World Games Leaves Financial Train Wreck, Reigniting Hosting Debate | Sports Destination Management

World Games Leaves Financial Train Wreck, Reigniting Hosting Debate

Aug 25, 2022 | By: Mary Helen Sprecher, Michael Popke

The very best that can be said is that this is a case study of how not to operate. At the worst, it’s an indicator of why cities are shying away from hosting large multi-sport events.

Birmingham, Alabama was left with a more than $15.5 million deficit after the recent World Games, and most of that is hurting local vendors. The exact figure on invoices is $15,656,173, and it is owed to more than 100 companies or individuals, according to a list obtained by Fifty-seven of the companies are identified on the list as either local to the Birmingham area and/or diverse (minority- or women-owned).

“We don’t need any Birmingham businesses failing,” City Council member Darrell O’Quinn said. “We can’t leave these vendors hanging. I mean some of them are owed very substantial amounts of money. I know one vendor in particular, it’s an excess of $1million that they are owed.”

Since the money needs to come from somewhere, officials expect to try to fundraise from various sources – which they hope will pay.

“The plan is to have the city of Birmingham cover one portion,” O’Quinn added. “Then, to have the Jefferson County Commission cover another big chunk, and then talk to the Convention and Visitors Bureau to have them cover a portion as well. Then, the remaining balance, I believe is about $3 million, they would raise from private sector. That’s the plan.”

According to an article carried by WBRC, Birmingham Mayor Randall Woodfin has asked the local city council for another $5 million to help pay the debt. The World Games CEO, Nick Sellers, told WBRC reporters that if the council approves the money, it would go directly to their outstanding debt with local businesses. US News reports that Birmingham city leaders "complained, yet agreed" to their part of the bailout.

But even if all the pieces come together, it could take weeks for vendors to get what is owed to them.

Sellers, on behalf of the World Games, released the following statement on the cause of the overage.

World Games in Birmingham were a financial disaster
The World Combat Games are scheduled to return in 2023, but without a governing body to lead them.

“Many factors contributed to the disappointing shortage. Due to the latest COVID spike, fewer than expected international travelers attended the games, particularly from China and Europe. That contributed to weaker-than-hoped-for ticket sales, and some open hotel room nights outside of the city’s core. The virus also delayed the Games a year, adding significantly to our costs. Finally, a challenging economy caused two large sponsors to withdraw support just weeks prior to The Games.”

Sellers says there are still bright spots: “The World Games 2022 Birmingham Organizing Committee delivered an amazing event for $65 million, $10M under the original budget of $75M.  This event is a major platform for the Summer Olympic Games. And we delivered an Olympic caliber program.”

But vendors ultimately do not care about the rosy projections for Birmingham, nor do they want to hear the reasoning for the overage – or praise for an event that is ironically claimed to have come in under budget. They want to be paid.

“The Birmingham Organizing Committee (BOC) cannot confirm the list of vendors with outstanding invoices,” Sellers said. “While we want to be transparent, it’s just not fair to our vendors who did not ask to be put into the spotlight.”

Don’t worry, dude. knows the Freedom Of Information Act and isn’t afraid to use it. Here is a listing of some of those vendors (and the debts owed to them):

Two international companies top the list of vendors owed. Host broadcaster ISB is owed $1,182,000. Swiss Timing is owed $1,155,000

Here are firms owned in excess of $300,000:

  • Van Wagner (sports production, including medal ceremonies): $938,680
  • Miller Media (sports production/presentation, LED walls, signage): $878,000
  • Revel XP (bleachers, tents, staging:) $852,000
  • Sheraton (room for games officials): $776,000
  • Thompson CAT (tractors, generators, power): $676,610
  • UAB Sodexo (Athletes’ meals): $607,000
  • USA Climbing (walls, shipping) $372,500
  • BJCC (rental, labor): $350,862
  • TGI (venue signage, decor): $315,000
  • In addition, 53 companies involved in the production of the opening and closing ceremonies are listed together as being owed a total of $1,722,000
  • Media buys across various platforms represent $500,000 owed
  • Salaries owed account for $320,000
  • A total of 19 companies are owed between $100,000-$300,000 (13 are listed as local or diverse).
  • 60 companies/people are owed less than $100,000 (36 are listed as local or diverse).
World Games in Birmingham were a financial disaster
The World Beach Games, another multisport event, has struggled with organizational and financial hurdles.

“Some of these companies are very new,” O’Quinn told WBRC reporters. “They came about because of the opportunity The World Games presented. We definitely encouraged people to get out in front of The World Games and take advantage of this opportunity.”

Meanwhile, the World Games in 2025, in Chengdu (China) are being promoted by the organization.

In the World Games, we see a case study, and a microcosm, of why cities are backing away from hosting large international multi-sport events. They are expensive, time-consuming, use innumerable resources – and in almost no cases do they live up to the promises of their organizers:

World Beach Games: After multiple missteps leading up to the 2019 World Beach Games (including but not limited to date switches, downsizing and a last-minute change of venues from San Diego to Qatar after San Diego balked at the expenses) – followed by a lower-than predicted turnout, ANOC has announced Bali, Indonesia as host for its 2023 event. Of course, it was the only city to bid on the international multi-sport event where most sports were sand- or ocean-based.

World Urban Games: Los Angeles had similar difficulties with hosting the World Urban Games, originally scheduled for September 2019. However, in March 2019, with less than six months to go, the event was pulled from L.A. and moved to Hungary. (That event was produced by the Global Association of International Sports Federations (GAISF) which recently noted it would be dissolving in 2022. It was reported the 2023 version of the Games would be in Budapest but the website does not mention anything about it.

World Combat Games: GAISF has had multiple difficulties with the World Combat Games.  First held in 2010 in Beijing, the Games consisted of six Olympic and 10 non-Olympic sports, with a second edition held in St Petersburg and a third awarded to Lima for 2017. But then the infighting started and Lima withdrew as host. It took another five years until GAISF signed a contract for the World Combat Games to take place in 2023 – the year after GAISF itself was set to be dissolved; there is no word yet as to who will be managing the event. It will be hosted in the Kingdom of Saudi Arabia, Riyadh.

Olympics: Oh, where to begin with this one? Cities used to make a stampede for the Olympic bargaining table. Today, they don’t. In fact, they run from the idea of hosting, chased away by two big negatives: the cost, and the need to do as the IOC says, even when it appears to be in the worst interest of the city. The failure of bid campaigns by Boston, Hamburg, Rome and Budapest for the 2024 Summer Games can all be attributed to residents’ and politicians’ growing discontent with the prospect of increased taxes and widespread disruption. More recently, Calgary pulled itself out of the running to host the 2026 Winter Olympics after the city council’s unanimous vote.  That news came one week after the Reno-Tahoe Winter Games Coalition in Nevada declined a 2030 Winter Games bid invitation from the USOPC to participate in an accelerated process to decide the next U.S. city to host.

But the Olympics is the biggest game in the world. Why are cities backing away from the bargaining table in record numbers? As notes, Calgary’s rejection —motivated by cost concerns and questions about economic benefits — came after three other cities also withdrew from bidding on the Winter Games: Sapporo, Japan; Sion, Switzerland; and Graz, Austria.

World Games in Birmingham were a financial disaster
The Olympics have become persona non grata at the bidding table in many areas.

Additionally, more cities dropped out of bidding for the 2022 and 2024 Games than actually stayed in, while others took themselves out of the running before the official bidding process even began. Fewer and fewer cities around the world want to host; the 2004 Summer Games, ultimately held in Athens, attracted 11 bids while the 2024 event generated two.

“I think that people had enough of the establishment telling us what to do, what to think,” Sean Chu, a Calgary City Council member adamantly opposed to an Olympic bid by that city, told the Calgary Herald. “They tell you to spend millions, billions, it’s good for you.”

“There is good reason for cities to be concerned,” Bent Flyvbjerg, a professor who has studied decades of Olympic budgets, told the website. “The general trend is that costs have been going up and governments are anxious about spending too much money. It’s a multibillion dollar budget that you will need to host the Games, and that’s only covering the direct sports-related costs. There are also the indirect infrastructure costs such as improving transport systems.”

Flyvbjerg added that every Olympics since 1960 has exceeded its budget.

In case you need to read that again: Every. Olympics. Since. 1960. Has. Exceeded. Its. Budget.

In a research paper entitled “Bidding for the Olympics: Fool’s Gold?,” the University of Oregon’s Robert A. Baade and Victor A. Matheson noted the misconceptions of the financial value of the Games.

“After the 1984 Los Angeles Olympic Games, the prevailing perception seems to be that a properly run Olympics generates billions of dollars in profit,” the authors noted. “Is this an accurate perception? … Information gleaned from the Los Angeles (1984) and Atlanta (1996) Summer Olympic Games indicate that the event’s actual economic impact was more modest than that projected by those promoting the event in those cities.”

“We know the cost of the Games is a concern,” Christophe Dubi, the International Olympic Committee’s executive director of the Olympic Games, told the BBC, adding that the committee has pledged $1.8 billion to the organizing committee for the 2028 Summer Olympics in Los Angeles. “I feel that we have to make all efforts to contain the costs and complexity.”

That hasn’t stopped organizations from protesting the L.A. Games. “Esperanza Community Housing, which partners with community members and organizations to promote affordable housing and equitable development in South L.A., believe[s] the 2028 Olympics could displace South L.A. residents and increase gentrification in the area,” reports the Daily Trojan, the University of Southern California’s student newspaper.

What’s more, results from a recent survey commissioned by NOlympics LA — an organization that attempted to keep the Games out of Los Angeles — revealed that 47 percent of more than 1,000 respondents across California opposed bringing the Games to Los Angeles, with 26 percent supporting the move. Only nine percent of respondents strongly supported bringing the Games to Los Angeles.

World Games in Birmingham were a financial disaster
The World Urban Games, scheduled for Los Angeles, were moved at the last minute. There is no current information on the next time they will be presented.

Examples from recent host cities don’t paint a promising picture for potential future Olympic cities.

“The graft and corruption that was part and parcel of the Rio 2016 has worsened Brazil’s economy,” notes USA “Meanwhile, the Olympic park is a graveyard of crumbling venues, and the waterways that were supposed to be cleaned up remain cesspools. The flame was barely out at the PyeongChang Games in February when civic leaders suggested they might have to raze some venues because they couldn’t be repurposed and there wasn’t money to pay for the upkeep of empty buildings. Never mind the environmental damage done to build a ski venue that lasted only as long as the Olympics did.”

So, where we go from here? Daniel Ritterband, who worked in marketing for the London 2012 Olympics and on the unsuccessful Budapest bid for 2024, argues to the BBC that the Games can make a positive impact on less-developed cities. “It needs to be part of a 20-year plan of how to move the economy onwards, where you build up the infrastructure and support,” he says. “[T]hen it’s totally worthwhile. It’s the greatest moment of national pride a country can have.”

But the roots of refusal to host actually stretch further than the 2024 Games. In fact, they go back nearly 50 years, to a time when America put its collective foot down and refused to host the Winter Olympics. Those Games were to be presented in America's bicentennial year, no less. Denver refused to host, saying the decision had been made without buy-in from local residents. And unbelievably, the residents won, setting an example for the world. (At the time, it was called “the most insulting snub in the history of the Olympics.” Now, it’s commonplace).

At least one other solution has been proposed: permanent locations for the Games, with venues and athlete housing that could be kept up to date, rather than built from scratch. Once, it was laughed off as a crazy idea. Now, it’s starting to make a bit more sense.

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