Athens 2004 - Cost Spiral

28 January 2003, updated 22 April 2003

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The figure of £1.8 billion we were given by the bid committee for the direct costs of a London 2012 Olympic Games is patently nonsense. It was produced by Ove Arup, engineering consultants who won awards for their Sydney 2000 buildings. It excludes enormous items, such as the cost of accelerating infrastructure spending, the cost of security outside Olympic stadia, immigration, customs, social services and other local costs.

For a nightmare vision of what London 2012 might end up costing, look no further than Athens. The absolute minimum cost of Athens 2004 is £6.5 billion, all but £1.1 billion of which will be public money. Published estimates have ranged as high £9.4 billion[1]. In order to arrive at an accurate figure, add up the following:

·         Budget of the Athens Organising Committee (£1.2 billion). The bid committee initially estimated ATHOC would spend $1.57 billion (£1.0 billion) and generate a profit of $36m (£23m)[2]. Since then the Organising Committee budget has increased to EUR 1.96 billion (£1.23 billion), of which just EUR 235 (£149m) will be public money[3].

·         The Greek Government’s own Olympic budget (£2.75 billion). Prime Minister Costas Simitis has set aside a further 1.493 trillion drachmas (£2.75 billion) of Governmental spending to cover Olympic venues and activities, including a rowing and sailing centre and the athletes’ village[4].

·         Infrastructure acceleration cost (at least £2.4 billion). The success of Athens 2004 depends entirely on accelerated completion of infrastructure projects costing a total of Eur 20.9 billion (£13.1 billion)[5] as follows:

o        Athens International Airport - Eur 2.5 billion

o        Athens Ring Road - Eur 3.0 billion

o        Athens Metro Extension - Eur 2.0 billion

o        Pathe Motorway - Eur 2.0 billion

o        Egnatia Motorway - Eur 2.3 billion

o        Upgrading of Telecommunications - Eur 5.0 billion

o        Athens-Halkida suburban railway line upgrade - Eur 1.5 billion

o        Rio Antiro Bridge - Eur 750 million

o        Water and sewerage projects - Eur 570 million

o        Health and welfare programmes - Eur 375 million

o        Energy and gas projects - Eur 920 million

Bringing forward expenditure costs money. Assuming these projects have been accelerated by an average of three years because of the Olympics, that is a hidden financing cost for Athens 2004 of £2.4 billion (£13.1 billion x 6% financing cost per year assumed by Ove Arup x 3 years).

In addition, of course, the fact that these projects have to be rushed through at once is contributing to enormous inflation in the Greek construction industry, the unquantified costs of which hit the rest of the Greek economy. Athens 2004 will use all this infrastructure at no charge.

Of course all potential 2012 host cities have a similar list of required infrastructure investments. For example the figure for San Francisco's failed 2012 bid was $31.8 billion. The big question for London 2012, of course, is what is the list of similar projects required and who is going to pay for them: London, British or EU taxpayers?

The real scandal of Athens 2004 is that the projects generally referred to as the ‘legacy’ of the Olympics are in fact being paid for not out of the ATHOC budget, nor even out of the Greek Government Olympic budget, but out of the European Union’s regional development funds, but noone from the UE is auditing them.

The majority of the Eur 20.9 billion costs are being met by the Community Support Frameworks II and III for Greece (Eur 18.5 billion and 26.6 billion respectively), with much of the remaining funding taking the form of subsidised loans from the European Investment Bank.

Amazingly, despite the huge sums being doled out, the EU does not maintain a list of projects supported by CSF III. Money is distributed to qualifying projects by selected local “partnerships”. They only inform the EU of the individual projects when the whole programme is closed (i.e. all the money is gone). CSF III is not expected to close until 2009. Until then, the Greek Government can effectively direct the EU money-hose wherever it wants. The EU does not even have a list of projects, let alone any financial information it could audit, for nearly a decade.

CSF II was grossly misapplied by the previous Greek Government. The EU is currently (behind a veil of secrecy) trying to recover Eur 2.9 billion that was spent on non-qualifying projects[6].

And who is the EU Commissioner in charge of ensuring that Greece can "absorb" (EU terminology) these multi-billion dollar sums without waste or fraud? None other than Michel Barnier, President of the Albertville 1992 Olympic Organising Committee!

·         The Cultural Olympiad (£74m initial cost). This is an ambitious monumental roving showcase of Olympic and Greek culture[7]. “Resources to the tune of 40 billion drachmas (£74m) have already been allocated through the [Greek] state budget ... to this amount one should also add the additional resources that will be allocated during the 2001-2004 period through the current budget, the Ministry of Culture lottery tickets, funds for Ancient Olympia and the Olympic Youth Festival and Olympic Education, not to mention the funds allocated for specific Ministry of Culture activities with regard to the 2004 Olympic Games. These funds are earmarked solely for activities and not for any infrastructures, which will be covered by the resources derived from the 3rd Community Support Framework.”[8]

·         Indirect costs (unquantified). In addition to the costs listed above, Greek police, customs, military, social services, health, environment and other public services are having to deflect very substantial resources away from other priorities because of Athens 2004. These public costs have not been quantified. There are also costs to disruption of business up to and during the Games, again unquantified.


The point of all this is that yes, the Athens is being transformed in the run-up to the Games. But the amounts being spent are ASTRONOMICALLY higher than the £1.8 billion we are told London 2012 will cost. In the case of Athens, there are enormous subsidies available from the EU. In the case of London there aren't - it would be British taxpayers footing the bill. Although the EU has allegedly let it be known there might be a billion or so Euros available help with the regeneration of East London, it will in no way cover the costs involved. The only Olympics worth having is one that comes clean about its costs.


[1] “Athens 2004 is ‘Back on Track’ Tom Knight, Telegraph, 4 May 2001. http://www.telegraph.co.uk/sport/main.jhtml?xml=/sport/2001/05/04/soolym05.xml

[2] Report of Bid Committee into expected benefits Athens 2004, 22 July 1997. Summary available at Greek Embassy to Washington DC website http://www.greekembassy.org/press/newsflash/1997/July/nflash0722d.html

[4] “Olympics budget to stay at 1.5 trillion drachmas, government decides” Athens, 16/01/2002 (ANA)
http://www.greekembassy.org/press/newsflash/2002/January/nflash0116e.html

[5] Infralympics Athens Conference Material, November 2000.
http://www.hirc.gr/events/infra/Org_New Infra Brochure.pdf

[6] Kathimerini, 8 June 2002, EU pressing Athens for huge refund
http://www.ekathimerini.com/4dcgi/_w_articles_politics_100005_08/06/2002_17381

[7] Cultural Olympiad 2001-2004 website. http://www.cultural-olympiad.gr/

[8] Helenic Ministry of Culture website. http://www.culture.gr/6/68/686/e6867.html