There’s a little unknown fact about nearly every city that have hosted the Olympic Games in the past: most of these cities have fallen under massive debts after hosting the Olympics, which is why smaller cities rarely bid for the honor of hosting the games. Believe it or not, this is only a small portion of the overarching economic effect that these games place on these unknowing cities.
the cost of bidding for cities.
The cost itself for bidding to be an Olympics hosting city can cost upwards of tens of millions of dollars, not including other necessary expenses. The IOC (International Olympics Committee) looks every bid placed for the Olympics, and based off of diversity, budget, and the cultural importance of every location, they decide the city that can host the Olympics. Keep in mind that money isn’t the deciding factor here.
In addition to bidding to the IOC, these cities must also plan how they decide to spend their money hiring people like consultants, event organizers, and dedicated travel-related managers. Cities can spend upwards of hundreds of millions of USD when considering these options.
Take for example, Tokyo, when they were bidding to be the location of the 2016 Olympics. They approximately lost a total of $150 million during their competitive season to acquire this priceless bid, meaning that they wasted all this money that could’ve gone into education, infrastructure, and economic development. Although there are negative sides to this argument, like the ones I just stated, there are still many benefits to betting on this bid.
For cities that have won the bet, more investments have poured into transportation and infrastructure to improve the general outlook on their community before loads of foreigners travel there. Another benefit is that tourism increases exponentially. This dramatic influx of visitors creates cultural mixing, which can increase the appreciation for different cultures. Since the Olympics will be broadcasted worldwide, billions of people have the option to take a closer look at the city. Job opportunity is also increased.
There is a more unsure/gray area to this host city though. Many Olympic stadiums, which can cost up to $3 billion, are left stranded with no other sport or event to populate the venue; the stadium would then to deserted, with no maintenance crew to uphold its vision and cleanliness. The land just becomes a large building that serves no real purpose.
For the 2021 Olympics, Tokyo won, spending an approximate $75 million in the process. Hosting the games is definitely more expensive that just bidding for it. In 2000, Sydney, Australia paid $4.6 billion for the Olympics overall, while Rio (during the 2016 Summer Olympics) paid approximately $20 billion for the event.
After a city wins the bidding process, infrastructure and tourism development commonly takes place afterwards. More advanced buildings and roads are placed, while hotels and airports are renovated to look more clean and accommodating. This can cost up to $50 million according to Investopedia.
overall benefits of hosting the olympics.
Cities where the Olympics were being hosted gained a temporary job opportunity increase because of amount of new infrastructure that were being built beforehand to prepare for the event. In addition to that, many spectators, sponsors, and participants visit the city six months before and after the event, which increases the cities overall revenue.
The natural tourism that spikes during the Olympic season is also positive for local economics; it can increase money circulation within all the visited cities. In addition, host cities are also exposed to more opportunities for global trade and legitimization. These cities/countries tend to be invited to more prestigious organizations that participate in global trade and international affairs.
For example, China was able to open itself to international trade after negotiation with the World Trade Organization following the 2008 Beijing Olympics. The 1968 Summer Olympics hosted in Mexico perpetuated the country to grow as a nation and become more legitimate in an industrial manner. Overall, accepting to be a host city increases openness and transparency that other nations will take notice of, which can increase credibility during trade.
Lastly, the Olympics have been known to increase national pride, patriotism and/or nationalism. According to a poll conducted by the BBC, a majority of people in 18 of 21 countries stated their nations’ performance at the Olympics was “important to their national pride,” including 91% of Kenyans, 86% of Filipinos, and 84% of Turks. The games create a sense of ubiquitous nationalism and unity that combines the citizens with a common goal, something that all nations strive to have.
economic effects of the games.
In addition to the benefits, there are also many drawbacks. For example, job opportunity may sound all good and well until you realize that many of these jobs are going to already employed people, which did not support the unemployed. In addition, many of the profits received by these infrastructure projects are actually wired to international organizations and companies rather than domestic ones.
Worse, the income of these games rarely match the initial deposit. For example, London brought in only $5.2 billion, yet they spent a total of $18 billion on the games, a hefty loss. As of 2021, Los Angeles is the only host city that created an overall profit from the games.
Also, many of these stadiums are huge and tiresome to maintain, like stated earlier due to the nature of their importance and size. These stadiums cost an average of $30 — $10 million (unlike the most recent Tokyo outlier [$3 billion]). Montreal, who hosted the 1976 games, finally paid off their debt in 2006, meaning that this hole in their budget lasted three decades. Furthermore, the Athens Olympics held in Greece in 2004 have left many facilities empty and deserted, contributing to the reason why 1/3 of Greece’s 10 million people are in poverty.
On the other hand, many countries do not look at the negative side of bidding to be a host city. They anticipate that the billions of dollars that are invested into the Olympics will create an economic boom to their country, which sometimes occurs. When Rio won the bid to host the 2016 Summer Olympics in 2009, the country was in one of their best economic positions for the past 50 years. Foreign investment is also increased dramatically, and housing is also increased.
No matter what, in the end, the Olympics is just a game. The results from hosting this event is never guaranteed, even though many of these countries hope to anticipate success after. In an overarching sense, a country cannot change its perception or economy completely after hosting the games; the Olympics cannot be seen as a crutch.
There are obviously many upsides and downsides to hosting the Olympics; it’s just a matter of how a city may pursue it.