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The Olympics represents one of the world’s largest sporting events and becoming a host can leave the country with a lasting legacy. But, 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.
Costs Incurred When Hosting the Olympics
Hosting the games is even more costly than the bidding process. For example, Paris spent a staggering total of $9.1 billion to fund the Olympic Games in 2024.
London spent £8.77 billion (about $12 billion in 2024 dollars) to host the Olympics and Paralympics in 2012. The city said it went over budget by £2.4 billion or $3.2 billion. Sydney paid about 6.5 billion AUD (that’s roughly $4.4 billion in 2024 dollars) for the Olympics in 2000. This figure includes venues, infrastructure, and event-related costs.
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 range from $3 billion to $50 billion.
Advantages and Disadvantages of Hosting the Olympics
Advantages
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.
Another advantage of hosting the Olympics is the impact on the host nation’s travel and tourism industry. 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.
Disadvantages
Job creation for Olympic host cities doesn’t always pan out as projected. For example, when Salt Lake City hosted the 2002 Olympics, the city added only 7,000 jobs, about 10% of the number that officials predicted. Most of these jobs went to workers who were already employed, meaning unemployment statistics did not budge significantly. Furthermore, many of the profits realized by construction firms, hotels, and restaurants flow to international companies rather than to the local economy.
Host nations often generate minimal income and, in some cases, none at all. The London 2012 Olympic Committee said the games generated £2.41 billion (roughly $3.18 billion in USD in 2024 dollars) compared to expenses of £2.38 billion ($3.14 billion in USD). The Vancouver games in Canada brought in $1.88 billion (CAD) in operating revenue and realized $1.88 billion (CAD) in operating expenses.
Debt Resulting From Creating Olympic Facilities
Many of the arenas constructed for the Olympics are not one-time costs. Rather, they represent ongoing expenses. For example, Sydney’s stadium costs $30 million annually in maintenance. Similarly, Beijing’s Bird’s Nest arena costs $10 million in annual maintenance.
In addition, when a city borrows to finance construction, it can be on the hook for repayment long after the games are over. It wasn’t until 2006 that Montreal finished paying off its debt from the 1976 games. This is the case even if the facilities are themselves defunct. For instance, most of the facilities created for the Athens Olympics in 2004 contributed to Greece’s debt crisis and remain empty.
As of 2024, Los Angeles is the only host city that realized a profit from the games, mostly because the infrastructure required of them already existed.
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 of debt and financial disaster for the city, with the decaying, custom-built venues remaining a forlorn eyesore for decades.
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. Its total cost was an estimated $15 billion, which far surpassed the original budgeted amount. A significant portion of the overrun was due in part to the additional security costs incurred in the aftermath of 9/11.
The 2016 Olympics in Rio de Janeiro
The first case of the Zika virus was reported in Brazil in 2015 and quickly spread across the country. At the time, experts estimated that Latin America and the Caribbean (which includes Brazil) would experience a significant drop in tourism, resulting in as much as $64 billion in revenue with a loss of as much as $7 billion to $18 billion to the region between 2015 and 2017.
Many athletes withdrew from the 2016 games following health concerns over the Zika virus in Brazil. Many spectators also decided to skip the Olympics that year. Although the Brazilian government added 2,000 healthcare professionals to help, the country’s debt crisis put an additional strain on the healthcare system. Scientists determined that the water used for boating and swimming events was contaminated with raw sewage and “super bacteria,” which increased the health concerns.
According to the Council on Foreign Relations, the games cost the country $20 billion. Out of this figure, $13 billion was footed by the city of Rio de Janeiro.
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. Postponing the games added additional expenses to the $13 billion bill, including $300 million for COVID-19 countermeasures.
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 did not provide the spending needed to make up for the costs incurred by the Japanese government.
How Does Hosting the Olympics Affect the Economy?
The Olympics can bring a range of benefits and drawbacks to its host city. Countries and cities are often compelled to bid for the privilege of hosting the games, in hopes that it will stimulate the development of infrastructure, draw tourisms dollars, and boost employment. However, in many instances, the games have failed to deliver on their projected economic boons, leaving host cities with debt and defunct facilities.
Is Paris 2024 on Budget?
In a January 2024 interview with Bloomberg, the CEO of the Games organizing committee indicated that the Paris Olympics was on track to meet its cost goals. Central to the city’s bid was an aim to have 95% of infrastructure be either existing or temporary, so as to keep building and maintenance costs low.
How Much Did the 2024 Olympics Cost?
The Paris 2024 Olympic Games cost an estimated $9.1 billion USD. Compared to other countries’ spending, Paris managed to stay on a lower budget than most.
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.
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