French see Games as economic saviour

PARIS - It was a single Frenchman who revived the Olympic Games in 1896. Now, thanks in part to a million people who showed their support for the 2012 Summer Games over the weekend in Paris, France is the favourite to host the event for the first time in 88 years.

In its third attempt in 20 years to host the Games, Paris is the "red-hot" favourite to beat out London, Madrid, Moscow and New York, UK bookmaker Ladbrokes says.

An International Olympic Committee assessment puts Paris and London ahead with "very high-quality" bids. IOC members select the winner on July 6.

The Games may create 60,000 jobs and inject 6 billion ($10.4 billion) into the economy between now and the event, according to the Boston Consulting Group. French unemployment is at a five-year high and business confidence at a 19-month low.

"The economic stakes are of such a scale that all companies, irrespective of their size or their business, will benefit," Lagardere SCA chief executive Arnaud Lagardere, who heads a group of 20 French companies backing the proposal, said in a statement on the Paris bid's website.

The Games have generated a profit since 1976 for the host city. Greek economic growth surged after Athens was picked to host the 2004 Games. Since 1996, a year before Greece was chosen, the economy has expanded an average of 3.8 per cent a year, the third-fastest rate in the European Union, according to EU figures.

Frenchman Baron Pierre de Coubertin founded the International Olympic Committee in 1894 in Paris. Two years later the first Olympic Games of the modern era were held in Athens.

Paris, which hosted the 1900 and 1924 Games and failed in bids in 1992 and 2008, has been the favourite throughout the process and is rated 1-6 by Ladbrokes. London is second at 7-2, followed by Madrid at 16-1, New York at 33-1 and Moscow at 100-1.

With 1-6 odds, a correct $6 wager pays $1.

"We are on the home stretch now with a month to go before the IOC meets in Singapore," Paris Mayor Bertrand Delanoe said yesterday at a press conference at the French capital's city hall. "Don't expect us to fall into the trap of being overconfident."

Eleven out of the 18 companies backing the Paris bid are in France's benchmark CAC 40 Index, including Accor, LVMH Moet Hennessy Louis Vuitton and Renault.

In the seven years after the 30th Olympiad, the Games may add 35 billion and 45,000 jobs through tourism and sporting events at Olympic venues, Lagardere said, referring to the study his group commissioned from Boston Consulting.

The benefits would represent a 2.1 per cent boost to France's economy, based on 2004 figures for gross domestic product of 1.6 trillion. France has maintained a forecast for growth this year of 2 per cent to 2.5 per cent.

"The Olympics are certainly something that contributes to the economy," said Philippe Waechter, chief economist at Natexis Asset Management, in a telephone interview from Paris. "There are certain mechanical effects, first from the spending to build the facilities, then from the infrastructure projects that help the city run better afterwards, and finally from the crowds that come to the Games."

Goldman Sachs, JPMorgan Chase and Bank of America Corp cut forecasts for French economic growth after first-quarter expansion fell short of expectations. The economy may grow by as little as 1.4 per cent, said Nicolas Sobczak, a Paris-based Goldman economist, last week.

The Paris Olympic bid committee estimates it will cost US$6.2 billion ($8.7 billion) to upgrade existing sports arenas, improve transportation links and construct an Olympic village in northwest Paris. Its own budget for managing the project is US$2.7 billion, which is "achievable", the IOC said.

Paris' bid for the Olympics has wide popular support, attracting a million people to a Champs Elysees exhibition during the weekend.

A survey by ACNielsen showed 81 per cent of French people support the Paris bid, compared with 68 per cent of British people backing London and 44 per cent of Americans supporting New York.

The bookmakers' favourite has lost two of the past six bids, according to a former IOC marketing director.

- BLOOMBERG