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Will the Rio Olympics Deliver Brazil's Much-Needed Economic Fillip?

Widely criticised for its 2014 World Cup preparations, Brazil had high hopes of delivering a flawless 2016 Olympics, but have the right lessons really been learnt and is the country's troubled economy truly set to benefit this time round?

Photo: Brazil: Will the Olympics give the locals something to celebrate at last?
Brazil: Will the Olympics give the locals something to celebrate at last?
Photo: Brazil: Will the Olympics give the locals something to celebrate at last?
Brazil: Will the Olympics give the locals something to celebrate at last?

Brazil was widely panned for its handling of the 2014 World Cup. International criticism focussed on delays to construction work on the designated sporting facilities, public protests about inappropriate spending, and a lack of managed investment in transport infrastructure projects. With the Olympic Games now scheduled to take place in Rio this summer, the country is claiming to have learnt from its past mistakes. There are still questions, however, as to how the country can economically capitalise on the legacy of these events, while a number of non-sports related issues may yet derail the country's hopes of successfully hosting the 2016 Games.

In 2007, when Brazil fought for, and won, the rights to the World Cup, it was greeted enthusiastically by people and politicians across the country. Outside, the choice of the South American nation was seen by some as a vote of confidence in its growing economic and cultural status. Cynics, however, suggested that few other countries were willing to underwrite the substantial costs of staging such a tournament.

Internally, though, it was welcomed as an opportunity to give Brazil something of a national upgrade. Speaking soon after the decision was announced, José Bernasconi, the President of the National Association of Architectural and Engineering Companies (SINAENCO), said: "Our country has a great opportunity to use the biggest event in world football to improve our sports, hotels, transport, and sanitation infrastructure."

Accordingly, the Ministry of Sport was quick to outline a programme of 109 projects, stretching across new stadiums, airport development and road and rail transport. Sounding a cautionary note, Bernasconi said: "All of these works need planning. We need to avoid the discontinuity that has characterised Brazil to date."

In 2014, the year before the event, it became apparent that the stadium and airport costs had run well over budget. At the same time, it transpired that transportation investment had been slashed, with 17 planned developments having been cancelled altogether.

The total cost of staging the event was then estimated to be around US$13 billion, with some $4 billion spent on 12 stadiums and a further $9 billion allocated to other infrastructure projects. These included upgrades to existing airports, the expansion of rail and road infrastructure, and support for hotel refurbishment.

Ultimately, while work on the stadiums was completed, a number of infrastructure and social projects were abandoned, largely because of a shortage of time rather than as the result of any shortfall in funding. Overall, seven new stadiums were built and five more were given a massive overhaul. Of these projects, eight went significantly over budget.

According to research by Stadiumdb.com – an online database of all the world's sporting arenas – Brazil did not actually overspend. A number of the cost increases, it said, were due to the falling value of the Brazilian Real, making imported materials more expensive. The record low unemployment level leading up to the event also pushed up labour costs. The result was an average per stadium cost of $320 million.

This was less than the cost for the World Cup 2010 in South Africa or Euro 2012 in Poland and only slightly higher than costs incurred in 2002 when Japan hosted the World Cup. Indeed, the per seat cost in Brazil is less than half the expected cost of the new stadiums planned for the World Cup in Russia in 2018.

Nevertheless, within Brazil there has since been a recognition that the priorities were wrong. At Cuiabá, the capital city of the remote state of Matto Grosso, for example, $290 million was spent on the Arena Pantanal stadium – 89% more than had been budgeted for. In the end, it was the setting for just four minor World Cup matches. Since then, it has been home to two local third division teams.

Speaking after the event, Bernasconi was a little muted in his assessment of the country's success in readying itself to host so historic an event. He said: "We have gained experience in stadiums, in projects and in management. All those who have been through this experience have learned a lot. We can now apply it to the 2016 Olympics."

There was, however, a problem, and this lay in the failed bids to upgrade the country's infrastructure. Acknowledging this, Bernasconi said: "Airports require 20 years for proper planning and construction. Investments in urban mobility cannot be made in haste."

Now, two years later, Brazil is again hosting another massive sporting event – the Olympics. This time, though, the challenge is a little less daunting, with all activity focussed on just one place – the city of Rio de Janeiro.

Photo: Uncertain legacy: Brazil’s World Cup Stadium.
Uncertain legacy: Brazil's World Cup Stadium.
Photo: Uncertain legacy: Brazil’s World Cup Stadium.
Uncertain legacy: Brazil's World Cup Stadium.
Photo: Nearing completion: Rio’s Olympic Park.
Nearing completion: Rio's Olympic Park.
Photo: Nearing completion: Rio’s Olympic Park.
Nearing completion: Rio's Olympic Park.

Eduardo Paes, the city's mayor was refreshingly honest about the challenges of hosting of the event. He said: "From the World Cup, there was barely any legacy. The investment was centred on building or revamping stadiums.

"The Rio 2016 Games, though, is an opportunity for solving problems that have been compromising the quality of life of Rio's citizens for decades. Hosting the Olympic Games is only worthwhile if the event promotes a transformation that will benefit our people."

In April 2014, the Brazilian government announced that the total budgeted cost of the Rio Olympics would be R$37 billion. Of this, some R$24 billion would be allocated to infrastructure projects.

This time, though just 27 projects were planned and the focus was clear – 11 of the projects were related to transport infrastructure, including four rapid bus transit routes, a new Metro Line, as well as investment in roads and trams. Another six projects were environmental priorities – cleaning up the bay, as well as a number of lakes and beaches. Three projects were also focussed on cleaning up inner city districts, while four projects were dedicated to providing public sports training facilities. The clear intent has been to leave a worthwhile legacy to the people of Rio.

The Rio Olympics will take place across four zones – Deodoro, Barra, Copacabana and Maracaña. Across all of these, there has been an emphasis on using existing stadia, providing facilities suitable for public use after the event, and investing in transport links.

The Deodoro zone will re-use the facilities built for the 2007 Pan-American Games, while new constructions, such as the white water canoeing course and the mountain biking course, will be available subsequently to the public in this under-resourced area. Deodoro will also be connected to the regional airport via the new TransBrasil line.

Deodoro and the Barra zone are on opposite sides of the city, so a 23 kilometre TransOlimpico Highway has been built to connect the two, cutting travel times by more than an hour. Barra will also feature an Olympic Golf Course that will become available for public use after the event.

A considerable proportion of Barra's Olympic Park and Olympic Village – designed to house 17,000 athletes – has been privately financed by investors. This will be sold off as private apartments after the Games. One Barra venue will be taken apart later and re-assembled to provide facilities at four local schools.

The 39 kilometre, R$1.8 billion TransCarioca, which connects Barra to the International Airport, and the 56 kilometre, R$985 million TransOeste – linking Barra with Campo Grade to the west – also form part of an upgrade to the city's transport network. This Rapid Bus Transit System, featuring dedicated bus-only lanes, is one of the few legacy projects from the 2014 Football World Cup.

Barra's main link with the city to the east is the cliff-side Joá highway. This has been enlarged as part of a R$500 million project, with two new lanes tunnelled through the rock and the addition of a cycle way.

The Copacabana zone is essentially the beach and coastal road. This will be the scene of the beach volleyball, cycling, marathon and triathlon events. A nearby lagoon – Lagoa Rodrigo de Freitas – will be home to rowing and canoeing competitions. The Olympic sailing events will take place in the Marina de Gloria at the mouth of the bay. Marathon and triathlon swimming will be held in the cleaner seawater of Copacabana.

With just months to go before the Games, the ambitious transport projects are almost all complete. The new transport links, several of which have been under construction since 2012, have shifted the real estate investment centre of the city to the west.

According to most observers, the development works are largely on track. One exception, though, is the planned clean-up of Guanabara Bay, one of Brazil's most iconic and beautiful natural landmarks, which seems to have foundered. Untreated waste from Rio's 10 million inhabitants and from eight other towns enters these waters every day. With the enormous 380 square kilometre bay narrowing to an outlet to the sea of just two kilometres wide, the US$300 million clean-up is seen as just too big a job.

The Rio government has now admitted it won't be able to meet its 2009 pledge to reduce pollution in the bay by 80% ahead of the Games. Stressing his disappointment, Paes said: "The pollution of our water is a theme that is much more important to the citizens than to the athletes. The athletes will spend just a few days in our city. We live here."

After the conclusion of the 2014 World Cup, The Washington Post newspaper spoke for many when it wrote: "Against the odds, Brazil pulled off a successful World Cup. Stadiums were ready, if only just. Huge protests failed to materialise and the airports function. Can the country do the same for the 2016 Summer Olympics?"

To all intents and purposes, it looks like the country has learnt some lessons, at least, from its problematic 2014 event. As the Games approach, there is far less open cynicism about the stadiums, and the country in general, being ready. There is also a grudging acknowledgment that more thought has gone into legacy this time.

Against this, though, there is the backdrop of a country in turmoil. In the political sphere, the suspension of President Dilma Rousseff and calls for her impeachment look certain to overshadow the coming Games to a certain extent.

Even prior to the political in-fighting, widespread concerns had already emerged as to the prevalence of the Zika virus in the country. This mosquito-borne disease is said to be responsible for possible birth defects, with pregnant women advised to stay clear of infection zones. This has already seen a number of athletes and members of the media express an unwillingness to attend the Games.

Photo: The Maracanã Stadium: The site for the 2016 Summer Olympics.
The Maracanã Stadium: The site for the 2016 Summer Olympics.
Photo: The Maracanã Stadium: The site for the 2016 Summer Olympics.
The Maracanã Stadium: The site for the 2016 Summer Olympics.

It could be that, despite the country being far better prepared for the Olympics than the World Cup, it may still fail to capitalise on the event. With the country's economy shrinking by 3.8% in 2015 – its worst performance for 34 years – and with unemployment expected to be more than 10% this year, Brazil certainly could have benefitted from any expected financial fillip from the Games. As it is, all the hard-learnt lessons of 2014 may prove to be of little benefit to the country, thanks to a number of factors few could have predicted.

John Haigh, Special Correspondent, Rio de Janeiro

Content provided by Picture: HKTDC Research
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