High stakes, high costs: The economic gamble of hosting the Olympics
Hosting the Olympics is a significant financial endeavor, involving millions of dollars in various expenditures long before the games even begin. In this report, a Kazinform News Agency correspondent investigates how the major cities invest heavily in evaluating, preparing, and submitting a bid to the International Olympic Committee (IOC).
These preliminary costs, which include planning, hiring consultants, organizing events, and necessary travel, typically range between $50 million and $100 million.
For example, Tokyo’s failed 2016 bid cost approximately $150 million, while its successful bid for the 2020 Olympics was around half of that amount. Conversely, Toronto withdrew its bid for the 2024 Olympics due to the prohibitive $60 million cost required.
Paris, after winning the bid for the 2024 Olympics in 2017, initially budgeted $8 billion for the event. However, this budget has since increased by several billion dollars.
According to an S&P Global Ratings analysis, the costs are evenly divided between operating expenses and new infrastructure. If Paris manages to keep the final costs within this range, it will host the most economical Summer Games in decades.
The city has managed to control costs by utilizing existing venues, such as those built for the French Open and the 2016 European Football Championship. Additionally, the events will be spread out to stadiums in other French cities like Lyon, Marseille, and Nice. Despite these measures, Paris has still invested $4.5 billion in infrastructure, including $1.6 billion for the Olympic Village, which exceeded its initial budget by at least one-third.
One of the key strategies for Paris’s attempt to host a cost-effective Olympics is the use of temporary structures, transforming iconic landmarks into picturesque backdrops for the televised event, thus minimizing the number of new permanent constructions. For instance, from next week, the Eiffel Tower will serve as the backdrop for beach volleyball and blind football, while the Palace of Versailles will host dressage and show jumping. The opening ceremony will take place on the Seine River, featuring a flotilla cruising along a UNESCO-listed stage. This edition of the Olympics is poised to be a powerful promotional event for Paris, showcasing its landmarks and culture.
However, the question remains: what will be the lasting impact once the festivities conclude? Beyond a surge in tourist numbers, Paris aims to achieve long-term benefits from the €9 billion investment.
“We saw the Olympics as a great opportunity to accelerate the city’s green transformation,” says Emmanuel Grégoire, who served as Paris’s socialist deputy mayor for urban planning from 2014 until last week. “We have transformed public spaces, public transport, the river – without the Games, it could have taken a decade or two more.”
Laure Mériaud of Ateliers 2/3/4, one of the architectural firms involved, emphasized the goal of achieving “better with less,” creating simple, efficient, yet beautiful structures.
Operational costs, particularly for security, also form a substantial part of the Olympics budget. Since the 9/11 attacks, security expenses have skyrocketed. Sydney spent $250 million on security for the 2000 Olympics, whereas Athens spent over $1.5 billion in 2004, with subsequent games maintaining costs between $1 billion and $2 billion.
Another significant issue is the creation of “white elephants” expensive facilities with limited use post-Olympics. These facilities can impose financial burdens for years. Sydney’s Olympic stadium costs the city $30 million annually for maintenance, while Beijing’s “Bird’s Nest” stadium, which cost $460 million to build, requires $10 million a year for upkeep and saw little use after the 2008 Games until it was repurposed for the 2022 Winter Games.
Most of the facilities built for the 2004 Athens Olympics, which contributed to the Greek debt crisis, are now derelict. In Montreal, the Olympic stadium, known as the Big O, is frequently called the Big Owe due to its high costs. In 2024, Quebec’s government planned to spend $870 million to replace the stadium’s roof for the third time, sparking calls for its demolition.
Economists also highlight the implicit costs of hosting the Olympics, such as the opportunity costs of public spending that could have been directed elsewhere. Servicing the debt from hosting the games can strain public budgets for decades. Montreal only paid off its debt from the 1976 Games in 2006, while Greece’s Olympics debt contributed to its bankruptcy. The Sochi 2014 Winter Games will reportedly cost Russian taxpayers nearly $1 billion per year for the foreseeable future. While some in Sochi view the unused stadiums and overbuilt facilities as a waste, other residents believe that the games prompted investment in roads, water systems, and other public infrastructure that wouldn't have occurred otherwise.
In Brazil, the cost of the 2016 Rio Olympics exceeded $20 billion, with the city bearing at least $13 billion of that total. Amidst a deep recession, Rio required a $900 million bailout from the federal government to cover policing costs and struggled to pay its public employees.
