The flame of the Olympic torch at Pyeongchang has been extinguished and like the excitement surrounding the Games, has cooled.  Local and international media have touted the Pyeongchang Winter Olympics as a great success.  However, this all depends on how you measure success. 

The Winter Olympics do not have a great record of economic return on investment.  Looking back, the Salt Lake City Games in 2002 are generally cited as one of the successes with Nagano (1998) cited as a significant economic failure. How does Pyeongchang stack up? 

The key determinant of economic success hinges on the capital investment and post-Games facility utilization. Without increased tourism traffic, financing the maintenance of indebted facilities becomes a major post-Olympic albatross for many host cities.  While Nagano failed to drive up tourism in the region, Salt Lake City saw a significant and continued rise after the Games. So, what about Pyeongchang?  

US$ 13 billion was invested in the infrastructure for the 2018 Olympics, nearly double the initially budgeted $ 7 billion. The projections for return on investment vary widely.  Andrew Zimblast (quoted on CNBC) projected that revenue would be just US$ 2.5 billion leaving a deficit of $10 billion.  The Korea Institute for Industrial Economics and Trade projected a 20 trillion ($18 billion) return while the Hyundai Research Institute (HRI) forecast a whopping 64.9 trillion won ($59 billion). 

With only six new facilities built for the Games and two (including the main stadium) destined for dismantling, Pyeongchang should not be burdened with too many white elephants. The fast train (KTX) between Korea’s gateway Incheon airport and the East coast is in itself a monumental step for Korea’s infrastructure where existing travel routes are primarily north-south.  Winter sports are relatively underdeveloped in Asia and Korea is already a destination for winter sports aficionados from Southeast Asia and China.  Facilities have been upgraded and their specifications enhanced to meet global competition standards.  Now accessible in less than two hours directly from the airport, it is reasonable to expect a bump in visitors. The HRI estimated a 32 trillion KRW growth in tourism over the next 10 years which, if transpires, would more than offset any residual debt.  The job creation from tourism is badly needed in the region which has suffered economically since the closure of its coal mining industry in the late 1980s.  (Korea still has lots of coal but the extraction costs are uncompetitive.)  22,000 volunteers are now trained and waiting to assist foreign visitors to the region. 

In this author’s opinion, the most significant benefits from the Pyeongchang Olympics are ‘soft’ successes which cannot be objectively converted into economic terms.  Most importantly is the impact on Korea’s national brand.  (The HRI estimates this at 11.6 trillion KRW, a surprisingly precise figure for such an intangible benefit.)  Korea has a history of positive exposure from previous world sporting events. The summer Olympics in 1988 marked Korea’s debut on the world stage.  The World Cup in 2002 highlighted modern Korea and generated positive publicity world-wide.  The paucity of publicity leading up to the 2018 Winter Olympics generated concerns in some circles that the event would be an absolute disaster.  In fact, the low number of international visitors and slow ticket sales seemed to reinforce these concerns.  However, the reaction of the international media highlighted the accolades from the athletes and staff alike for the accommodations, catering and friendly volunteers - not to mention the Samsung Galaxy S4 commemorative smartphones given to all. The spectacular opening and closing ceremonies with their attention-grabbing hi-tech light shows generated nothing but praise from the international participants.  I was fortunate to attend the Opening Ceremony personally – and what a great show it was!

Korea enthusiastically embraced the IOC’s emphasis on sustainability by maximizing biodiversity and harmony with nature and at the same time minimizing negative impacts on the environment with plans to restore the venues to their natural conditions.  Korea reforested more than twice as much land as was disturbed to build Olympic facilities. Newly installed renewable wind power energy exceeded 100% of demand during the Games.

Human benefits were also significant. Twenty-two thousand people volunteered for the Games, 26,000 students were schooled in Olympic values, and 2000 students from around Asia were invited to Korea to learn about the culture and spirit of the country. More than 5000 students participated in impairment and accessibility awareness in a country where facilities, attitudes and concern for the physically and mentally disabled lag those of many nations. Hopefully, the para-Olympics will build on this and usher in a new era of celebrating the achievements of all our citizens.   

Domestically, interest in Winter sports has spiked with parents enrolling their children in every sport: skating, snowboarding, downhill and most especially curling, a sport that was virtually unknown prior to these winter Games but emerged from obscurity thanks to the Cinderella story of the darling ‘garlic girls’ who caught the nation’s fancy and honored the country by bringing home the silver medal.

The Games bore witness to other changes in Korean culture and the Korean psyche.  In a marked shift from the collective attitudes of the past, individual athletes were singled out and praised – and not just gold medal winners.  Winners of silver and bronze medals showed pride in their accomplishments rather than shame at not winning ‘gold’ – and were publicly celebrated. Competitors who exhibited poor sportsmanship were vilified.  The Games bore witness to a major step in the maturity of Korean culture. 

Peace and reconciliation were a key theme of the Games on this divided peninsula, which still carries one of the last wounds of the Cold War.  The participation by hundreds of North Korean officials, ‘cheerleaders’ and athletes was an optimistic development after several years of bellicose chest pounding. Athletes from both sides of the divide entering the stadium under a single flag brought back memories of previous efforts at reconciliation. We can only hope that the dialog between North and South transforms into a real opportunity for change and is not yet another empty gesture by our neighbors to the north.  Just as it will take time to fully appreciate the economic and social impact of the Pyeongchang Olympics, only time will tell if it has had a significant political impact as well.

Peter Underwood, IRC Consulting, Seoul, Korea; March 2018

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