By Ethan Currie, Staff Writer
With the Olympics returning to Beijing for the Winter 2022 Games, each event carries a huge financial impact. Beijing, now the first city in which both the summer and winter Games have occurred, is no stranger to the costs of hosting. Although the Olympics bring an economic hit to its host country, there are upsides as well. However, it is often difficult to distinguish whether the benefits outweigh the costs, especially in such a unique situation.
The Olympics are very expensive to host, and it all begins with a bid to the International Olympic Committee (IOC), costing millions. It is common for cities to spend anywhere from $50 to $100 million in fees for consultation services, travel, and event organizing. This also comes at no guarantee, with Tokyo losing roughly $150 million on its bid in 2016, before its successful bid of approximately $75 million to host the 2020 Summer Games.
An initial bid to the IOC is just a fraction of the total cost to host an Olympics, however. London paid $14.6 billion for hosting the Games in 2012, with about 30% of that amount coming from taxpayers ($4.4 billion). Beijing’s previous hosting set them back $42 billion in 2008. Following a successful bid, cities will often invest in new or updated infrastructure to accommodate for the additional large volumes of tourists, athletes, and staff – these costs can range anywhere from $5 to $50 billion, depending on the existing condition of a city’s facilities.
These infrastructure updates can serve as a benefit of hosting the Games, too. For example, when London hosted the Olympics in 2012, the city invested heavily into its public transportation, which was in dire need of an upgrade. Hosting the Olympics served as an excellent catalyst to make these investments. In relation to benefits from added infrastructure, host cities often gain temporary jobs. Sochi, Russia, spent approximately $44.3 billion on non-sport related construction for the 2014 Olympics. Thousands of tourists, media workers, and athletes visiting the host city also drives revenue – before, during, and after the Games.
That said, income generated from the Olympics almost never covers total expenses. The last time the Games were hosted in Beijing (2008), the city generated $3.6 billion in revenue, although it spent over $40 billion. In fact, as of 2016, Los Angeles has been the only host to realize a net gain (profit) from the Olympics. The city has hosted in 1932, 1984, and will again in 2028. LA’s profit was mainly the result of existing infrastructure, and thus, a smaller investment into the Games. This rare occurrence could signify that reusing existing venues is a financially sound decision for the Olympics, as opposed to constant relocation.
A handful of permanent Olympic venues across the globe could increase long-term profitability for host cities, reduce environmental impact, and allow for democratic countries to be less weary on placing a bid to the IOC (out of caution with upcoming elections). Since this is not the case yet, it is no surprise that every Olympic Games since 1960 has run, on average, 172% over budget, according to Oxford University researchers. For example, the London Games in 2012 was budgeted at $5 billion, but actual costs incurred were roughly $18 billion. Nearly every Olympic budget made has been inaccurate and has failed to account for non-traditional costs. This includes Beijing, who spent $44 billion during 2008, and has made significant investments into two additional venues, specifically for the 2022 Winter Games.
Hosting the Olympic Games is a sport in and of itself. It takes precision, effort, and a large investment – of time, and from a financial regard. While it may bring benefits, it often brings on even more debt. Without existing infrastructure and sporting venues, cities may benefit more from holding back on their bids to the IOC.
Photo by Rowan Simpson on Unsplash