The London Olympics came in under budget. Yeah right.

This just out from the NZ Herald - the London Olympics came in under budget:

The British government says the London Olympics cost about $NZ786 million (400 million pounds) less than expected.
The final financial report for the games projects that the cost will be $17.6 billion from an original budget of $18.33 billion.
Olympics minister Hugh Robertson says, "it is a significant achievement to deliver this large and complex program on time and under budget."

It sure is a significant achievement. Especially when you are aware of this information, taken from Brad Humphrey's piece in on the economic impact of the Olympic Games in the New Palgrave Dictionary of Economics (well worth a read in general if you are at all interested in the economics of mega sporting events):

London expected its 2012 Games to cost under $4 billion, but they are now projected to cost over $19 billion (Carlin, 2007; Simon, 2006; Sports Business Daily, 2008a). As expenses have escalated for London, some of the projects have been scaled back, such as the abandonment of the planned roof over the Olympic Stadium. The stadium was originally projected to cost $406 million and will end up costing over $850 million. Further, its construction will be financed by taxpayers and the government has been unsuccessful in its effort to find a soccer or a rugby team to be the facility’s anchor tenant after the 2012 Games. This will saddle the British taxpayers with the extra burden of millions of dollars annually to keep the facility operating. It is little wonder that the London Olympics Minister Tessa Jowell stated: ‘Had we known what we know now, would we have bid for the Olympics? Almost certainly not’. (Sports Business Daily (2008b), citing a story in Daily Telegraph (2008). The Olympic Village was to be privately financed, but the plan fell through and will instead cost the taxpayers nearly $1 billion. The government hopes that the apartments will be sold after the Games and the financing will be recouped.)

So, was it 400m pounds under budget or did it completely blow all projections? You decide.

New Zealand's Olympic success - what's in it for us?

Well, the Olympics were again a wonderful source of entertainment and drama - they were compulsory viewing in our household. For a spectacle, you really can't beat an Olympic Games. Mind you, for US$14 billion, it had to be just that!

Not surprisingly, much of our attention now turns to the implications of the performances of New Zealand's Olympians for us here at home. They have given us much to celebrate, and I am sure that as a country, we are all very proud of their achievements. In the headlines this morning - what will the Government do as far as funding high performance sport in this country to see us do even better in 2016? The answer: No change for two years, but come election year, who knows?

Sports funding would again be looked at for the 2014 Budget when McCully said he hoped Finance Minister Bill English would be "in a generous frame of mind".

It is not like the Government is being scrooge with this. In fairness, funding was increased from NZ$40m to NZ$60m in 2010.

Mr McCully pointed out that rowing was an excellent example of targeted government spending producing medals in London. Sport New Zealand targets six sports: rowing, cycling, triathlon, sailing, swimming and track and field. It would be fair, on the surface, to say that these targets largely delivered results. The question, for me, is whether success in other areas would be even better if government funding was extended to other promising sports? There is no easy answer to this one, but plenty of opinions from influential former Olympians as can be viewed in this New Zealand Herald story, as well as at least one academic:

Canterbury University senior business lecturer Ekant Veer said the Government needed to put more money into Olympic funding and not concentrate on the top medal prospects.
"Funding only sure medallists not only sends the impression that we don’t support effort, but it also can kill a future generation of athletes who are inspired to step up and be the next gold medallist."

I absolutely agree. I only wish I knew what a sure medalist was, and how to predict one.

What perked my ears, though, was this comment:

Veer said New Zealand was a sports crazy country and a successful Olympic campaign often had huge impact on the nation’s mood.
"Which, in turn, can lead to increased productivity at work, improved relationships, increased consumer spending and all manner of behaviours that are positive for this nation."

Granted, we are a sports crazy nation. We do love our sports. Most countries would also profess to being at least as sports-mad as we are, though. I'm not aware of much in the way of evidence that supports the economic arguments mentioned above (increased productivity at work and increased consumer spending). A really interesting piece of research on the link between sporting success and happiness from Europe by Kavetsos and Szymanski that is sure to be doing the rounds at the moment (RePEc working paper link here, published version link here) finds that while hosting events produces a definite (and measurable) feelgood factor, the link between national sporting success and happiness was not significant. If evidence from Europe is anything to go by, we loved the Rugby World Cup last year for a reason, but we shouldn't expect a lot more than short-term happiness from our Olympic success that fades almost as quickly as it arrived.

The All Blacks play this weekend...