The benefits of hosting the Olympics are nonexistent


olympic bid
Mayor Anne Hidalgo, IOC President Thomas Bach and Los Angeles
Mayor Eric Garcetti react after the confirmation of the
tripartite agreement which awards Paris and LA with the Olympic
Games of 2024 and 2028 during the 131th IOC Session – 2024 &
2028 Olympics Hosts Announcement at Lima Convention Centre on
September 13, 2017 in Lima, Peru


It’s official: We now have hosts for the next two Summer
Olympics. Paris will host in 2024 and Los Angeles in 2028.

It looks like a victory for the International Olympic Committee,
as the result could be Olympic Games without the embarrassments
of empty seats and foul water of Rio, the
massive cost overruns of Sochi or the
awkward political moments of Beijing.

But the announcement also marks a failure: Only
two cities competed for the 2024 Summer Olympic Games – Paris and
Los Angeles – and two for the 2022 Winter Olympic Games – Beijing
and Almaty, Kazakhstan. I’ve been studying the Olympics enterprise for years,
and this narrowing of cities willing to host is another sign that
the games are in crisis.

Business of the Olympic Games

The IOC holds the franchise for the Olympic Games, which it then
rents out to host cities. The IOC prefers the current model of
competition between bid cities for the simple reason that it
reinforces its own power and bargaining ability.

The IOC retains control over the games, pockets the revenues from
broadcasting rights and corporate sponsorship but is neither
responsible for hosting and paying for the games nor at risk if
any losses occur. It provides less than 13 percent of the direct
 of the games. In short: It’s a very sweet deal for
the IOC. Not so sweet for host cities who have to pay for the
Olympic Games.

The Olympic Games cost a great deal of money, and cost overruns are endemic. The tight deadline
for putting on the games can easily lead to price gouging,
sweetheart deals, corruption and things simply costing much more
than they need to be. And security costsare mounting.

In one of the most comprehensive analyses, economists Robert
Baade and Victor Matheson in 2016 looked at costs and benefits associated with hosting the
Olympic Games

On the expenditure side, they included general infrastructure,
specific sports infrastructure and operational costs of hosting
the games. Benefits include tourist spending during the games,
the “Olympic legacy” that might include improvements in
infrastructure and increased trade, foreign investment or tourism
over the long run after the games; and intangible benefits such
as the feel-good effect or civic pride.

They conclude, though, that the Olympics are a money-losing
proposition for host cities since they result in positive net
benefits only under very specific and unusual circumstances.
Their main finding is reinforced by many subsequent studies. One study, for example,
found that hosting the 2000 Sydney Olympic Games led to a real
consumption loss of AU$2.1 billion (US$1.7 billion) for
the Australian economy.

While hosting the games may increase exports through increased trade,
the same effect is found for cities that bid but did not win.
One study found it is not necessary to win
the bid; the bid itself sends a message to investors that the
city is open for international business.

Tokyo 2020 Olympics
The costly construction is underway for the 2020 Summer
Olympics in Tokyo, Japan.


Event capture

Who actually makes out better when a city hosts the Olympics?

Winning the bid to host the Olympics has the clearest benefit,
albeit intangible, to the political regimes and economic elites
running a city, as they have the opportunity to reshape the
city’s image in a time of increased global competition.

Financially, the very biggest winners are of course the
construction and land development companies who do very well from
the contracts associated with the direct investment in sports
venues and accommodation and the indirect investments of
infrastructural provision.

But there are costs to city spending on the Olympics. Hosting the
games crowds out other investments, especially those related to
social welfare, and often displaces low-income residents and raises rents and property
. The games are a classic example of the privatization
of benefits and the socialization of costs. The main benefits,
such as spending on real estate development and construction, are
captured by the rich and the well-connected.

In my view, we need to replace the notion of a city winning the
games with the image of the games capturing a city.

Event capture takes four main forms. First, there is
infrastructure capture, where the city’s infrastructure is
constructed and reconstructed around the particular needs of an unusual two-week

Second, there is financial capture, in which public monies are
devoted to funding the games, directly and indirectly. There are
associated opportunity costs as other projects are canceled or
much reduced in order to put on the games and social programs are

Third, there is legal capture, as new legislation is introduced.
Limitations are placed on citizens’ rights in order to ensure the
financial profitability and the security of the games. A number
of studies point to the increased surveillance and security control
 during the games. One study of Sydney found
that specifically formulated legislation for the 2000 games
that significantly broadened police
 remained as a lasting Olympic Games legacy.

Fourth, there is political capture, as the normal rules of
accountability and transparency are displaced and eroded by
non-elected organizations such as the IOC.

The Rio Olympics were only a year ago, but the venues look like they've been deserted for decades
Rio Olympics were only a year ago, but the venues look like
they’ve been deserted for decades


Opting out

Perhaps as a result of all of this, there is growing resistance
from communities in bid and host cities. The 2022 Winter Olympic
Games had only two bids – from Beijing and Almaty, Kazakhstan –
after Stockholm, Krakow and Oslo withdrew their bids because of
lack of public support.

Bidding for the 2024 Summer Olympic Games saw significant
defections as well. In 2015 the mayor of Toronto decided not to
even put the city’s name forward as an applicant city to host the
2024 games even although the Canadian Olympic Committee supported
the bid. Boston, Hamburg and Budapest all turned their backs on
the opportunity to host and gave hope and advice to bid resisters
all across the globe.

There were only two serious bids for the 2024 Summer Olympic
Games – Paris and Los Angeles – after the mayor of Rome, Virginia
Raggi, publicly announced that the Eternal City
did not want to be considered as a host city.

Some argue, as I have, for a permanent site for the Summer Olympic
Games and a limited rotation of host sites for the Winter Olympic
Games to reduce the environmental impacts. Others argue for
a decentralizing to multiple sites.

In the meantime, though, it looks like the IOC needs Los Angeles
and Paris to host summer games more than either city needs the
IOC to give them the right to host the games. The reputation of
both cities is unlikely to be improved and could even be damaged
by hosting the games. People will still flock to either city
whether they host the games or not.

A legacy of half-used and abandoned expensive Olympic venues
litters the landscape of host cities. The more positive legacies,
such as new roads and improved airports, could have been provided
for less money, with greater transparency and more public input.
Hosting the Olympics is a distraction from achieving a fairer,
more just and efficient city.

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