By Iain Rogers
MADRID, Aug 31 (Reuters) - For a sports-obsessed country in the grip of a debilitating recession and stained by allegations of political corruption, winning the right to host the 2020 Olympic Games in Madrid is exactly the tonic Spain needs.
At least that is what government and bid officials are arguing as they attempt to convince International Olympic Committee (IOC) members the capital deserves to stage the world's biggest and most expensive sporting event instead of Istanbul or Tokyo.
As ordinary Spaniards are forced to swallow cuts in wages and benefits, spending is slashed on public services such as health and education and unemployment hovers just below 30 percent, Madrid has presented a bid characterised as the "Austerity Games".
Local officials say that with much of the infrastructure already in place, it will be the first time the projected Games budget of some $3.1 billion exceeds investment of just under $2 billion in projects linked to the hosting of the event but not directly related.
That compares with Istanbul's massive non-Games budget of around $17 billion, dwarfing expected Games expenditure of $2.9 billion. Tokyo, which hosted the Games in 1964, is also planning to incorporate existing venues and has estimated a non-Games budget of around $4.4 billion compared to $3.4 billion for the actual event.
Madrid's strategy, their third Olympic bid in a row after failed attempts for the 2012 and 2016 editions, requires a delicate balancing act.
On the one hand struggling Spanish tax payers, and particularly residents of the capital, must be persuaded that the long-term benefits of hosting the Olympics outweigh the economic cost.
At the same time, IOC members must be convinced that a Madrid Olympics will be a resounding success -- something like the Barcelona Games in 1992 -- despite the drive to keep a lid on spending.
Madrid-born Veronica Molina Perez-Tome, head of marketing for the nationwide Marca Sports Cafe chain, says she has sympathy with her compatriots who are angry that the Games would suck in cash which could be used to fund hospitals and schools.
At the same time, she believes an event like the Olympics will help pull Spain out of its current slump, in both economic and psychological terms.
"I understand them but I don't agree," the 31-year-old told Reuters at the chain's central Madrid branch on Paseo de Recoletos, as a host of television screens showing sports events flickered nearby.
"I don't agree because this is an investment and investments almost always pay off at some point," she added.
"Maybe it's not the best time to be diverting cash from other areas but the money will come back.
"Considering everything, we are experiencing at the moment Spain needs a boost, and this is a brilliant opportunity."
As a Madrid native, Molina Perez-Tome would feel a special pride in hosting the Olympics.
"There are times when maybe you don't have confidence in your country," she said.
"Many are leaving, and the Games could provide an injection of positivity and a sense of optimism about the future."
She also expects a significant boost to the chain's sales and is hopeful the Olympics might help in their effort to attract customers who want to watch sports other than soccer.
"Money of course is short at the moment but it will provide a return that will be positive for the country and for us specifically in terms of sales.
"As a sports-themed chain perhaps the Games will have more of an impact on us than other sectors. Hostelry is going through a tough time."
A few hundred metres away at the Ireland-themed James Joyce pub in Calle de Alcala, manager Matthew Loughney says he is hoping a Madrid Olympics would replicate the success of last year's Games in London.
Dubliner Loughney, 41, who commutes between Britain and Spain, has been advertising Madrid's bid in the pub's front windows and believes the Iberian nation sorely needs the kind of fillip the 2012 Olympics gave to the U.K.
"Spain could do with a bit of a psychological boost, it really could, because it's a great country, it's just going through an incredibly difficult time," he told Reuters over a cup of tea.
However, he said he had mixed feelings about spending so much money on a sports event at a time when many Spaniards were suffering financially.
"One part of me would like Madrid to win because it will give great motivation.
"But then the other side is that there are these huge cuts happening. It's really difficult to justify.
"I saw the positivity the Olympics brought to the U.K. but then when you have so many people suffering here it's horrendous. God knows where we're going to end up."
Theresa Zabell, CEO of international relations for the Madrid bid and an Olympic sailing champion in 1992 and 1996, is clear about why the city and the country needs the 2020 Games.
"What is most exciting about being here is what it could mean for the future," she said in Buenos Aires on Thursday, where the winner will be announced on Sept. 7.
"It could mean an improvement in the lives of a great number of people and that is a huge motivation," she added.
"Spain needs more youth employment and having the Games here in 2020 will open up fantastic opportunities for young people." (Additional reporting by Karolos Grohmann and Julien Toyer, editing by Ossian Shine)