Hosting the Olympics: The Worst Investment in Sports for Nearly Every City

There is no world event that truly unites everyone like the Olympics. Although it is the second most-watched sporting events after the World Cup, over a hundred countries are represented. Both the Winter and Summer Olympics are televised across the globe and covered in dozens of languages, allowing those with access to be able to see the sports being played. Many cities put bids together every few years to host the Olympics, believing it will generate billions in revenue from tourism and jobs for people. But in fact, a seemingly guaranteed economy booster may be a bigger burden than one may think, and the true cost/benefit analysis that comes with looking at the Olympics makes one question why any city would host.

The cost to even make a bid itself costs a fortune. Cities will spend anywhere from $50 to $100 million in consulting and development fees to plan out how they will run the Olympics before they're even selected to host. Tokyo lost their 2016 bid and spent $150 million, but were able to win the 2020 Olympics with $75 million spent in that bid. Many countries will back out during the bidding phase itself because they drastically underestimate the costs, like Oslo and Stockholm as of recently.

Once a city wins the bid itself to host the Olympics, it will cost them billions to run the games themselves. Most recently, Rio spent over $20 billion on their Olympics, and Pyeongchang spent $12.9 billion on their games. This money is mainly used to build the infrastructure for the games. Whether that's new stadiums, roads, hotels, or more, many cities that don't have the preexisting infrastructure to run the Olympics will use their money to ensure the games can be run efficiently.

The games do have significant upsides. The roads can last for future events and reduce congestion in major cities. In Beijing in particular, the $11.25 billion in environmental clean up helped make the air quality better. Tourism can boom as a result of hosting, even after the games conclude, with more hotel rooms being built. Rio built 15,000 new hotel rooms as a result. Also, they can allow national sports teams in the future to have access to world-class facilities after the events conclude that winter or summer.

Yet, even with the upsides that the Olympics bring to cities, the cost/benefit analysis tilts almost exclusively in one direction. A single shocking goes above anything else in Olympic history: Los Angeles in 1984 is the only city that has ever received a profit from hosting. That's it. Every other city has been left with debt that taxpayers have paid over years, even three decades as with Montreal. Most of the profits made are gained by private industry and not the city. This means that for cities that have the majority of infrastructure to host, like LA, can see at the very least a net-neutral effect of hosting. Local congestion, unused stadiums, and lack of public support all also contribute to the drawbacks politically of having the Olympics.

While the prized Olympic Games are some of the most fun fans of any sports, of entertainment period, have, there is unfortunately nearly no upside long-term to hosting. And as time goes on, we will probably see fewer cities bid for the games because more are seeing the consequences of hosting these games. So, no matter how much a city may want to host, they must realize unless they are prepared with nearly all of the infrastructure, they best not host.

Sources:

https://www.investopedia.com/articles/markets-economy/092416/what-economic-impact-hosting-olympics.asp

https://www.economicshelp.org/blog/29/sport/costs-and-benefits-of-the-olympics/

https://www.forbes.com/sites/christinasettimi/2018/02/08/by-the-numbers-the-2018-pyeongchang-winter-olympics/#3dcf5ff47fb4