An Economic Myth of Olympic Proportions
According to Olympic legend, hosting the Games is an economic boon for the chosen city and country. In reality, as Rio de Janeiro is finding out, the Games are more often a boondoggle, with costs far exceeding the benefits.
NORTHAMPTON – According to Olympic legend, hosting the Games is an economic boon for the chosen city and country. In reality, the Games are more often a boondoggle, as Rio de Janeiro is finding out.
First, consider how the games are awarded to a host city. The International Olympic Committee (IOC), an unregulated global monopoly, conducts a biannual auction whereby the world’s cities compete against one another to prove their suitability. Business executives – often from the construction industry – who stand to gain from the Games’ preparation usually lead a prospective city’s bidding process. Among other things, cities will offer lavish sporting venues, ostentatious ceremonial spaces, newly built transportation networks, luxurious accommodations for athletes, and media and broadcasting centers.
The outcome of this process is predictable: winning cities usually overbid. The cost of hosting the Summer Olympics these days runs from $15 billion to $20 billion, including venue construction and renovation, operations and security, and additional infrastructure. The total revenue for the host city from its share of international television contracts (roughly 25%, with the other 75% going to the IOC), international and domestic sponsorships, ticket sales, and memorabilia is $3.5-4.5 billion. In other words, costs comfortably exceed revenues by $10 billion or more.