London Admits It Can't Top Lavish Beijing Olympics When It Hosts 2012 Games

Facing an economic downturn, British officials are trying to keep costs down.

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LONDON—How can London, host of the 2012 Olympic Games, possibly compete with China? How can it top the eye-popping pyrotechnics, the cast of thousands, and the architectural gem of a stadium that were part and parcel of the successful Beijing 2008 Olympics?

It can't, London's organizers admit.

So it won't even try.

"The International Olympic Committee themselves recognize that [Beijing] is the last edition of a games which is going to look and feel like this," says Sebastian Coe, head of the London Olympics organizing committee. The London games, Coe adds, won't attempt to equal the "scale and stature" of the extravaganza in Beijing.

Echoing Coe's remarks is Boris Johnson, London's newly elected mayor. Johnson promises London won't "produce an austerity games—we are not going to run things down." But, when London won the Olympics sweepstakes three years ago, Britain's economy was flush. That's not the case now. "We're being asked to deliver it in a credit crunch," Johnson says, "and with what people say is a recession looming."

In other words, don't expect budget-busting razzmatazz.

It would, of course, be fiscal insanity for London to try to replicate the Beijing gala, which included enormous spending on construction projects. China spent around $44 billion on the games, an amazing sum. In comparison, Athens, four years ago, spent $12.8 billion. "These games were an absolutely unique experience. This was the world's biggest country presenting itself on the world stage," says Ian Henry, head of the Center for Olympic Studies and Research at Loughborough University.

That's not to say Britain is doing things on the cheap. The government's Olympics budget has already ballooned to $17.4 billion—nearly $13 billionmore than estimated in its wildly optimistic initial bid. It's spending $981.8 million on the main stadium in Stratford, East London—a cost that's jumped $54 million just since November.

But Tessa Jowell, the Olympics Minister, vows that the total budget won't spiral any higher. Any future extra costs, she says, will have to be covered by cuts in other areas because "there's no more money."

Mayor Johnson is equally adamant that every cost must be justified. In that regard, says Rodney Barker, a government professor at the London School of Economics, the tight economic times are doing organizers a favor. "It's forcing them to consider just what their priorities are."

Nevertheless, the National Audit Office recently reported that the budget remains under threat. For instance, it said, the planned $1.87 billion Olympic Village—with 3,300 apartments—hasn't found secure financing, which could force the government to inject more cash. And although nearly $1.55 billion has been earmarked for policing and security, the auditors weren't convinced that's an adequate amount. The need for tight security was hammered home on July 7, 2005, the day after London won the international competition to host the 2012 Games, when four Islamic terrorists set off suicide bombs in London that killed 52 people.

Even if Britain keeps to its Olympics budget, there's no guaranteed payoff. A recent Merrill Lynch study found that 10 of the last 11 games caused lingering financial problems for host cities. The main horror story was Montreal, which needed 30 years to pay off its debts for the 1976 Games.

And certainly there are critics here—temporarily muted by an outpouring of public acclaim for the British team's haul of 18 gold medals in Beijing, the country's best showing in 100 years—who call the vast expense of hosting the games a waste of tax money.

It is indeed the biggest public works project in European history, so it is expensive, supporters say, but it'll leave behind a lasting legacy of improved transport infrastructure and sporting facilities. The goal is that five of the athletic facilities under construction will remain in use once the games end. The 80,000 seat main stadium, for example, will be downsized to 20,000 seats and leased to a soccer or rugby team.