The Best and Worst Olympics Financial Planning

Preparations for the Paris 2024 Olympics are currently underway. In an interview with Bloomberg, the CEO of the Games organizing committee indicated that the budget was “under control,” but that the coming months would be critical with regards to meeting cost goals.

The price tag associated with hosting the Olympics regularly looms over both planners and the general public. As China prepared to host the 2022 Winter Olympics, observers wondered how the country would fare financially compared to other Olympic hosts, especially considering Japan’s disastrous financial losses in 2021 for the COVID-postponed summer games.

Key Takeaways

• Countries around the world enter into heated competition to host the Olympic Games.
• Doing so is supposed to bring an economic boom, increased tourism, and national prestige; for the lucky, the risks prove worth the reward.
• Olympic dreams do not always pan out, however, and in some cases turn into an economic nightmare.

For the 2020 games, Japan reportedly originally budgeted $7.3 billion, a number that quickly rose to $15.4 billion. The final cost came in at $13 billion against total revenues of $5.8 billion. The 2020 Tokyo Games is one of the most costly in history.

China budgeted $3.9 billion for the cost of its Winter Olympics, but an investigation by Business Insider notes that the figure omits massive expenditures on infrastructure including an airport upgrade, new highways, a number of sports arenas, a driverless bullet train, and a new subway line. The real cost, according to the report, would have been about 10 times the budget. The Beijing Organizing Committee later claimed that it took in about $52 million in profit from the games.

The Impact of COVID

As if the normal unexpected costs of managing a mega event like the Olympics weren’t enough, Japan had to contend with a one-year postponement due to the COVID-19 pandemic and the lasting slowdown in international travel that followed.

Though the pandemic was certainly unexpected, the financial planning around the Tokyo Games had already been facing criticism prior to its onset, as many argued that the Japanese Olympic committee paid far too much—with a bid budget of $83 million—to win the games. There were also the additional costs associated with building new event venues and upgrading infrastructure, much of which turned out to be unneeded due to the low turnout of spectators.

Olympic Winners and Losers

The costs of staging an Olympics have grown astronomically over the decades. Lake Tahoe pulled off the Winter Olympics in 1960 for about $100,000. Innsbruck shelled out about $900,000 four years later.

Note

Financial figures listed in this article are in U.S. dollars and do not include intangible costs, such as to the environment, or benefits, such as from tourism.

Canadian Catastrophe

The Montreal Games of 1976 are almost synonymous with economic decline following an Olympics bust. Budgets spiraled out of control, and debts related to the games ballooned. The main Olympic stadium, with an estimated budget of $250 million at the time, ended up costing $1.4 billion and took 30 years to be fully paid off.

Some have argued that Quebec’s 1980 referendum for independence from Canada was sparked by Montreal’s budgetary woes. Another result of the economic fallout was the birth of Canada’s national lottery, a scheme originally devised to help repay the Olympic losses.

Australian Ambivalence

The contrast between the success of an Olympic event and its economic impact can be sizable. This was certainly the case with the Sydney Olympics in 2000. Heralded as one of the most positive and well-organized Olympics of all time, the Sydney Games were a triumphant display of outstanding infrastructure and immense sporting achievement.

Despite receiving almost unanimous praise from viewers around the globe, a lack of forward-thinking and legacy planning left the citizens of Sydney debating if Olympic economics means boom or doom.

As is often the case with hosting the Olympic Games, the New South Wales government was forced to spend a great deal more than it initially budgeted for the event. The total investment had risen to approximately $5 billion by the time the first medals were awarded, $1 billion of which was covered by public funds.

Then, as a portent of what was to befall Athens four years later, the much-vaunted Olympic Park became dormant as the government struggled to implement its plan of redeveloping the site as a residential suburb.

This did not materialize until 2005; by that time, it had become little more than a sightseeing stop for tourists.

A Greek Tragedy

The Olympic Games were held in Athens, Greece, in 2004. Some have speculated that the financial hole dug by excessive and irresponsible spending—in excess of $15 billion at the time—helped lead to the enormous Greek financial crises of the 2000s and 2010s.

Cost overruns and mounting debts were never paid off, and several sports venues that were constructed for the games were rarely used in the years that followed.

Economists estimate the cost per household at more than $56,000, which has been shouldered by Greek taxpayers ever since.

When Breaking Even Is Profitable

In the aftermath of the 2012 Olympic Games, host city London and its residents rightfully basked in the glory of what proved to be a momentous and extremely successful event.

Though all the talk prior to the games was of the financial costs involved—and whether Britain could even survive such an expense—the discussion afterward was filled with the positive social ramifications of the event and its empowering influence on U.K. youth.

Though this switch was partly due to the goodwill that the games generated, it also reflected the financially sound approach that London authorities took in organizing and hosting the event. Although the stock market often loves the Olympics, individual economies frequently don’t. Nations have long had a history of bad financial repercussions following their hosting of the Olympics.

London’s Fiscal Plan

Heeding the numerous lessons of previous countries that suffered long-term financial issues after hosting the Olympics, London chose to invest as part of a sustainable fiscal plan. Most of the sporting venues that it built were dynamic but temporary. In addition to these temporary venues, London authorities also ensured that the Olympic Stadium itself could be utilized fully as a long-term sports venue.

Although the stadium was a permanent structure, it was designed as a versatile sports arena. Renamed London Stadium, the venue is currently home to Premier League football club West Ham United. It also features rock concerts, has hosted the Rugby World Cup, the international and domestic Rugby Union, the Race of Champions, and the Rugby League Four Nations, and was home to the first Major League Baseball games to be played in Europe.

The lifetime financial position of the London Olympics was to break even, meaning the event paid for itself. All of the named advantages of hosting the games, including the long-term plans for the Olympic Stadium, resulted in a positive outcome for the United Kingdom and its citizens.

The table below shows the financial outcomes for the Olympic Games, both winter (W) and summer (S), from 2000 through 2020. Note that although London’s breakeven status is considered a win for Great Britain, some countries even managed to make a profit.

Sources: Various

What Was the Most Expensive Olympics in History?

The most expensive Olympics in history is the Sochi Winter Olympics held in Sochi, Russia, in 2014, costing an estimated $52 billion, despite having fewer events, athletes, and venues than other Olympic games.

Is Hosting the Olympics Good or Bad for a Country?

Generally, hosting the Olympics is financially bad for a country given the staggering amount of money it costs to host the games. The revenues rarely make up for the immense cost.

On the plus side, the host city is the focus of the entire world while the games are on, and gets an unparalleled chance to show off. Hotels, restaurants, and local attractions may earn significant revenues for a couple of weeks. The benefits in future tourist dollars are difficult to measure.

What Is the Biggest Expense for Olympics Host Cities?

The biggest expense for Olympic host cities is the many huge new sports venues that must be created for the games. Many are left to deteriorate after the Olympic Games have ended.

The Bottom Line

Hosting the Olympics can bring a lot of prestige to a nation, not to mention tremendous amounts of money through tourism, which will include flights booked to the country, accommodation, and money spent in the country.

However, it can be difficult to plan an Olympics event, especially when a significant amount of infrastructure needs to be built to accommodate the games. Some countries profit from holding the games, while others lose a tremendous amount.

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