CAT 2017 Slot 1 — VARC Question 22
Answer the following question based on the information given below.
Do sports mega events like the Summer Olympic Games benefit the host city economically? It depends, but the prospects are less than rosy. The trick is converting… several billion dollars in operating costs during the 17-day fiesta of the games into a basis for long-term economic returns. These days, the Summer Olympic games themselves generate total revenue of 5 billion, but the lion’s share of this goes to the International Olympics Committee, the National Olympics Committees and the International sports Federations. Any economic benefit would have to flow from the value of the Games as an advertisement for the city, the new transportation and communications infrastructure that was created for the Games, or the ongoing use of the new facilities.
Evidence suggests that the advertising effect is far from certain. The infrastructure benefit depends on the initial condition of the city and the effectiveness of the planning. The facilities benefits is dubious at best for buildings such as velodromes or natatoriums and problematic for 100,000-seat Olympic stadiums. The latter require a conversion plan for future use, the former are usually doomed to near vacancy. Hosting the summer Games generally requires 30-plus sports venues and dozens of training centers. Today, the bird’s Nest in Beijing sits virtually empty, while the Olympic stadium in Sydney costs some $30 million a year to operate.
Part of the problem is that Olympics planning takes place in a frenzied and time-pressured atmosphere of intense competition with the other prospective host cities – not optimal conditions for contemplating the future shape of an urban landscape. Another part of the problem is that urban land is generally scarce and growing scarcer. The new facilities often stand for decades or longer. Even if they have future use, are they the best use of precious urban real estate?Further, cities must consider the human cost, Residential areas often are razed and citizens relocated (without adequate preparation or compensation). Life is made more hectic and congested. There are, after all, other productive uses that can be made of vanishing fiscal resources.
The central point in the first paragraph is that the economics benefits of the Olympic Games
Answer & solution
- A
are shared equally among the three organizing committees.
- B
accrue mostly through revenue from advertisements and ticket sales.
accrue to host cities, if at all, only in the long term.
- D
are usually eroded by expenditure incurred by the host city.
The central point in the first paragraph is that the economic benefits of the Olympic Games… Option 1 is incorrect. The economic benefits are shared ‘equally’ among the organizing committees is incorrect. Eliminate option 1.
Option 2 is incorrect. “Revenue from advertisements and ticket sales’ is not referred to in the passage. The paragraph merely states that the Games are an advertisement for the city where they are held.
Option 3 is correct. The writer is skeptical about the economic benefits of the Games to the host city. He says, “Any economic benefit would have to flow from the value of the Games as an advertisement for the city, the new transportation and communications infrastructure that was created for the Games, or the ongoing use of the new facilities.” Retain option 3.
Option 4 is incorrect. The paragraph does not support the inference that the economic benefits that accrue form the games are ‘eroded by expenditure’ on the Games. Eliminate option 4.
Hence, the correct answer is option 3.