The Economic Impact of Hosting the Olympics (2022)

The economic impact of hosting the Olympics tends to be less positive than anticipated. Because most cities have ended up falling massively in debt after hosting the games, cities without the necessary infrastructure may be better off not submitting bids.

Key Takeaways

  • Many countries and the cities within them bid tens of millions of dollars for the chance to host the Olympics.
  • Many believe that the level of tourism and foreign investment that result from hosting the games can be an economic boon.
  • Others see the games as overly expensive, leaving cities and nations with massive debts and economic woes.
(Video) The Economic Impact of Hosting the Olympics

Costs Incurred When Hosting the Olympics

Submitting a bid to the International Olympic Committee (IOC) to host the Olympics costs millions of dollars. Cities typically spend $50 million to $100 million in fees for consultants, event organizers, and travel related to hosting duties. For example, Tokyo lost approximately $150 million on its bid for the 2016 Olympics and spent approximately $75 million on its successful 2020 bid.

Hosting the games is even more costly than the bidding process. For example, London paid $14.6 billion for hosting the Olympics and Paralympics in 2012. Of that amount, $4.4 billion came from taxpayers. Beijing spent $42 billion on hosting in 2008. Athens, Greece, spent $15 billion on hosting the 2004 Olympics. Taxpayers in Athens will continue to be assessed payments of approximately $56,635 annually until the debt is paid in full. Sydney paid $4.6 billion on hosting the Olympics in 2000. Of that total, taxpayers covered $11.4 million. Rio de Janeiro, Brazil, paid over $20 billion for the 2016 Olympics.

Once a city wins a bid for hosting the Olympics, cities commonly add roads, build or enhance airports, and construct rail lines to accommodate the large influx of people. Housing for the athletes in the Olympic village, as well as at least 40,000 available hotel rooms and specific facilities for the events, must be created or updated as well. Overall, infrastructure costs may be $5 billion to $50 billion.

Benefits of Hosting the Olympics

Cities hosting the Olympics gain temporary jobs due to infrastructure improvements that continue benefiting the cities into the future. For example, Rio de Janeiro constructed 15,000 new hotel rooms to accommodate tourists. Sochi, Russia, invested approximately $44.3 billion in constructing non-sports infrastructure for the 2014 Olympics.

(Video) The Economic Impact Of Hosting Olympics || BizVd || Business Documentary

Beijing spent over $22.5 billion constructing roads, airports, subways, and rail lines, as well as almost $11.25 billion on environmental cleanup. Additionally, thousands of sponsors, media, athletes, and spectators typically visit a host city for six months before and six months after the Olympics, which brings in additional revenue.

Drawbacks of Hosting the Olympics

The boost in job creation for cities hosting the Olympics is not always as beneficial as initially perceived. For example, Salt Lake City added only 7,000 jobs, about 10% of the number that officials had mentioned, when the city hosted the 2002 Olympics. Also, most jobs went to workers who were already employed, which did not help the number of unemployed workers. Furthermore, many of the profits realized by construction companies, hotels, and restaurants go to international companies rather than to the host city’s economy.

Also, income from the games often covers only a portion of expenses. For example, London brought in $5.2 billion and spent $18 billion on the 2012 Summer Olympics. Vancouver, Canada, brought in $2.8 billion after spending $7.6 billion on the Winter Games in 2010. Beijing generated $3.6 billion and spent more than $40 billion for the Summer Olympics in 2008. As of 2016, Los Angeles is the only host city that realized a profit from the games, mostly because the required infrastructure already existed.

Additionally, it is difficult ascertaining exactly which benefits come from hosting the Olympics. For example, Vancouver had planned many infrastructure projects before winning the bid for hosting the 2010 games.

(Video) Why Hosting The Olympics Isn't Worth It Anymore

Debt Resulting from Creating Olympic Facilities

Many of the arenas constructed for the Olympics remain expensive due to their size or specific nature. For example, Sydney’s stadium costs $30 million annually in maintenance. Similarly, Beijing’s Bird’s Nest arena costs $10 million in annual maintenance.

It was 2006 before Montreal finished paying off its debt from the 1976 games, and Russian taxpayers will pay almost $1 billion annually for many years to come to pay off the debt from the 2014 Winter Games in Sochi. Furthermore, note that most of the facilities created for the Athens Olympics in 2004 contributed to Greece’s debt crisis and remain empty.

Examples of Olympics Cost

The 1976 Olympics in Montreal

At the time of the event, Montreal was undergoing a dramatic surge in terms of its global profile. In conjunction with the Expo ’67 World Fair, which was held to celebrate the nation’s centenary, the games helped to transform the city into a world-renowned location. The governing body soon ran into the familiar budgetary issues, as their estimated costs of $360 million fell drastically short of the final $1.6 billion bill.

The Montreal Games ended up leaving a 30-year legacy ofdebtand financial disaster for the city, with the decaying, custom-built venues remaining a forlorn eyesore for decades.

(Video) Economic Impact Of Hosting The Olympics Amid COVID-19

The 2004 Olympics in Athens

Some economists trace the beginning of Greece’s ongoing economic woes to the Olympics held in Athens in 2004. The event stands as the embodiment of excess and irresponsible spending. To begin with, the total cost—an estimated$15 billion—far surpassed the original budgeted amount; however, to be fair, the overrun was due in part to additional security costs incurred in the aftermath of 9/11 (which were unforeseen when Greece bid for the games in 1997).

While this is an understandable expense, the building of unnecessary and ill-conceived permanent sporting venues was extremely difficult to comprehend. A number of these venues remain idle to this day. This lack of foresight and planning left the nation with a shortfall of 50,000eurosper Greek household, which has been shared among the taxpayers ever since.

The 2016 Olympics in Rio de Janeiro

Health concerns over the Zika virus that was spreading in Brazil caused many athletes to withdraw from the 2016 games and many spectators to not enter the country. Although the Brazilian government added 2,000 healthcare professionals to help during the Olympics, the country’s debt crisis put additional strain on the healthcare system. Additionally, scientists determined that the water being used for boating and swimming events was contaminated with raw sewage and “super bacteria,” adding to health concerns. Brazil had already lost an estimated $7 billion in tourism due to the Zika virus before the Olympics were taken into consideration.

The 2016 Olympics cost the Brazilian government approximately $13.1 billion to host ($3.5 billion over budget), plus an additional $8.2 billion in infrastructure upgrades and renovations, paid for with a mix of public and private money. The hoped-for economic benefit of hosting the games did not occur in Rio de Janeiro. According to The Associated Press, the city is late in paying teachers, hospital workers, and pensions, and crime has risen to almost record-breaking levels.

(Video) The Economic Gamble Behind Hosting the Olympics

The 2020 (2021) Olympics in Tokyo

Japan won the 2020 games by bidding $12 billion, pushing out rival Italy to win the hosting spot. But then the COVID-19 pandemic hit in the spring of 2020, and the decision was made to postpone the Olympics to the summer of 2021. The postponement added an additional $2.8 billion to the total outlay, which is estimated to be a total of more than $15 billion—the most expensive Olympics ever held.

When 2021 brought a surge of COVID-19 in many parts of the world, including in Japan, the decision was made to bar spectators. Without fans, international tourism will not provide the spending needed to make up for the costs incurred by the Japanese government. While the economic cost will be substantial, the health cost could be even higher. As of Aug. 9, 2021, the day following the closing ceremonies, 436 individuals (including athletes) had tested positive for COVID-19 by authorities in Tokyo. What health or economic impact these numbers may have on the city of Tokyo remains to be seen.

The Bottom Line

Hosting the Olympics tends to result in severe economic deficiencies for cities. Unless a city already has the existing infrastructure to support the excess crowds pouring in, not hosting the Olympics may be the best option.

FAQs

What is the economic impact of hosting the Olympics? ›

The economic impact of hosting the Olympics tends to be less positive than anticipated. Because most cities have ended up falling massively in debt after hosting the games, cities without the necessary infrastructure may be better off not submitting bids.

What are the economic benefits of the Olympics? ›

Three major categories of benefits also exist: the short-run benefits of tourist spending during the Games; the long-run benefits or the "Olympic legacy" which might include improvements in infrastructure and increased trade, foreign investment, or tourism after the Games; and intangible benefits such as the "feel-good ...

Does the Olympics stimulate the economy? ›

It Definitely Pays to Host the Olympics — If You Ask the IOC

Those reports use numbers and data to promote the idea that: The Olympics inject millions of tourist dollars directly into local economies through hotel stays, travel and transportation, shopping, dining and entertainment.

How is hosting the Olympics an example of economic development? ›

Economic Benefits of Hosting Hosting the Summer Olympic Games can have several economic benefits associated with the city such as ticket sales, licensing, increased employment, broadcast revenue, sponsorships, and increased tourism.

What are benefits of hosting the Olympics? ›

The Olympics increase valuable tourism, which can boost local economies. The Olympics increase a host country's global trade and stature. The Olympics create a sense of national pride.

Why is hosting the Olympics so costly? ›

Over a century ago, the first modern games had approximately 280 athletes competing from 12 different countries—these days, more than 10,000 athletes from 200+ countries participate in this prestigious athletic event. As the games have increased in scope and size, so too has the cost of putting them on.

Do the Olympics make money for host country? ›

No city in the modern era has ever profited from hosting the Olympics, except for Los Angeles in 1984.

Do the Olympics make a profit? ›

In the last 60 years, no Olympics has ever stayed on budget and almost none have turned a profit. One silver lining came at the start of the millennium in Utah with the Winter Olympics in Salt Lake City.

Who makes all the money from the Olympics? ›

A nonprofit organization, it's funded entirely with private money. According to the IOC's own numbers, 73% of its revenue comes from broadcasting rights, 18% comes from marketing rights and 9% comes from other rights and revenue streams.

How much money do the Olympics bring in? ›

In total, through the sale of broadcasting and marketing rights, as well as other income streams, the revenue for the Olympiad that spans 2017 to 2020/21, covering the Olympic Winter Games PyeongChang 2018 and the Olympic Games Tokyo 2020, was USD 7.6 billion.

What are the cons of hosting the Olympics? ›

The prospect of hosting any mega-event – especially the Olympic Games – is cause for serious consideration.
...
Here, we take a closer look at five key reasons why a city might be reluctant to host the Olympic Games.
  • Sheer cost. ...
  • Infrastructure challenges. ...
  • Human rights violations. ...
  • Fear and security. ...
  • International prestige.
Jan 15, 2016

Does hosting the Olympics make money? ›

No city in the modern era has ever profited from hosting the Olympics, except for Los Angeles in 1984.

What are the negative impacts of hosting the Olympics? ›

Among the negative outcomes measured are ongoing debt from construction, infrastructure that becomes unnecessary after the Games, increased rent, and unjust displacement of citizens.

What is the economic impact for each host city Super Bowl? ›

Hosting the Super Bowl Is a Pay-to-Play Endeavor

The NFL and its supporting committees say hosting the Super Bowl is good for a $300 million to $500 million payday, but Matheson said in the video that the true economic impact is actually a fraction of that — more like $30 million to $130 million.

How much money do the Olympics bring in? ›

In total, through the sale of broadcasting and marketing rights, as well as other income streams, the revenue for the Olympiad that spans 2017 to 2020/21, covering the Olympic Winter Games PyeongChang 2018 and the Olympic Games Tokyo 2020, was USD 7.6 billion.

Even in normal times, the Games don’t pay off, argues the economist Andrew Zimbalist.

His research has led him to raise questions about the value to cities of hosting the Olympics — and influenced some cities to back away from bidding.. He believes Tokyo has spent more on the Olympics than the 2019 government audit estimated and expects the Games to lose at least $35 billion.. How do Olympic cities end up spending billions of dollars?. The budget put out by the organizing committee is for operating the Games for 17 days.. In addition to the 17 days, in recent years they’ve also started to include some other expenses, like temporary venues.. It also doesn’t include any of the transportation, communication and hospitality infrastructure investments that were made in order to host the Games.. And another thing that’s there, by the way, is the $3 billion that it costs them to postpone.. Why are cities still bidding for the Olympics if, as you argue, the economics are so bad?. But some cities still do want to do this, right?. Your city should never do this,” they are never going to do another economic impact study for a megastar sport event.. It’s extremely stupid to spend that kind of money to promote skiing in the north of China when it’s not a very popular sport.. Back in 1964, one of the things that Japan was so happy about when it hosted the Olympics was their opportunity to say to the world: “We’re not part of the Axis powers anymore.. If we were living in a rational world, we would have the same city hosting the Games every two years.

Submitted by: Soonhwan Lee Introduction Economic impact in sport events can be defined as the net change in an economy resulting from a sport event. The change is caused by activity involving the a…

Economic impact in sporting events can be defined as the net change in an economy resulting from a sport event.. Economic impact is an important topic of discussion and debate in sport marketing and/or management fields because estimating the economic impact of a sporting events is very difficult and frequently too subjective.. The purpose of this study was to review previous economic impact studies and to develop strategies for conducting an economic impact study.. There are following reasons to conduct economic impact studies of sport events.. The multiplier effect accounts for the overall economic impact of a sport event.. A portion of the increased income is spent and further re-spent within the region (Archer, 1984; Crompton, 1995; Wang, 1997).. In summary, there are three elements that contribute to the total impact of visitor spending: Direct impact (the first-round effect of visitor spending), Indirect impact (the ripple effect of additional rounds of re-circulating the initial visitors’ dollars), and Induced impact, which is further ripple effects caused by employees of impacted business spending some of their salaries and wages in other business in the host community (Howard & Crompton, 1995).. A variety of multiplier used modeling techniques are available: TEIM (Travel Economic Impact Model), RIMS (Regional Input-output Modeling System) (Donnelly, Vaske, DeRuiter, & Loomis, 1998; Wang, 1997), TDSM (Tourism Development Simulation Model) (Donnelly, et al., 1998), RIMS II (Regional Input-output Modeling System, version II) (Wang, 1997), ROI (measuring financial Return On Investment) (Turco & Navarro, 1993), and IMPLAN (Impact Analysis for Planning) (Bushnell & Hyle, 1985; Dawson, Blahna, Keith, 1993; Donnelly, et al., 1998; Howard & Crompton, 1995; and Wang, 1997).. The IMPLAN model was developed by the U.S. Forest Service and Engineer Economics Associates, Inc.. Fifth, consider all possible impacts for the community not just on economic impact.. Economic impact studies should contain economic as well as social impacts.. Sometimes, however, these social impacts can be more important to a community than the economic impact.. Conducting economic impact studies of. Recreation and parks special events.

By embedding legacy planning into sporting event bid planning, events can live on long after the final whistle. It has important implications for the economy.

Large scale sporting events have the potential to bring people together and boost their mental and physical health long after they’ve ended.. By embedding legacy planning into sporting event bid planning, events can live on long after the final whistle.. But, a decade later, I have been closely involved in efforts to create wider and lasting benefits from hosting the London 2012 Olympic and Paralympic Games, alongside continuing to compete as an athlete.. To date, projects funded by Spirit of 2012 have reached 5.5 million people in the UK.. Fourteen started in Glasgow and reached into fourteen places across the UK to link with community organisation volunteers, ensuring they used arts, physical activity and events to bring people together to improve their communities.

China's zero-COVID approach to the pandemic might be coming up against its limit as the country's economy has begun to suffer significantly.

It was on this trip that a news alert flashed on my phone: China, on May 14, announced it was withdrawing from hosting the Asian Football Confederation Cup —the continent’s premier international soccer tournament—due to a COVID-19 outbreak that, on that same day, was responsible for only 65,000 cases and 45 deaths nationwide.. That China is still wedded to a stringent zero-COVID policy focused on stamping out every infection, rather than mitigating severe illness and deaths, wasn’t a secret to anyone following the harsh lockdown endured by the 26 million residents of Shanghai , its biggest city, over the last two months.. “Ordinary Chinese people have felt the heavy-handed authoritarianism of the Party in a much more direct and personal way than many people, especially young people, have before,” says Astrid Nordin, the Lau Chair of Chinese International Relations at Kings College London.. On May 25, Chinese Premier Li Keqiang held an emergency meeting with over 100,000 party members where he warned China’s current economic woes were in some ways greater than the initial impact of the pandemic in 2020 and indicated that the annual growth target of 5.5% was unobtainable.. “The economic crisis owing to draconian measures to control the outbreak really shows the mess, miscoordination, and miscalculations by leadership at the top,” says Valarie Tan, an analyst on Chinese elite politics for the Mercator Institute for China Studies in Berlin.. On May 5, the CCP’s Politburo’s standing committee, China’s apex political body, said zero-COVID was “determined by the nature and purpose of the Party,” thus expressly linking it with CCP legitimacy, while declaring that relaxing controls would lead to “massive numbers of infections, critical cases and deaths.”. According to a study published May 10 by researchers from Shanghai’s Fudan University, Indiana University, and the U.S. National Institutes of Health, relaxing COVID-19 restrictions in China could lead to 112 million cases and 1.5 million deaths in just three months.. This is above all because China has not fully vaccinated 100 million of its 264 million citizens over 60, or 38%.. Meanwhile, owing to a pernicious blend of national security and national pride, China has not approved any foreign vaccines, meaning it doesn’t have access to the most effective types, which are those based on mRNA technology.. During that May 5 Politburo standing committee meeting, Xi vowed to crack down on “all words and deeds that distort, doubt, and deny our epidemic prevention policies.” Ominously, China’s National Health Commission chief Ma Xiaowei wrote in CCP ideological journal Qiushi on May 16 that more “permanent” quarantine hospitals must be built and weekly testing “normalized.”. Over half of American businesses in China either delayed or decreased investments in China due to lockdown measures, according to a recent survey by the local U.S. Chamber of Commerce.

The limits of economic power.

The United States and its NATO allies clearly possess economic power in Cooper’s sense, in terms of the ability to use economic instruments to punish another party.. Other developments in the economic war against Russia similarly illustrate the limitations of economic power, given the increasingly multipolar structure of the world economy.. This last observation points to a key difference between military power and economic power: military power is concentrated, whereas economic power is disbursed.. Thus, the main threat to effective U.S. economic power comes from the United States itself—from the danger that the country will once again turn inward economically and politically, as it did starting in 2017.. Foreign trade and investment have always been a source of strength for the U.S. economy, and a country that is not economically strong cannot effectively wield economic power.

Videos

1. Hosting The Olympics Is A TERRIBLE Investment | Here’s Why
(Conscious Money School)
2. How The Olympics Became So Expensive For Host Cities
(CNBC)
3. The Economic Impact of Hosting the 2020 Olympic Games in Tokyo
(adlina ali)
4. Dr. Henry Sun on the economics of hosting the Olympics
(CGTN America)
5. Do the Costs of Hosting the Olympics outweigh the benefits? No Host has Financially Gained from it.
(The EdPreneur)
6. Andrew Zimbalist: "The Risky Economics of Hosting the Olympics"
(日本外国特派員協会 オフィシャルサイトFCCJchannel)

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