How Much do the Olympic Rings Cost?

Everyone dreams that someday his or her home country will be chosen to host the Olympic games. Who hasn’t? The largest global athletic showcase would be happening right at your front door, and the entire world is watching. In a few years from now, California will be in the spotlight when Los Angeles hosts the 2028 Summer Olympics, which will attract hundreds of jumbo jets filled to the brim with people hoping to bear witness; masses of people and even more media attention. But looking past the huge influx of athletes and spectators, how does a host city economically benefit (or suffer) from hosting the Olympics? First, let’s look at how each host city is chosen by the International Olympic Committee (IOC).  The IOC begins its search for a host city approximately 10 years before the date of the Olympics they are planning for to give the potential host cities sufficient time to deliberate and prepare. Referred to as the Olympic Candidature Process, the method the IOC uses determines the location of the Olympics by examining the feasibility and sustainability of the host site. In addition to examination of economic factors involved in hosting the Olympics, a large aspect of the decision involves how well the city fits in with the Olympic Movement, or the social ideals and motives of the Olympic culture. Dan Doctoroff, who attempted to bring the Olympics to New York City in 2012, said that although NYC could sustain economic implications of hosting the games, the city was culturally unprepared and did not fit the Olympic Movement culture aspect that the IOC was looking for.

The location of the next Olympic games is decided by a simple majority vote of the IOC. Once the financing, construction, and event coordination is mapped out, the IOC determines a suitable list of candidate cities for the committee to vote on. However, in the recent years, the bidding contest has not been all too competitive. All but two of the finalists (Paris and Los Angeles) for the 2024 Olympics dropped out in response to the huge amount of costs they would incur by hosting. In a unprecedented motion, the IOC decided to split the decision and offered France to host the 2024 Olympics in  Paris and 2028 Olympics in Los Angeles. Obviously, there is a universal concern from potential host cities about the costs of hosting the Olympics.

As time goes on, the Olympics have become more and more expensive for host countries; the need to accommodate more people continues to drive up the cost year after year. For example, the 2016 Summer Olympics at Rio de Janeiro cost the city about $20 billion, which is over 16 times the cost of the games 20 years prior. The 2014 Winter Olympics cost Sochi, Russia more than $51 billion; almost 5 times the estimated price tag. These costs include construction of new sports venues and lodging areas, as well as new infrastructure such as improvements to airports, roads, public transportation, and utilities. Additionally, the cost of planning and coordinating events, providing proper security, and policing make up a large chunk of the overall cost.

Although one may expect that the revenue received by the cities from hosting the games would cover the immense costs, they only make up a fraction of it, putting the host city in a position of debt. Throughout the course of the Olympics, the host cities draw revenue from multiple sources, such as television broadcasting, sponsorships, and ticket sales. The large majority of the money comes from selling rights to television broadcasters and other television revenue. However, host cities cannot even capitalize on it completely because the IOC keeps more than half of the television revenue. In fact, the only city that has turned a profit was Los Angeles in 1984. Because Los Angeles was the only city to put in a bid, they did not have to impress the IOC with new venues, which saved the city a lot of money in construction and planning costs. Every other iteration of the Olympics resulted in a negative profit for the host city. For example, London generated $5.2 billion in total revenue, but the costs totaled to a staggering $18 billion, over three times the revenue. Beijing operated at even more at a loss in 2008 with a final bill of $40 billion, and the city only returned $3.6 billion of that in revenue. Given the exorbitant costs of hosting the Olympics, the amount of revenue that actually goes to the host city itself does not make it practical to go through the entire rigamarole of hosting.

Looking purely at the numbers, the 10 years of time and money spent planning and preparing for the spectacle that is the Olympic games simply are not worth the benefits (if any). Host cities get strapped with mountains of debt that take decades to pay off. It took the city of Montreal an entire three decades to finally wipe clean the debt that it owed for the 1976 Summer Olympics. As I have shown, almost every city to host the Olympic faces this glaring issue. All for what? A month of glory and noteworthiness, then everybody forgets. Putting patriotism and national pride aside, hosting the Olympics is a formula for financial stress and hardship.

 

Sources:

Chang, Andrew. “How an Olympic Host City Is Determined.” ABC News, ABC News Network, 11 July 2001.

Dillow, Clay. “Hosting The Olympics Is A Terrible Investment.” FiveThirtyEight, FiveThirtyEight, 31 July 2017.

Eneriz, Ashley. “Who Actually Pays for The Olympics?” Investopedia, 6 Feb. 2018.

McBride, James. “The Economics of Hosting the Olympic Games.” Council on Foreign Relations, Council on Foreign Relations, 19 Jan. 2018.

“Olympic Games Candidature Process.” International Olympic Committee, 26 Jan. 2018.

Wallenfeldt, Jeff. “7 Ways Hosting the Olympics Impacts a City.” Encyclopædia Britannica, Encyclopædia Britannica, Inc.

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