What Impact Did The 1976 Summer Olympics Have On Montreal, Canada’s Economy?

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The Ancient Olympics were a series of events which included sports such as footraces, a javelin contest, and wrestling matches. The competitors represented city-states in ancient Greece. After Rome took control of Greece in 85 BCE, the games were stopped due to their pagan origins. They were later restarted in Greece in 1894 CE. These modern Olympics involved more modern sports like track & field, swimming, and gymnastics. The competitors represented different countries and have occurred almost every four years since then. The reinstitution of the Olympics led to Montreal, Canada hosting the 1976 Summer Olympic Games. This essay will focus on the effect on the economy that the 1976 Summer Olympics had on Montreal, Canada. In order to understand what factors positively and negatively impacted its economy I will look at the increased tourism, corruption in the government, the cost of building materials, construction worker strikes, the cost of security, boycotts, and the infrastructure. By the end of this essay the question, “what impact did the 1976 Summer Olympic Games have on Montreal, Canada’s economy?” will be answered. This question is relevant because it has a contemporary application, as the factors apply to most other countries who host the Olympics. This information can be applied to more recent Olympics in order to determine if overall the Olympics are too economically draining to their host countries to continue. This particular Olympic year was chosen to investigate because it brought to light the problems with the Olympics as well as opened the discussion as to whether or not they should continue to occur.

Increased Tourism

The first factor that will be looked at is the increase in tourism in the area. The increase of people during the Olympics helped stimulate the economy because the people stayed in hotels, went to the Olympics and other events in the area, as well as ate at local restaurants, and bought souvenirs from Montreal’s shops. The tourism that occurred due to the increased traffic of people because of the Olympics positively impacted the economy. Although the act of tourism helped to stimulate the economy, the tourists also negatively impacted the economy long before they arrived in Montreal. This is because in order to build hotels to accommodate this large influx of tourists, many locals were kicked out of their homes. They removed many houses and the people within so that they could be torn down in favor of new hotels that would be able to accommodate the amount of people that were visiting for the Olympics. This created a large mass of homeless people in Montreal that were displaced due to the Olympics. This means that the Olympics caused a negative impact on the economy long before it caused a positive impact.

Corruption In The Government

Another factor that impacted the Montreal Olympics was the corruption in the government during this time period. This is most blatantly seen by the fact

Cost of Building Materials

A factor that affected the economy in Montreal, Canada is the cost of building materials. This factor was planned for in the proposal, because in order to host the Olympics, the people knew that they would need buildings that could host all the events and large influx of tourists. What was not calculated in the original proposal was the artificially inflated cost of building materials. An issue with the infrastructure (for the Montreal populace) was that the price of the building materials such as wood and metal were artificially inflated by the companies so they could make a profit. Although this helped the individual business in Montreal, it added a lot to the cost of the Olympics which had to be paid through taxes by the province of Montreal.

Construction Worker Strikes

Since a lot of buildings needed to be built in order to accommodate the large influx of tourists and athletes, there was a need for lots of construction workers to build the infrastructure required. This was a foreseen need and accounted for in the original proposed budget. As the Olympics approached, this quickly changed from an accounted for factor to a negative factor because the construction workers went on strike. When building the stadiums, there was a rush to make them in the last six months before the Olympics were set to take place which required the workers to work long hours. They were paid poorly for the work they were doing in 24 hour shifts. This caused the workers to go on strike for 155 days during the six month period which halted all work during this time period. They were protesting the double shifts and the overcrowded work area which further slowed down the rate of construction. The strike occurred for 155 days. In particular the buildings most affected by the strikes were the Olympic Stadium, the Olympic pool, and the Velodrome. Because of this, the 1974 Olympics almost didn’t have diving, swimming, and water polo events happen. As a result of the strikes, the Olympic Stadium did not have the manpower to make the tower and retractable-roof which the Olympic Stadium has now in the present day. It was incomplete during the 1976 Olympics. The construction workers did not work at a time that was most integral to making the buildings come together. Because of this, the workers, and to a further extent, Montreal, were never able to make up the time or resources to complete the buildings efficiently and on time.

Cost of Security

After the Israeli Hostage Situation, later dubbed the Munich Massacre at the 1972 Munich Games in Germany, Canada increased their already high budget for security. This unexpected catastrophe occurred at the games four years prior to Montreal so it was important for Montreal to create a response that would lessen the fear of the general public and show that they were going to keep everyone safe. Although this would be seen by the public as necessary, it increased the end cost of the Olympic Games, which resulted in a larger debt for the citizens of Montreal. When Canada first proposed hosting the Olympics in ….., their top budget was… After Munich that increased to… This increase was not felt by the citizens of Montreal until after the Games when they began to pay off the cost. The increased security lessened the fear of another incident happening as well as heightened patrol for suspicious activity. After this there was a visible increase in security made at the Olympic Games in order to protect the people who participated in them, as well as the people who attended them. This created more jobs at the Olympics but also greatly increased the amount of money spent on the games. Montreal spent over $100 million on security in order to protect and fortify their facilities. Each host country since has spent at least this much on security as well in order to keep everyone safe. The Munich Massacre inspired everyone to allocate more money towards security which, although it is extremely important, caused Montreal to go even greater into debt after the closing ceremony in 1976. This was an expense that was not seen before the 1976 games, but has affected every game since that period of time. As you can see, objectively, the cost of increased security negatively impacted the economy no matter what the positive impacts were socially.

Boycott

A social factor that was not directly linked to Montreal, Canada was the International Olympic Committees ruling on New Zealand’s participation in these games. This was linked to the apartheid movement in Africa, specifically prominent in South Africa. The New Zealand rugby team was known as the All Blacks. The International Olympic Committee (IOC) ruled that New Zealand would be allowed to participate which caused backlash socially around the world. This was expressed as a boycott by 29 African countries. There was also a significantly smaller, separate boycott concurrently by China in response to Montreal recognizing the “People’s Republic of China” rather than the “Republic of China”. The repercussions of these actions directly affected Montreal as they lost money from tourists that were from these countries and from the athletes who were meant to compete as they dropped out after the Olympic Village had already been built with them in mind and even after some of the events had started. Due to this, they were not able to regain the money lost on the athletes. This Factor negatively impacted the economy because they went further into debt due to the boycotts.

Although rugby has not been an Olympic sport since 1924 (except for in the most recent 2016 Rio games), the black-ruled African countries saw the 1976 Olympics as an opportunity to protest apartheid through boycotting the games if New Zealand was allowed to compete (as South Africa had already been barred since 1964). The International Olympic Committee (IOC) argued that since rugby was not an Olympic sport they had no right to bar New Zealand from competing. Based on this decision, 29 African countries refused to participate in, or continue participating in the games as an act of protest. This greatly altered the outcome of Olympic games such as track and field. Since so many athletes did not show up this also caused the economy to be negatively affected.

Infrastructure

A factor that affected the economy of Montreal for the longest time after the Olympics was the infrastructure that was required in order to host the games. This included the creation of many buildings like the Olympic Village, Olympic Velodrome, Olympic Stadium, the Olympic Pool, Montreal Botanical Garden, Maurice Richard Arena Center, and Pierre Charbonnet. These buildings required a large portion of the budget. The Olympic Stadium itself cost almost 1 billion dollars to build and was still in the process of being built after the Olympics. It required an even larger amount of the budget when, as previously mentioned, the price of building materials was inflated. This, combined with the fact that these buildings were specialized for the sports they would be used for, meant that they could not be used later for other events. They did not already have a sports complex for this purpose, or the large capacity required to host the tourists and athletes. Due to the fact that these arenas were so specialized, after the completion of the Olympics there was hardly any use of the buildings, but some still had to be completed and all of them needed to be maintained. This is seen best by the Olympic Stadium which cost $770 million to build and $32 million to maintain each year after the Olympic Games. It was later nicknamed the “Big O” due to how much it cost the citizens in Montreal. In fact the “Big O” facilities retractable roof never properly worked, instead it fell to shambles and had to be replaced in order to maintain it. Buildings like this added greatly to the cost of the Olympics overall. Due to the fact that the Olympic buildings were so specialized, they were unable to turn a profit as they were largely unusable. The government of Montreal still had to pay for them as they deteriorated and broke down, unused. As seen by the information previously stated, this factor negatively impacted the economy of Montreal.

Economy Before & After the Olympics

Montreal quickly became the center of commerce in Canada as well as the most populated city in the 20th century. This was seen as it was cited in Canada’s census as the most populated city for at least the first 61 years of the 1900’s. The city’s population grew exponentially reaching 1,080,546 in 1976. Montreal saw a rise in industry in the 1940’s with inventions such as home appliances and aircrafts. Hydroelectric power, both world wars, and nuclear power helped to increase the industry going into the 1970’s. Montreal’s economy prior to the Olympics was very good as can be seen in the fact that they applied for and were chosen to host the Olympics. During the Olympics, their economy did not change too much as they had either already spent the money in the few years prior, or it was spent after in order to continue paying for items like infrastructure. In order to help understand the idea that Montreal was impacted by the Olympics I included a table from the article “The Legacy of the Olympic Games”.

This table is relevant to my research because it shows how much each part of the economy made in the year of 1976. It shows every program about the Olympics that had a positive impact on Montreal’s economy. Based on these calculations, it is estimated that there is 223,000,000 Canadian dollars of surplus due to the Olympics. Even though these items left Canada with a surplus of money, many other factors as stated in other sections of this paper caused economic issues after the Olympics concluded. In total, this game caused Canada to go into $1.5 billion Canadian dollars of debt. This means that they had a cost overrun of 720%. This debt was paid out over the course of thirty years and completely paid off in November 2006. This is extremely significant because the original projected cost of the games was meant to be $310 million dollars. This is a difference of eighty-seven million dollars ($87,000,000) between the projected and final cost.

Should the Olympics Continue, and if so, how?

The Olympics are now widely known to cause economic deficits in the country that hosts them which is why it’s more likely for a first world country to be their host. They have the ability to take a larger loss in money than poorer nations. Although there are many cases where less money is lost it is much more likely to find that the Olympics will negatively impact the economy greatly. The economic deficit in the 1976 Montreal Summer Olympics was caused by many factors such as unions, bad infrastrucure, corruption, neglected infrastrucure, fear of terrorism, and a boycott. Because of this, the economic deficit was so large it took Canada 30 years to pay off the debt from this game. Due to these facts it has become necessary for economists to find a way to continue the Olympics in a sustainable fashion. A common theory that has come out of this is if the games were to regularly take place in one central location. They have come to this conclusion because the problems that riddled the Canadian games would have no environment to thrive in. In fact, the idea of moving the Olympics is one that came with the modern return of the Olympics. I

Comparison to the Only Economically Beneficial Olympic Games

There is only one case in modern Olympics history where the economy benefited from hosting the Olympics; Los Angeles. This is due to the fact that the United States was able to negotiate terms greatly after the Montreal games. (Check the following information: They were the only country to put in a bid to host the 1984 Olympics. Since Los Angeles was already established as a sports hub in America it already had many large sports complexes that could host a large number of people. When bargaining with the IOC, they used this as one of their negotiating terms which lowered the cost of their game immensely, as they didn’t have to build so much new infrastructure like most other host countries. )

Conclusion

The mayor, Jean Drapeau, was probably most famously known for his statement in regards to Montreal’s decision to host the 1976 Olympics. Jean Drapeau said, ‘The Olympics can no more lose money than a man can have a baby.’ Ironically, a few months later Montreal’s economy was left ravaged by the games. From the evidence presented, the answer to the question “What impact did the 1976 Summer Olympics have on Montreal, Canada’s economy?” is that the Olympics caused negative effects on their host country. This is widely agreed upon between both historians and economists since after tracking the modern Olympic Games, this trend arises.

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