Gold for Gold

I was talking with colleagues yesterday about the economics of the Olympics of the medals and speculated that, with the East Germans gone, we spend more to enhance our chance of winning gold medals than any other country. This morning I received, from Jack Strocchi, a column on the topic from Andrew Bolt which makes exactly the same claim, giving an estimate of $50 million in public expenditure per gold medal.

A quick check suggests that this is about right. It’s a matter of historical fact that the establishment of the AIS was due to our poor performance at the Montreal Olympics , and its costs appear to be around $100 million per year. Assuming that AIS support for non-Olympic sports is offset by other forms of public support for the Olympics, and that only gold medals count[1], we get a budget of $400 million for each Olympiad. With eight gold medals so far, the current cost comes out right on $50 million apiece, though we’ve still got plenty of good chances to come. According to this report, the Australian Sports Commission (parent body for the AIS) is still hoping for 40 medals, at an implied cost of $10 million each.

What should we think about this? I’ll turn around a standard form of argument[2] and say that, if you support public funding for the arts (and I do) there’s no reason in principle to oppose public funding for Olympic sports. Still, $50 million a pop is pretty expensive, and we should be looking for some ways to reduce the costs. The proposal that some part of sponsorship returns for successful athletes trained at public expense should be returned to train their successors seems reasonable. No doubt there would be practical difficulties, but I think they could be overcome.

And of course the fact that a lot has been spent on training them doesn’t in any way detract from the achievements of our athletes. Even making it to the Olympics is a big achievement, and winning a gold medal is a huge one.

fn1. I’ll call this the Norman May assumption

fn2. The one that bemoans our focus on sporting heroes at the expense of cultural and scientific achievement.

25 thoughts on “Gold for Gold

  1. Presumably 50% of their sponsorship returns *are* returned to the government? But perhaps a more formal HECS-like scheme would be better?

  2. I think the Olympics as a whole has become too much of a gravy train and indeed the attendances in Athens perhaps bear this out. I would like to see the Olympics trimmed to core athletics disciplines, and possibly even distributed across multiple cities in the future.

    The money the world saves could build some water supplies in India and Africa.

  3. they could certainly trim some of the bloat in olympic sports…

    get rid of sports like soccer, tennis, baseball and basketball which have other world championships and events which people watch widely, attract the best athletes, and no-one cares about what happens at the olympics.

    like tony says it should just be athletics and a few other sports which dont have their own strong competitions.

  4. I support public and private funding of systems that conserve and extend the lives of “actual and existing” conscious moral agents.
    Public funding of “arts” and entertainment activities, such as literature grants and olympic athlete subsidies, does nothing to advance this ideal.
    The AIS and AC dough would be better spent on ARC grants to stem-cell research.

  5. Ian Thorpe et al are worth more gold than any advertising the Tourism Industry can ever master be it in Japan, China or Germany.

    Sportsmen/women are the leadership salt of Australia. Imagine how fatter we all would be without them!

    On the other hand, maybe we would be less of potato couches (sic). So in some ironic ways, economists, might after all, know not only the price, but also the value of everything. (smile)

    PS: I was amazed to read three years ago that Bridget Jones Diary, accoding to some confessional study by the London School of Economics, was worth more to British economy in exports than the entire steel industry put together. Would be interesting to explore the question of value adding further be it in the area of sport or arts …

  6. There are worse things to spend money on
    Asia Times: Military spending nears $1 trillion
    By Thalif Deen

    NEW YORK – After declining in the post-Cold War era of the early 1990s, global military spending is on the rise again – threatening to break the US$1 trillion barrier this year, according to a group of United Nations-appointed military experts.

    The 16-member group estimates that military spending will rise to nearly $950 billion by the end of 2004, up from $900 billion in 2003. By contrast, rich nations spend $50 billion to $60 billion on development aid each year.

    The 2004 estimates would be “substantially higher if the costs of the major armed conflicts in Afghanistan and Iraq were included”, the experts say in a 30-page report released in New York. The US Congress has authorized spending of about $25 billion for Afghanistan and Iraq in 2004, but that is expected to more than double by the end of the year. US Deputy Defense Secretary Paul Wolfowitz told the Senate in May that war spending in Afghanistan and Iraq was approaching about $5 billion a month. He predicted that total costs for 2005 would be $50 billion to $60 billion.

    “At a time when global poverty-eradication and development goals are not being met due … to a shortfall of necessary funds, rising global military expenditure is a disturbing trend,” warns the UN study. The report, titled “The Relationship between Disarmament and Development in the Current International Context“, will go before the 59th session of the UN General Assembly beginning mid-September.

  7. Of course Australia never won a gold medal prior to the establishment of the AIS. A better example of the failure of government intervention is hard to find. How much has a couple of World Cups in rugby cost taxpayers? I believe zip is the correct answer.

  8. Hate to admit it but I’m with Bolt on this one. I can’t believe we sent the second largest team! Do we really need to have a team in everything? They better finish in top 4 of the medal table or it’s a complete waste of money.

  9. John, the figure you mention is $20 per head or $80 per 4 person family once every Olympiad. Is this excessive in Sports-mad Australia or does it provide an orgy of consumption pleasure and a wise investment in promoting Australia and Australians abroad? I say yes to both questions.

    Lets not become a nation of politically-correct, scrouges who frown on nationalistic pleasures.

  10. It is a bit broad brush to divide AIS support by the number of medals. If you divide it by the number of athletes helped to give their all, it’s a much more modest figure.

    Even then, I doubt whether anyone gets rich on AIS support. Away from Thorpeville (a man IMHO made great by the size of his feet) a lot of sports get very little sponsorship and the athletes struggle financially. It is pretty hard to talk about “paying it back” to woman cyclists, for instance.

    I find the obsession with gold a bit sickening. A lot of people slog hugely in weird sports to go to the Olympics, do their PB’s and enhance the image of their sport. But no-one gives a (questionable content involving bodily waste) unless they can match it with the sports machines of other countries.

    And I think Harry’s remark works for the arts as well. We pay to be part of a sophisticated country, that we can be proud of – often in fields we know nothing about. Like stem cell research. Or ballet. How can we not be moved by joy and dedication?

  11. No-one’s arguing against sport and achievement. What I’m arguing against is the relentless gravy train that the modern Olympics has become. A lot of money is wasted to create a pleasant little event for thousands of dignitaries. The Athenians at least have the independence to recognise this for what it is.

    Running, cycling and swimming are noble sports worthy of the Olympics. Table tennis isn’t. Football, sailing and skiiing are sports with their own championship events. They should not be in the Olympics. I would like the Olympics to honour athletic achievement and tell the freeloaders to pay for their own holidays.

  12. I’ve widened the scope of one of John’s proposals in order to provide some context. What do you think?

    The proposal that some part of [monetary] returns for successful [actors/artists, or for that matter, doctors/lawyers/economists] trained at public expense should be returned to train their successors seems reasonable.

  13. “The one that bemoans our focus on sporting heroes”

    Heroes are people who run into burning buildings to save others. Ian Thorpe is a sporting champion. It’s not the same thing at all.

    I agree the amount we spend on these people is excessive. In a month’s time. no one will rememvber or care how many medals we won. The government should spend enough to ensure we get as many medals as would be expected for a country of our size and wealth. Anything more, the athletes can get from their own resources.

  14. surely the ais isn’t still subsidising ian thorpe’s training etc? i read somewhere he earns 3.5 mill a year (and going exponentially upwards).

  15. Tony Healy: Running, cycling & swimming DO have
    their own championships, but the Olympics are
    better promoted. (For example, did you realise
    that the cycling World Championships were held in
    *Melbourne, Australia* last May?)
    The high profile of our team does have a flow-on
    effect: Little Athletics clubs across the country
    will be overflowing with new participants in
    October.

  16. Terrific. I am a fan of athletic achievement, including running, cycling and swimming. I am not a fan of freeloaders. I would like to see beach volley ball, table tennis and similar events taken out of the Olympics.

  17. Hey,I remember 1976 when australia had one last chance for a gold medal and lost the mens hockey to NZ.
    We have spent bucketloads since,but the results are great,aren’t they?
    You would have to be a sour puss not to enjoy the spectacle of the games,at least the jingoism is harmless.
    The war in Iraq and the war against refugees would fund many years of australian sport.
    Which would you rather have?
    The only sport within Iraq at the moment is shooting,very boring I reckon.

  18. One of the reasons (though not the major one) that Australia got more medals at Athens than in Montreal is that there are more medals – 928 as opposed to 613. The number is rising steadily and will soon top the thousand.

  19. I’d like to see a comparison of Gold’s won not just by per capita but by sports budget and see where we come out. I also seriously wonder about the trickle down benefits on spending on elite athletes when we have the problems like childhood obesity growing.

  20. Simon,
    I think that two conflicting factors are at work here. Australians’ obsessive interest in sport has the potential to increase participation, as well as enhancing general levels of fitness.
    However, on the basis of my narrow experience with junior sport, there is a contrary effect at work. Striking numbers of junior sports participants come to a realisation during their mid- to late- teens (if not earlier) that they are not world-beaters, and have no realistic prospects of developing to become so. Their reaction is frequently to drop out of sport (both their chosen variety and any alternative) rather than participate at a local club level. I don’t know of any empirical evidence which might either confirm or refute this impression about contemporary rates of participation in sport, compared to earlier periods in Australian history.
    I acknowledge that this may be offset by a greater awareness of and interest in informal fitness activity and nutrition, but again my suspicion is that there’s a lot more talking about that and good intentions than real activity.

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