Olympic Games & Cities: Enshrined in sports history, but for what purpose?

Lucy Qi
Lucy Qi
Sep 18 · 6 min read
Source: https://www.pgatour.com/news/2020/03/30/tokyo-olympics-rescheduled-july-august-2021-golf-coronavirus.html

The Summer Olympic Games were recently held in Tokyo this year. Thousands of people flocked to Tokyo to support and watch the athletes compete, cultivating excitement and world peace through sports.

While watching the Olympics though, people do not usually think about how the Olympics affect the host city and the extensive planning that leads up to the event. Overall, the economic impact of hosting the Olympics is generally less positive than anticipated, as most cities end up falling massively in debt after hosting the games. Without the necessary infrastructure, cities should then more carefully weigh the pros and cons before deciding to apply to become the host city.

First, submitting a bid to the International Olympic Committee (IOC) to host the Olympics costs millions of dollars. Cities can spend a range from $50 million to $100 million for event organizers, consultants, and travel accommodations. For example, Tokyo lost approximately $150 million on its 2016 Olympics bid and spent approximately $75 million on the 2020 bid.¹

This bidding process may seem exorbitantly expensive, but this is only the start of the process. Hosting the game is even more costly. To put this into perspective, Greece spent $15 million on hosting the 2004 Olympics and Beijing spent $42 billion on hosting in 2008. Even to this day, Athens’ taxpayers struggle with having to pay annual payments of approximately $56,635 until the debt is paid in full.²

Once a city wins the bid for hosting the Olympics, cities typically invest heavily in infrastructure, including airports, roads, and rail to accommodate the large anticipated influx of tourists. The hosting city must also create housing for athletes in the Olympic village, which requires creating or updating at least 40,000 hotel rooms and specific facilities for events. These arenas are often especially expensive, given their specific nature or size. For instance, Sydney’s stadium costs $30 million annually in maintenance. Generally, infrastructure costs alone historically have ranged from $5 to $50 billion. Thus, this is a huge undertaking involving hyper-focused management, organization, and planning.⁴

Source: https://olympics.com/ioc/news/sydney-goes-out-with-a-bang

With all these hefty costs, why would any city even want to host the Olympics in the first place? To start, the infrastructure can serve the city for years to come. It also helps a city receive wide publicity, allowing them to showcase its culture and sites. Hosting the Olympics has been a catalyst for helping address the host city’s pressing infrastructure needs and has often been synonymous with infrastructural development and improvement.

Projects that originally lingered on the drawing board for decades are finally expedited and prioritized. Thus, even though the cost is hefty, benefits go beyond just sports and athletics. For instance, for the 1992 Barcelona Games, only 17 percent of expenditures went exclusively towards sports, whereas 83 percent was aimed toward urban improvement.⁵ Therefore, while the cost may seem daunting, it’s imperative to consider the long-term utility that this city infrastructure will benefit. For example, in Barcelona’s waterfront was reinvigorated for the 1992 Summer Olympic Games, and is now considered a top tourist destination.⁶

Source: https://olympics.com/ioc/legacy/barcelona-1992/barcelona-1992-a-model-of-olympic-legacy

Therefore, when we consider the current city infrastructure and socioeconomic conditions, hosting cities can have colossal economic benefits. The hosting city can gain temporary jobs due to infrastructure improvements, which help contribute to the GDP of the economy, benefiting cities well into the future. In addition, thousands of sponsors, media, athletes and spectators typically visit a host city for the months before and and after after the Olympics, bringing in even more additional revenue. For example, Beijing spent over $22.5 billion constructing roads, airports, subways, and rail lines. More importantly, Beijing also spent almost $11.25 billion on environmental cleanup. These investments, while costly, have immense long-term benefits to the city.

However, these positive effects are only seen if the city generally already has the current infrastructure to accommodate the Olympics. As well, this also depends on how much of a tourism base the city has. Tourists will come to see the competition, stay in hotels, eat in restaurants, and shop. On the other hand, some tourists interested in a city’s other attractions might be put off by the long queues and crowds that are created from the games. In fact, Los Angeles is one of few cities that realized a profit from the games since the required infrastructure already existed.⁷

After the crowds disperse and the athletes fly home, some Olympic venues are left in a state of limbo, enshrined in sports history but without a future purpose. For example, Brazil invested heavily in new infrastructure, many of which are now untouched. It incurred heavy costs when concerns spread over the Zika virus, which caused many athletes to withdraw and many spectators to not enter the country. Therefore, the Brazilian government added 2,000 healthcare professionals to help with the Olympics, but this also puts more strain on the pre-existing healthcare system. In the end, it cost the Brazilian government $13.1 billion to host the 2016 Olympics, which was $3.5 billion over budget. Rio de Janeiro is just one example of how the short-term cost did not result in the promised long-term benefit.

Source: https://www.latimes.com/sports/olympics/la-sp-rio-legacy-20170523-story.html

Consequently, the boost in job creation for hosting the Olympics is not always as beneficial as promised. Specifically, most jobs went to workers who were already employed, which didn’t help decrease the number of unemployed workers.⁸ Even more, many of the profits realized by construction companies, hotels, and restaurants go to international companies rather than to the host city’s economy. The income of the games might only cover a portion of the expenses. For instance, London brought in $5.2 billion during the 2012 Summer Olympics.

Ultimately, determining the city’s success or failure in hosting the Olympic Games boils down to its legacy — the long-term economic, social, cultural, and environmental impacts on a city. The sought-after positive legacy includes increased tourism and employment, urban renewal, enhanced city image and reputation, improved public welfare, and a renewed sense of community. On the contrary, negative impacts include ongoing debt, abandoned infrastructure, and unjust displacement of citizens. Thus, unless a city already has the existing infrastructure to support the excess crowds pouring in, hosting the Olympics may not be the best option for long-term growth and prosperity.

Footnotes

[1] Wills, Jennifer. “The Economic Impact of Hosting the Olympics.” Investopedia, Investopedia, 15 Sept. 2021, www.investopedia.com/articles/markets-economy/092416/what-economic-impact-hosting-olympics.asp.

[2] Wills, Jennifer. “The Economic Impact of Hosting the Olympics.” Investopedia, Investopedia, 15 Sept. 2021, www.investopedia.com/articles/markets-economy/092416/what-economic-impact-hosting-olympics.asp.

[3] Wills, Jennifer. “The Economic Impact of Hosting the Olympics.” Investopedia, Investopedia, 15 Sept. 2021, www.investopedia.com/articles/markets-economy/092416/what-economic-impact-hosting-olympics.asp.

[4] “The Economics of Hosting the Olympic Games.” Council on Foreign Relations, Council on Foreign Relations, www.cfr.org/backgrounder/economics-hosting-olympic-games.

[5] “7 Ways Hosting the Olympics Impacts a City.” Encyclopædia Britannica, Encyclopædia Britannica, Inc., www.britannica.com/list/7-ways-hosting-the-olympics-impacts-a-city.

[6] Barber, Megan. “6 Olympic Venues with the Best Afterlives.” Curbed, Curbed, 22 Feb. 2018, archive.curbed.com/2018/2/22/17036724/olympic-venues-still-in-use-vancouver-salt-lake-sydney-atlanta.

[7] Wills, Jennifer. “The Economic Impact of Hosting the Olympics.” Investopedia, Investopedia, 15 Sept. 2021, www.investopedia.com/articles/markets-economy/092416/what-economic-impact-hosting-olympics.asp.

[8] “The Economics of Hosting the Olympic Games.” Council on Foreign Relations, Council on Foreign Relations, www.cfr.org/backgrounder/economics-hosting-olympic-games.