By Kevin Muniz
@redlineproject
AI disclosure: Notebook LM was used to generate the podcast and video for this essay.
The Olympic Games have been a tradition that dates back to Ancient Greece, which were originally held in Olympia to honor Zeus. From 1896 onward, the Olympics, as both a summer and winter event happening every four years, have been an institution that provides the grandest stage for sports competition and national pride. Every four years, the host city changes for each edition, giving cities a chance to bid for and eventually host the games.
Despite the pride and glory that come with hosting the Games, each city that has hosted the Olympics has had to bear the financial and economic impact of holding one edition. Because of this, the cost of hosting the Olympics has been a concerning issue that has been a thorn in each host city’s side with every edition.
As a result of the financial and economic costs of holding the games, the cities often end up in debt and have to cover the costs of building and maintaining the Olympic facilities. Some budget overruns are also the result of security costs, especially after unexpected events.
For example, Montreal hosted the 1976 Summer Olympics, but it came at a heavy debt of $1.5 billion, which was fully paid off in 2006. Among the costliest facilities built was the main stadium for the games, the Olympic Stadium, which ended up becoming very expensive to maintain and renovate, causing locals to refer to it derisively as “the Big Owe.” The 2004 Summer Olympics in Athens were beset by budget overruns and enormous debt as well.
Podcast: Listen to an AI-generated discussion based on this essay.
Estimates vary by source, but Lake Forest College economics researcher Robert A. Baade said he believes that the 2004 edition cost Athens $13.8 billion, with economics professor Victor Matheson of College of the Holy Cross stating the price to be as high as $14.7 billion. Those budget overruns were mainly due to increased security costs in response to 9/11.
Some cite the 2004 Olympics as a contributing factor to Greece’s debt crisis that transpired several years later. The 2016 Rio de Janeiro Summer Olympics were also marred by high costs caused by unforeseen events and Brazil’s economic turmoil. The Brazilian government estimated the costs for the 2016 games to be $13.2 billion, most of which went to building the venues and infrastructure to host the edition. The heavy costs were exacerbated by the country’s recession, which required the nation to lend Rio de Janeiro $895 million to cover security costs and pay state employees’ salaries.
Moreover, while the games took place, the country was in a political crisis when its president, Dilma Rousseff, faced impeachment for corruption, which resulted in her removal from office shortly after the Olympics concluded. Adding stress to hosting the games was the Zika virus outbreak, which caused many athletes to pull out of the 2016 Olympics. Despite this, no athletes and staff members tested positive for that virus during the games.
Nevertheless, the outbreak warranted the use of insecticides to thoroughly disinfect Olympic venues and housing, ensuring the safety of athletes and staff. Another serious problem was that the water used for aquatic events such as swimming and boating was contaminated with “super bacteria” and untreated sewage, which spurred concerns about the Olympians’ health and safety at the 2016 games. All of those issues that plagued the Rio Olympics demonstrate that unforeseen problems and events can negatively impact and drive up the costs of hosting the Olympics, as they did in 2016.
However, Rio de Janeiro is not alone in being an Olympic host city affected by a viral outbreak. The 2020 Summer Olympics in Tokyo were postponed to the following year due to the COVID-19 pandemic, which also ballooned the costs of hosting that year’s edition. Postponing the 2020 Olympics to 2021 cost nearly $3 billion, and $500 million was used for an insurance payout. $300 million was used for COVID-19 countermeasures during the games.
All of these expenditures stemming from the pandemic added to the edition’s total cost of $13 billion. All these examples make it clear that factors such as the construction of venues and infrastructure, providing security, and combating health hazards can all impact the costs for cities to host the Olympics, which can lead to financial and economic consequences for them.
Joshua Drucker, the professor of Urban Planning and Public Affairs at UIC, said it’s hard to predict how expensive hosting The Games can be. “Unfortunately, they can’t foresee what can happen,” he said. “The only thing they can do is do the best they can.”
In other cases, some cities have successfully borne the brunt of the financial and economic impact of hosting the Olympics. Los Angeles hosted the 1984 Summer Olympics, but the financial impact was minimal for a few reasons. Firstly, being the only city to bid for the games that year allowed it to settle for favorable terms with the International Olympic Committee.
Secondly, many of its Olympic facilities, some of which were built for the 1932 games the city had hosted previously, were already in place for the 1984 edition, which lessened the need to construct new venues. Because of this, Los Angeles profited from the games by as much as $232.5 million, while the total costs were a mere $546 million, significantly less than the amount Montreal incurred in 1976.
Paris hosted the 2024 Summer Olympics, which is estimated by the French government to have cost €6.6 billion ($7.7 billion US). Those costs are half of what Tokyo spent on hosting the 2020 Summer Olympics, which is estimated to be $13 billion in total. The French city had most of its existing facilities already built prior to the games, with only three being newly constructed. In addition to the permanent venues, both existing and brand-new, temporary ones were assembled for the games and then dismantled afterwards. This strategy of utilizing existing facilities as well as building temporary venues and fewer new permanent ones was the main reason Paris had a smaller budget for the 2024 games compared to other previous host cities.
When asked about the impact of the 1996 Atlanta Olympics, Drucker noted that the games reinvigorated the city by bringing in new tourists and expanding the city’s Hartsfield-Jackson International Airport, which has become one of the busiest airports in the world. In addition to these effects, several Atlanta areas experienced a renaissance as a result of redevelopment fueled by Olympic-related investments, with the Summerhill neighborhood as an example.
New parks, including the Centennial Olympic Park, were also built in the city. Many Olympic venues used for the 1996 games were also reused afterwards, including the Centennial Olympic Stadium, which was converted into a baseball stadium as the home of the Atlanta Braves and presently used for the Georgia State University football team.
Regarding the costs, the 1996 Olympics cost $1.7 billion, with most of the funding coming from private sources. The games also generated a $10 million profit for the city. This indicates that Atlanta was able to foot the bill by using private money rather than public funds, as the city transformed itself into a global destination overnight as a result of the success it gained from hosting the 1996 games.
Host cities are not the only ones dealing with the financial costs of the Olympics, as bidding cities are also not immune to this issue. Chicago submitted a bid for the 2016 Summer Olympics, but it lost to the eventual host, Rio de Janeiro. The city spent $91 million in public funds on the former Michael Reese Hospital site in the Douglas neighborhood, planning to build an Olympic Village there, which never materialized due to the defeat. The total costs of bidding for the 2016 games were $70 million.
Drucker said he believes that Chicago would have mixed results from hosting the 2016 Summer Olympics. He said that the games would’ve created new jobs and investment in other city projects. However, he also said that the 2016 Olympics would have been a financial burden for Chicago, which constantly has other affairs to deal with. When asked if Chicago was to bid again, he predicted that the city’s officials and higher-ups would not be entertained with rebidding for the Olympics.
“Chicago has better issues to deal with,” he said. The failed Chicago 2016 Olympics bid and the money the city sunk into it demonstrate that bidding for the event is also a risky venture, just like hosting it.
Cities have questioned the wisdom of hosting the Olympics, but those that have hosted before or will do so in the future may have to rethink how to manage the costs and impact of holding the games. Los Angeles is set to host again in 2028, utilizing the same facilities from the 1932 and 1984 editions, as well as new venues built since the last time it hosted the games.
Additionally, temporary venues are becoming a new norm for recent Olympic hosts looking to reduce spending on new facilities. For example, the main stadium built for the 2018 Winter Olympics in PyeongChang, South Korea, was constructed as a temporary venue only for the games and then demolished soon afterwards. Paris also built several temporary venues for the 2024 Summer Olympics, including one behind the Eiffel Tower specifically constructed for beach volleyball.
These examples indicate that cities have decided that temporary venues are the future of hosting the Olympics and other international sporting events. Drucker also noted that the IOC has shifted its potential hosts from authoritarian regimes to places that are either democratic or have already held the Olympics before.
This is evident, as the Summer Olympic hosts in the 2020s and beyond, such as Tokyo, Paris, Los Angeles and Brisbane, are all located in democratically governed countries. Likewise, future Winter Olympic host locations such as Milan and Cortina d’Ampezzo, the French Alps, and Salt Lake City are all located in nations with such a government type. Drucker also predicted that the 2034 Winter Olympics would be less costly for Salt Lake City, the host city for the 2034 edition, as it already has infrastructure in place, as well as some facilities from the 2002 games that are still in use.
Among the existing venues expected to be reused are Delta Center and Rice-Eccles Stadium, which have both received renovations in the years since then. Salt Lake City is another instance of a previous host city planning to reutilize venues from the past edition it held decades before.
In summary, the financial and economic impact of hosting the Olympics remains a significant issue for host cities, with various factors, including venue construction and maintenance, infrastructure, unexpected events, government priorities, security, and other related costs contributing to the overall expenses.
To be clear, this issue isn’t just about hosting the Olympics; it also applies to hosting other global sporting events, including the FIFA World Cup, which is also a spendy expenditure. When explaining the examples and breaking down the factors and costs, it is obvious that the economic impact of the Olympics is enormous for each city that has hosted it.
This is enough to reaffirm that hosting those games is a risky financial and economic expenditure for host cities, despite the glorious and joyous nature of athletes partaking in these events. For every city hosting or bidding for the Olympics, it is crucial and necessary to evaluate the finances and economics of the event, as every city has its own priorities and features that can influence how it’s held. At the same time, though, cities have questioned the wisdom of bidding for and hosting the games.
This leads to the following question: Is it worth it? Heading into the future, while the Olympics remain an institution in the sports world and always will be, bidding and host cities continue to seek ways to reduce the costs of the games, including building temporary venues and reusing existing facilities.
It is also another dilemma the IOC will have to face as it considers potential host cities for future editions. While host cities like Paris and Los Angeles have been successful in utilizing these strategies, with the latter retaking that approach for the 2028 games, only time will tell if other future host cities will see positive results from these tactics. It is also up to them to take action on this issue and any unexpected challenges that could arise when they host the games in the future.