Death, taxes and the crash-and-burn Olympic referendum

As it is the year 2018, three things in life are certain: death, taxes and defeat by referendum of a proposal to stage an Olympic Games.

Whoops. Strike that. Make that four: the International Olympic Committee’s consistently tone-deaf response to voter rejection.

Make no mistake:

For the IOC, rejection Sunday by voters in the Swiss canton of Valais of a potential bid for the 2026 Winter Games by Sion — very near IOC headquarters in Lausanne — is all but a full-on crisis.

 A "No on Sion 2026" campaign poster. It reads, "Three weeks of partying, 30 years of debt - No to Olympic waste" // Getty Images 

A "No on Sion 2026" campaign poster. It reads, "Three weeks of partying, 30 years of debt - No to Olympic waste" // Getty Images 

The IOC is eager — whoops, strike that, all but desperate — to return the Winter Games in 2026 to Europe. Why? 2018 in PyeongChang and 2022 in Beijing, 2014 in Sochi (for sure Europe but only kinda-sorta because it’s Russia and, moreover, Sochi itself is perched down on the Black Sea) and 2010 in Vancouver.

Sion was assuredly the IOC’s best hope, even if it would never say so publicly.

The others nominally in the 2026 race, and this list makes clear the crisis:

Calgary; Graz, Austria; Stockholm; Erzurum, Turkey, Milan and Torino in Italy; and Sapporo, Japan.

Briefly: 

Voters in Austria have repeatedly said no, to Vienna for Summer and Innsbruck for Winter. Stockholm is in Europe, too. Good! Bad: it pulled out for 2022; tentatively dropped out for 2026 then got back in, which tells you the domestic politics remain complicated; and the would-be ski site, Åre, is 325 miles away. Hardly anyone would be inclined to think off-hand of Turkey for the Winter Olympics and, besides, Turkey borders Syria to the south while Erzurum is up there near Georgia, which is heading in the direction of ... Sochi.

Italy — great, if the organizational debacle of 2006 can be forgiven if not forgotten and if the chaos that is the current government can somehow step up. Calgary is in Canada, not Europe, and they should win Olympic gold for dithering and anguishing over do-we=bid-or-no. Sapporo is on the list as a failsafe and, besides, have you seen how much the Tokyo Games are over budget?

If not: the Tokyo bid book said $7.8 billion all-in for 2020, and now the IOC and local organizers are all geeked up about holding costs “down” to, hmm, about $13 billion.

As for Sochi and 2014: $51 billion. Or Beijing in 2008, $40 billion. Or a host of smaller but still outrageous figures for other recent Games. 

These numbers are a major reason why Swiss voters on Sunday said no, and for the third time in five years, In 2013, it was Davos/St. Moritz for 2022. Last year, Davos/St. Moritz again to 2026. 

Valais voters said no Sunday by 53.98 percent. In politics, that is what is called a loud and clear rebuke. 

To be sure, the IOC is confronting a number of issues in referendums like the one Sunday. There are general concerns: corruption in international sports. And specific: a perception, fair or not, that the IOC is arrogant.

Above all, however, there is one concern — financial — and it's why boosters immediately said Sunday the Sion bid for 2026 was dead.

"We couldn’t convince a majority of voters that this was a reasonable and sustainable project,” campaign spokesman Alexander Waefler told Reuters, and next comes the money quote, literally and figuratively:

 “In the end, it’s all about the money and people were concerned it would become too expensive.”

Ding, ding, ding. 

The IOC has introduced what it has called a “flexible” new bidding system. It has promoted what it calls a “new norm” that it claims “reimagines” how the Games will be delivered, a 118-point purported cost-saver.

Voters obviously could care less.

Why?

Because the IOC — despite continued rejection — still does not get it.

Its communication strategy is fundamentally awful.

Strike that. That’s maybe not fair.

It’s awful because the strategy is essentially at odds with itself.

The IOC is trying to have it both ways. That can’t work. That never works.

To explain:

There are two budgets at work in any Olympic Games. 

One is the organizing committee’s budget. That column, to which the IOC contributes a significant amount — $925 million for 2026 — almost always ends up in the black. 

To reiterate: the organizing committee budget almost always ends up with a profit, which in Olympic jargon is called a “surplus.” 

A Summer Games operating budget runs to about $3 billion. A Winter Games, $2 billion.

Recent Games surplus numbers: Beijing, $146 million. Sochi, $261 million.

No, really.

The second budget is the infrastructure that accompanies the delivery of a Games. This can and does include anything and everything from the construction of roads, high-speed train lines (Seoul-Gangwon province, for instance), bridges, metro lines, airports and more. 

This infrastructure is the reason many if not most countries have in recent decades sought an Olympics. The glamor of a Games brings the opportunity to get done in a seven-year window the sort of public policy projects that would otherwise take 20, 30 or more years.

Back to those all-in numbers for 2008 and 2014: Beijing $40 billion, Sochi $51 billion.

Reputedly. No one really knows, because those are autocratic countries, and transparency in accounting in those places is not a thing.

At any rate, the big-picture problem is the disconnect between the operating and infrastructure numbers. 

Voters, especially in the democracies of western Europe, only see the likes of the $40 and $51 billion figures, and freak out, understandably.

The IOC, meantime, is trying to have its cake and eat it, too. 

Witness:

A statement Sunday attributed to an IOC spokesperson said, in part:

“From the polls, we understand that outdated information on the cost of the Games was the main concern for those voting against the funding.

“The recent reforms undertaken by the IOC have unfortunately not been taken into consideration. The impact of these reforms is clearly illustrated by the case of the last edition of the Olympic Winter Games, PyeongChang 2018, for which this week a multi-million dollar surplus was announced. According to the PyeongChang 2018 Organizing Committee, this was only possible thanks to the reforms of Olympic Agenda 2020 and close cooperation with the IOC.”

To deconstruct:

1. If the "recent reforms" undertaken by the IOC “have unfortunately not been taken into consideration,” that is plain and simple the IOC's fault. That means it has not communicated what those "reforms" are, or what benefit those "reforms" might bring. That’s Politics 101. 

2. As the Sion 2026 spokesman made plain, it’s all about the money. Voters clearly understood an edition of a Games costs a lot. They didn’t want to pay to play. Again, Politics 101. Not difficult to understand. 

3. The Olympic Agenda 2020 “reforms,” meanwhile, are not responsible for the PyeongChang surplus. Those measures weren’t around in Beijing, or Sochi, and those Games made bank. Again, the organizing committees of almost all Games break even, or register a surplus.

The real issue, which no one at the IOC or the PyeongChang organizing committee seemingly breathed a word of this week, is that the total cost of the 2018 Winter Olympics, as POCOG president Lee Hee-Beom has said for the public record, is $14 billion.

The PyeongChang bid book fixed capital investment in 2018 dollars at $7.868 billion.

That same bid book called for an operating budget of $2 billion.

Ultimately, that budget ended up at $2.4 billion, after accounting for costs not normally considered the responsibility of an organizing committee, per the IOC.

To make the math easy, recognizing that this equation won't be precise but plenty good enough for voter purposes:

Let's scale the operating budget back to $2 billion and slide the capital column up to $8 billion. That's $10 billion. That's a lot of money to begin with. Except the whole thing ended up at $14 billion.

That makes for a $4 billion problem. Or if you are inclined to think this way, a 40 percent more problem.

If a contractor came to your house and bid x for a job and then at the end said, whoops, it's x plus 40 percent, you'd be outraged, right? 

4. When you get 53.98 voting no, you see that voters indeed understand this sort of math loud and clear. They're outraged.

To compound its misunderstanding, on the one hand on Sunday the IOC referred only to the “multi-million dollar surplus” of the PC2018 operating budget but in trying to sell its “new norm” and “flexible” bidding system, it 110 percent is selling the development — that is, the infrastructure — benefits of an Olympic Games.

Which means capital costs. Which means taxpayer investment. 

This is why voters are in revolt. 

Not difficult. Politics 101.

From the release touting the “flexible: bid process, second sentence: “It has been reformed and redesigned to enable cities and [national Olympic committees] to have even more sustainable, feasible and cost-effective Olympic Winter Games, and to align with their local, regional and national long-term development goals.”

Similarly, the “new norm,” very first sentence of the body of the release, is said to “provide cities with increased flexibility in designing the Games to meet long-term development goals …”

Let's close the circle: development costs money. Where's the money coming from for "local, regional and national long-term development goals"?

IOC leadership knows these referendums are not ending well. By now, there have been enough of them. 

Crisis — which is what 2026 right now represents, after a 2022 process that ended with only two candidates, Kazakhstan and China — sometimes affords an opportunity to effect long-overdue change. 

For starters, the IOC ought to take a long, hard look at the obvious disconnect in its strategic communication strategy. Because it's getting killed right now by a simple, effective slogan that makes a point Taxpayers Tammy and Tommy can readily understand, and to continue with Politics 101 whether it's even remotely true does not matter because it hits people not just emotionally but viscerally: three weeks of partying for 30 years of debt is not worth it.