2018

March 2018

Posted by Anton Murray Consulting on . Posted in 2018

The Olympic stadium built in Pyeongchang, South Korea, for this year’s Winter Games cost $109 million. It was used four times and will be demolished, meaning the cost of the stadium is $10 million per hour of use. The stadium was not used for a single event. Since 1968, no Olympic Games have come in under budget. Nearly half of them ended up costing more than double the initial estimated amount.

As with any mega-event, costs and benefits can be hard to estimate, but the general story is clear: for most modern Olympics, the costs have outweighed the benefits. The cost of an Olympic bid alone easily reaches hundreds of millions, and may never result in a win. If a city does win the bid, they face costs in the tens of billions. The most expensive Games to date was Sochi in 2014, where an estimated $50 billion was spent on the Games themselves and the necessary infrastructure projects. By comparison, the South Korean Winter Olympics cost $12.9 billion.

The benefits of hosting the Games can be substantial, however are almost always grossly overstated by proponents. Host cities receive revenue from ticketing and sponsorships, and local organising committees receive a share of the proceeds from the sale of television broadcast rights. These benefits are easy to quantify but don’t add up to a significant fraction of the hosting costs in most cases. Vancouver 2010 produced about $1.5 billion in direct revenues and London 2012 about $3.3 billion; in each case, far less than the costs.

These mounting costs are the reason so few cities continue to bid for the games. The 2024 Summer Olympics received only two bids, from Paris and Los Angeles. The International Olympic Committee was so concerned that there would be no bids for the 2028 games that they awarded both cities with the event, Paris in 2024 and LA 2028. With that said, LA only received the US bid after Boston withdrew due to severe public backlash regarding the enormous cost of hosting the Games. It’s this public involvement that is a possible contributor to the fact that the two most expensive Games were hosted by non-democractic countries – China and Russia.

With interest in hosting the Games continuing to drop, and few cities ever turning a profit, it begs the question – where to from here? The announcement for the next Olympic Games isn’t until 2025, so the IOC has a lot of time to consider its options. One of the most commonly suggested solutions is to rotate the Games through a handful of ‘proven’ host cities, allowing the costly facilities to be reused. A more recently suggested solution is to alter the bidding process, offering incentives for sustainably budgeted bids. It will certainly be interesting to see which way the IOC decides to take the Olympics. They’re a fantastic way of bringing people together, but a costly one at that.

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