Like most people around the world, we here at Clarity Finances have been enjoying the Summer Olympics in Rio de Janeiro, Brazil. Not all of us have the luxury to travel to Brazil to see the games so wouldn’t it be nice if your home city hosted the games?
Hosting the Olympics can seem alluring. The Olympics can be seen as a worldwide marketing program. The eyes of the world are fixed on your city, you receive a massive influx of tourists, your city will forever be a part of history and you can display the best of your city to the world. But is all of this worth the cost?
According to The Oxford Olympics Study, the cost of the Rio Summer Games cost $4.58B, a 51 percent cost overrun. The Sochi Winter Olympics in 2014 cost $20B and were 289 percent over budget. The last Summer Olympics held in London cost $14.96B and were 76 percent over budget. The 1976 Games in Montreal were a staggering 720 percent over budget. We could go on and on, but the Olympics are an expensive venture. Simply put, the data shows that hosting an Olympics, whether summer or winter lose money for the host city.
According to FiveThirtyEight, the median cost overrun of the Olympics is 90 percent. Costs include building the venues, transportation, administration and workforce. Infrastructure improvements are not included in the data, which makes things even scarier when considering hosting. Host cities must be able to accommodate a minimum of 40,000 hotel rooms and housing for a minimum of 15,000 athletes.
Countries that are awarded the honor of hosting the Games fall into varying levels of financial stability. If a country is not doing well financially, they see the Olympics as a potential boon to their economies. If a country is seemingly doing well financially, as Brazil appeared to be when they were awarded hosting duties, the Olympics are an opportunity for your country’s success to be on display. Fast-forward to today and Brazil is now in the midst of both an economic crisis and a presidential impeachment.
If a country is awarded the Games, they can count on dishing out a minimum of $5.2B for summer games and $3.1B for winter games, according to the World Economic Forum. According to the same study, “since 1960, none of the Olympic ceremonies have come under budget.” Only the 1984 Games in Los Angeles made a profit, which was achieved by using existing structures and maximizing TV deals.
If a city does want to bid for hosting the Olympics, the process beings seven years before the ceremonies are to begin. Just bidding for the games can cost cities hundreds of millions of dollars. The countries currently bidding for the 2024 Games include Los Angeles, Rome, Paris and Budapest.
Keeping all of this in mind, do you still want the Olympic Games hosted in your home city?