The economic effects of hosting the Olympics tend to be less positive than expected. Cities that don't have the necessary infrastructure may be better off not bidding, as most cities will be saddled with huge debts after hosting the Olympics.
Important points
Many countries and their cities are bidding tens of millions of dollars for the chance to host the Olympics. Many believe that the level of tourism and foreign investment that comes from hosting the Olympics will translate into economic benefits. Others think the Olympics are too expensive. , cities and nations are left with huge debts and economic hardship.
Expenses incurred during the Olympic Games
Hosting a game is even more expensive than the bidding process. For example, London cost him $14.6 billion to host the 2012 Olympic and Paralympic Games. Of that amount, $4.4 billion came from taxpayers. The Chinese government spent his $42 billion hosting the 2008 Olympics. Athens, Greece spent his $15 billion hosting the 2004 Olympics. Sydney paid his $4.6 billion to host the 2000 Olympics. Of that amount, $11.4 million was covered by taxpayers. Rio de Janeiro, Brazil paid more than his $20 billion for the 2016 Olympics.
When a city bids to host the Olympics, it typically adds roads, builds or strengthens airports, and builds railroads to accommodate the influx of people. Housing for athletes in the Olympic Village, at least 40,000 available hotel rooms and special facilities for events must be created or updated as well. Overall, infrastructure costs could range from $5 billion to $50 billion.
Benefits of hosting the Olympics
Cities that host the Olympics will gain temporary employment through infrastructure improvements that will continue to benefit the city in the future. For example, Rio de Janeiro built 15,000 new hotel rooms to accommodate tourists. Sochi, Russia, invested approximately $44.3 billion in non-sports infrastructure in preparation for the 2014 Olympics.
The Chinese government has spent more than $22.5 billion building roads, airports, subways and railways, and about $11.25 billion on environmental cleanup. Additionally, thousands of sponsors, media, athletes and spectators typically visit the host city during the six months before and six months after the Olympics, bringing in additional revenue.
Disadvantages of hosting the Olympics
Job creation in Olympic host cities does not always go as planned. For example, when Salt Lake City hosted the 2002 Olympics, the city only added 7,000 jobs. This was about 10% of the number of jobs that authorities had originally suggested the Olympics would bring. Also, most jobs go to workers who are already employed, and unemployment statistics don't necessarily fluctuate significantly. Moreover, much of the profits realized by construction companies, hotels, and restaurants flow to international companies rather than to the local economy.
Income from games often only covers a portion of expenses. For example, the 2012 Summer Olympics in London brought in $5.2 billion compared to his $18 billion in city spending. Vancouver, Canada, brought in $2.8 billion after spending $7.6 billion on the 2010 Winter Olympics. Beijing generated $3.6 billion and spent more than $40 billion on the 2008 Summer Olympics. As of 2016, Los Angeles can benefit from gaming primarily because the necessary infrastructure for gaming already exists.
Debt from Olympic facility construction
Many of the arenas built for the Olympics are not one-time costs. Rather, they represent ongoing expenses. For example, Sydney's stadium costs $30 million a year to maintain. Similarly, Beijing's Bird's Nest Arena costs him $10 million in annual maintenance costs.
Additionally, if the city borrows money for construction, it may be forced to repay it long after the tournament ends. It wasn't until 2006 that Montreal finished paying off his debt from his 1976 tournament. This also applies even if the facility itself is abolished. For example, most of the facilities built for the 2004 Athens Olympics, which contributed to Greece's debt crisis, remain vacant.
Olympic cost example
1976 Montreal Olympics
At the time of this event, Montreal was experiencing a dramatic rise in its global profile. Along with the World's Fair held to celebrate the country's 100th anniversary, the game helped turn the city into a world-famous destination. The governing body immediately faced a familiar budget problem, as his $360 million in estimated costs was significantly lower than his $1.6 billion in the final bill.
The Montreal Games ended up leaving the city with a legacy of 30 years of debt and financial disaster, and the dilapidated, custom-built venue remained a shabby eyesore for decades.
2004 Athens Olympics
Some economists trace the beginning of Greece's ongoing economic woes to the 2004 Olympics in Athens. This Olympics is the embodiment of excessive and irresponsible spending. The total cost was estimated at $15 billion, significantly exceeding the original budget. A significant portion of the overage was also due to additional security costs incurred in the aftermath of 9/11.
2016 Rio de Janeiro Olympics
Many athletes withdrew from the 2016 tournament due to health concerns over the Zika virus that was circulating in Brazil, and many spectators were unable to enter the country. Brazil's government has added 2,000 medical professionals to help during the Olympics, but the country's debt crisis has placed further strain on the health system. Additionally, scientists have determined that water used for boating and swimming events is contaminated with raw sewage and “super bacteria,” raising further health concerns. Brazil had already lost an estimated $7 billion in tourism due to the Zika virus before it was considered to host the Olympics.
The 2016 Olympics cost the Brazilian government approximately $13.1 billion to host, which was $3.5 billion over budget. Additionally, $8.2 billion was spent on infrastructure upgrades and renovations, paid for with a mix of public and private funds.
2020 (2021) Tokyo Olympics
Japan won the $12 billion bid for the 2020 Games, beating rival Italy to take the host spot. However, in the spring of 2020, the coronavirus disease (COVID-19) pandemic occurred, and it was decided that the Olympics would be postponed to the summer of 2021. The postponement is estimated to add an additional $2.8 billion to total spending, making the total even higher. At over $15 billion, it was the most expensive Olympics ever held.
In 2021, when the number of new coronavirus infections rapidly increased in many parts of the world, including Japan, the decision was made to ban spectators from entering. Without fans, international tourism could not provide the spending necessary to offset the costs incurred by the Japanese government.
What impact will hosting the Olympics have on the economy?
The Olympics can bring a variety of advantages and disadvantages to host cities. Countries and cities are often forced to bid for the privilege of hosting the Olympics in the hopes of spurring infrastructure development, attracting money from tourists and boosting jobs. But in many cases, the Olympics fail to deliver the expected economic benefits, leaving host cities saddled with debt and dysfunctional facilities.
Is Paris in 2024 on a budget?
In a January 2024 interview with Bloomberg, the CEO of the organizing committee suggested the Paris Olympics were on track to meet cost targets. Central to the city's bid was a goal for his 95% of infrastructure to be existing or temporary to keep construction and maintenance costs low.
How much will the 2024 Olympics cost?
The original budget for the 2024 Paris Olympics was set at €8 billion, or US$8.2 million.
conclusion
Hosting the Olympics tends to create serious economic deficiencies for cities. Unless a city already has the existing infrastructure to support the influx of extra spectators, not hosting the Olympics may be the best option.
