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0The Olympics Are a Giant Money Sink. So What?
The benefits of staging the games go beyond profit-and-loss accounting.
June 11, 2023, Bloomberg
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You can’t blame Britons for looking back fondly on the 2012 London Olympics. It was possibly the last time the country did anything really well in the eyes of the world, an unqualified sporting success and an optimistic celebration of openness and diversity. After a decade marked by Brexit, public health failures, economic crisis and rising anti-immigration rhetoric, it’s small wonder the games retain a warm glow for many. But were they worth the money?
The model of using the games to regenerate a deprived area of east London served as an inspiration for Paris, which will host the competition next summer. Parallels are already building between the two, with the French capital seeing inflated budgets, complaints of high ticket prices and, most recently, suggestions of backtracking on commitments to social inclusiveness. Last month, the president of the French National Olympic Committee resigned after 18 months of internal conflict.
The question of whether staging the Olympics is worth the money is nigh on impossible to answer. Doing a cost-benefit analysis is like trying to nail jelly to the wall. The last host city to record an operating surplus was Los Angeles in 1984, so all games since have been money losers in the narrowest sense. But a more realistic assessment of whether the wider economic impact justifies the cost is confounded by the issue of what to measure.
The cost of building Olympic stadiums and accommodation for athletes is straightforward enough, but what about the panoply of associated infrastructure, particularly if some or all of this was planned in any case? What to include on the benefit side is just as fraught. Separating economic activity generated by the games from investment and spending that would have happened anyway is an inexact science, to put it mildly — and the further out the estimates go, the more speculative the exercise becomes. Most studies showing large anticipated gains for host nations are better regarded as promotional documents than objective analysis.
