rights for the 2024 Olympics. To date, large sums of money have already disappeared via non-competitive construction tenders – many conclude that the primary objective is not the successful realisation of a Hungarian Olympics, but more the misappropriation of the money invested in our olympic bid, which is in itself a considerable amount.

On top of everything else, the government is simultaneously preparing for another major (and not less dodgy) spending project that will be a serious burden on its budget: the Paks II nuclear power plant will cost at least $12,8billion (without corruption), which means roughly $1billion every year. While these are estimations published by the government, it is hard to check for their validity since the entire deal is secretic and lacking in transparency. In any event, if either of the estimated budgets detailed here are not entirely honest and accurate, an economic recession akin to the Greek case might be in the offing. As such, the aftereffects of our olympic bid will have to be measured in decades, way after the current government will have already been gone.

d) Bread and circuses to the crony elite

In all probability, we can also expect the olympic success of our athletes abroad, while the best-case scenario of organising the Games domestically is barely avoiding financial collapse via an increased national debt. So who would profit from the Hungarian Olympics? Naturally, it is the group that is running towards the store with your credit card.

The popularity of the government has dropped significantly in recent years – Hungarian citizens have started to realise that other nations outcompete us in the region. Figures of competitiveness and corruption have not been so disconcerting since the shift from a planned socialist economy to Western-type capitalism in 1989-90. The government would readily exploit the Olympics to gain legitimacy for its populist catchphrases about ‘national unity’ and ‘putting Hungary on the map’. At the same time, the sham construction tenders would give an ever greater opportunity for financial fraud by the elite.

Fidesz provides circuses to the public regardless of whether they want it or not, and they are happy to keep the bread even if this leads to the collapse of the Hungarian economy.

– by Daniel Corsano; translated by Sebestyén G.