When the Olympics come to town, the host city becomes the world’s rock star metropolis. The Olympics bring tourists from far and wide, the spotlight of the global media, and the pride and prestige that comes with being home base for the grandest athletic competition on Earth. When a city pulls off an event of that magnitude before the watching world, it’s validated as a major player on the global stage.
But prestige and national pride can’t be measured in dollars and cents. Financially speaking, does it make sense for a city to host the Olympics?
The truth is: There’s just no money in it.
According to the International Olympic Committee (IOC), “The most recent editions of the Olympic Games and Olympic Winter Games have all either broken even or made a profit.”
The spirit of that quote sets the tone for the economic impact reports that hosting committees prepare for public officials to present to the masses as they sell the idea of submitting a bid to 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.
- The Olympics create thousands of jobs
- The Olympics pay long-term dividends in the form of upgraded infrastructure and brand-new, world-class facilities.
There’s a large body of convincing research from organizations such as the Council on Foreign Relations (CFR) and the Journal of Economic Perspectives that shows the IOC’s tendency to use dubious methodology to generate rosy arithmetic that’s designed to sell the Games.
Most notably, there’s a lot of evidence that:
- The impact of tourism is often overstated
- Many of those highly touted new jobs are temporary construction jobs that tend to go to people who are already employed
- Stadiums and other Olympic infrastructure can quickly become a burden that costs more to maintain than it generates in revenue
That last one is common with Olympic facilities, which are often purpose-built for obscure sports. What do you do with a bobsled track once all the bobsledders have gone home?
There are three immutable facts that never make it into the IOC’s literature, all of which have been well documented and never refuted:
- Prospective host cities spend between $50 million and $100 million just to submit bids, according to the CFR. Tokyo spent around $225 million combined on its 2016 and 2020 submissions. The bidding process has been widely criticized for encouraging wasteful spending by rewarding the biggest and most ambitious plans with little regard given to whether those plans serve the public interest.
- Every single Olympics since 1960 has gone over budget. The average overrun is 172%, according to Oxford University. From bridges and dams to roads and reservoirs, no other category of megaproject has such a miserable record.
- No city in the modern era has ever profited from hosting the Olympics, except for Los Angeles in 1984. But L.A. didn’t have to build a stadium; and, as the only bidder, the city had unique leverage to dictate favorable terms.
Whether the IOC overstates the revenue potential or not is almost immaterial. That’s because no amount of revenue could possibly measure up to the impossibly high costs of hosting the modern Olympics.
In the post-9/11 era, the costs of security alone keep most nations from casting a bid. Combined with the massive new health and sanitation costs associated with the pandemic, hosting the Olympics in the 21st century is not something that makes financial sense — but that’s not to say it isn’t worth it.
There are intangible benefits such as civic and national pride, long-term marketing potential and public exposure, but no reasonable public officials could possibly argue that there’s a way to turn a profit when the price tag is so high.
Currently, Beijing is bragging about hosting an Olympics that will go down as one of the cheapest on record, with a price tag of $3.9 billion. Considering Tokyo spent $13.6 billion and Sochi, Russia, spent $50 billion, that would be a well-earned brag — if it were true.
According to Business Insider’s calculations, it’s more like $38.5 billion — nearly 10 times the official budget. The bullet train that China built to connect its far-flung Olympic sites cost $9.2 billion — and you know it’s an expensive party if the host forgets to add the bullet train to the final bill.
More From GOBankingRates
- 7 Best New Dollar Tree Items That Are Worth Every Penny
- You Can Get These 3 Debts Canceled Forever
- 8 Signs You'll Retire Wealthy
- 4 Reasons You Should Be Getting Your Paycheck Early, According to An Expert