Olympics is one of the greatest shows on the earth. It is the dream of every athlete to win an Olympic medal, standing on the podium to the tune of their national anthem playing in honour of their win. The sacred games that define the epitome of success for any athlete are organised as a sheer source of real-time entertainment for the people. It is also an honour and an opportunity of pride for countries to host the games on their home soil. The rich history of the Olympics has been long standing, however, the costs associated with it coupled with declining revenue is gradually contributing to its popularity fading away.
The last few years have seen a decline in the number of bids applying to host the Olympics. For 2004 games, the International Olympic Association received a total of 11 Bids – in 2008 there were 10 bids, in 2016 there were 7 bids, and the 2024 Olympic games garnered shockingly only 2 bids. Eventually, it was awarded to Paris, France.
It is no secret that the economic stretch a country pays to host this mega event, more often than not running into billions of dollars over budget. It is well documented that the Winter Olympics in SOCHI, Russia went approximately $40 Billion over budget. Additionally, almost all recent Olympics games have been marred with controversies, over spending, corruption, waste of resources and have made lasting damages on the host cities.
As written by Professor Andrew Zimbalist, who has authored several books on the Olympics including ‘Rio 2016: Olympic Myths, Hard Realities’, “These days they require about 35 different athletic venues, they require an Olympic Village that could cost one and a half to $3 Billion depending on the circumstance. They require a media and television production facility which could usually go for half a billion to a billion Dollar. They require a media village, an opening ceremony area and a green space. They require transportation amongst all of it and special lanes for IOC executives, for transiting amongst all the venues.”
Hosting cities used to make a profit from the games initially, partly because they collected a lot of revenue in TV Broadcasting rights. But recently the International Olympic Committee has been taking larger percentages of the revenue. In the 90’s, IOC used to take 4% of the revenue compared to 70% that they pocketed from 2016 Rio Games. This is leaving the host countries and cities with much lesser amounts to earn from the games, more often leaving them in debt.
Many of the arenas constructed for the Olympics remain expensive due to their size or specific nature. For example, Sydney’s stadium costs $30 million annually in maintenance. Similarly, Beijing’s Bird’s Nest arena costs $10 million in annual maintenance. It was 2006 before Montreal finished paying off its debt from the 1976 games, and Russian taxpayers will pay almost $1 billion annually for many years to come to pay off the debt from the 2014 Winter Games in Sochi.
Furthermore, it is interesting to note that most of the facilities created for the 2004 Athens Olympics largely contributed to Greece’s debt crisis and remain empty. While the IOC demands its share of revenue and fees right from the bidding stage to hosting the Olympics, it takes an absolute exit once the games are finished. The host country is left to fend for itself irrespective of the economic situation and the IOC plays no part in assisting the country any further to recover the expenses, make use of the facilities or utilise the unused resources.
Submitting a bid to the International Olympic Committee (IOC) to host the Olympics in itself costs millions of dollars. Cities typically spend $50 million to $100 million to prepare the bid document which includes fees for consultants, event organisers, travel plans and hosting related duties. For example, Tokyo lost approximately $150 million on its bid for the 2016 Olympics and spent approximately $75 million on its 2020 bid.
Naturally, hosting the games is even costlier than the bidding process. For example, London paid $14.6 billion for hosting the Olympics and Paralympics in 2012. Of that amount, $4.4 billion came from taxpayers. Beijing spent $42 billion on hosting in 2008. Athens spent $15 billion hosting the 2004 Olympics. Taxpayers in Athens will continue to be assessed payments of approximately $56,635 annually until the debt is paid in full. Sydney paid $4.6 billion hosting the Olympics in 2000. Of that total, taxpayers covered $11.4 million. Rio de Janeiro paid over $20 billion by the end of the 2016 Olympics.
With high costs of investments in infrastructure and the political environment, many cities are no longer interested in taking the risk of hosting the Olympics. The return on investment is risky, and the additional costs for security for such an event is scary. For countries that have money to invest, the opportunity to improve the infrastructure is attractive; and investors are still willing to put money into an event that is high profile on an international level. However, for the most part of the world, countries are shying away from hosting the Olympics as the aftereffects stay for long while the returns are negligible.