The Olympic host cities tend to spend billions of dollars for the privilege. Russia’s Sochi tops the list for most expensive games at $51 billion, with Beijing coming in second at $40 billion, and Athens, London and Barcelona cost between $15-18 billion.
The tallies for Rio aren’t in yet, but according to a report from FiveThirtyEight, Brazil is already 50% over budget.
Why do countries compete so hard to host the world’s most expensive party? The answer is wrapped up in dreams of PR glory and sweet, sweet tourism dollars. As a recent report in the Journal of Economic Perspectives explained:
“Proponents tout supposed benefits ranging from the economic stimulus provided by construction demand, to increased tourism during and after the games thanks to a worldwide advertising campaign, to increased foreign investment and better trade connections, to an improved sports infrastructure for future generations (this last benefit is most easily debunked).”
And while the breakdown of costs and benefits is only slightly less complicated than Simone Biles’ floor routine, authors Robert Baade and Victor Matheson say, “the general story is clear: for most modern Olympics, the costs have far outstripped the benefits.”
Below, a look at five cities that have hosted the games over the last 30 years, and how they’ve fared when the torch goes out.
By Spyrosdrakopoulos (own work) / Wikimedia Commons
The 2004 Athens Olympics didn’t cause Greece’s debt crisis, but leaving Greece’s citizens with a 7 billion euro bill (not including the money sunk into a new airport and transportation system) certainly didn’t help. Also, unlike London and Barcelona, Athens can’t use the decaying 12-year-old facilities. Today, the beach volleyball courts are covered in weeds, the pool drained and rusting, and the Olympic Village decorated mostly with graffiti. Greece itself is still living on funding from the EU.
Julian Nitzsche (own work) / Wikimedia Commons
Hedwig Klawuttke (own work) / Wikimedia Commons
Hosting the 1984 Winter Olympics in Sarajevo was supposed to be an opportunity for then-Yugoslavia to finally emerge from the shadows of two world wars. Authorities certainly wanted to show off their country as an tourist destination. Such was the civic spirit that Sarajevans even agreed to contribute part of their salaries to cover the costs. They weren’t able to enjoy the results for long, as the breakup of Yugoslavia triggered civil war in 1992. The 44-month Siege of Sarajevo, the longest occupation of a capital city in modern history, killed 11,000 and left scars that can be seen today.
Alexxx1979 (own work) / Wikimedia Commons
If there were gold medals for cost overruns, the 2014 Winter Games in Sochi would be the all-round champion, breezing past their projections by 289% with a $51 billion price tag. How does a country spend that much for a two-week event? Well, start with a megalomaniacal leader like Vladimir Putin. Then add a construction and engineering process with “no integration of the scientific approach,” as the deputy scientific secretary of the Sochi branch of the Russian Geographic Society told Bloomberg. I could go on, but the sprinkles on this ice cream cone of corruption might be the $8.7 billion railway (an infrastructure project that cost more than Vancouver’s entire expenditure for its Winter Olympics in 2010), which is no longer functional.
Ethan Kan / Flickr Creative Commons
Beijing’s famous Bird’s Nest stadium, designed by Jacques Herzog and Pierre de Meuron, was lauded by design lovers for its intricate latticework. The New York Times said it had an “intoxicating beauty that lingers in the imagination.” Unfortunately, as the Atlantic noted in 2012, “The stadium, which cost $480 million to build and takes about $11 million each year to maintain, has no regular tenant.” A Business Insider story using data from Chinese financial news site Caixin noted that “only a third of major sports venues nationwide break even,” and the other two-thirds lost $44 million in 2010 alone. After a variety of failed schemes for reinvention, it’s used as a Segway track where tourists can pay $20 for the privilege of a lazy ride.
Moyan Brenn / Flickr Creative Commons
Barcelona seems to have benefited from hosting the Olympics in 1992. As with many Olympics, the cost is debated, with figures ranging from $15 billion to closer to $9 billion, according to a study from the Universidat Autònoma de Barcelona, which estimates a more agreed-upon $5 billion in profits. Other benefits include much needed infrastructure upgrades (new roads, sewage system, parks and beaches), plus a dramatic drop in unemployment, from an all-time high of 127,774 in November 1986 to a low of 60,885 in July 1992. In addition, tourism revenues jumped from 2% of the city’s pre-Olympic GDP to 12.5 per cent, generating, according to a Guardian article, 12,500 new hotel jobs.
How to explain that success? Lisa Delpy Neirotti, a sports management professor at George Washington University’s business school, told Today.com that having a long-term plan is key. “It really starts from the bid perspective. You have to think it out even before that point,” she pointed out. Barcelona already had infrastructure projects in the works, the Olympics gave them a deadline and an organizing principle.
As documentarian Gary Hustwit of The Olympic City also told Today.com, “They just didn’t redevelop the beach just to have a two-week party.”
Now, we want to hear from you! Would like to share your opinion or make a comment on the Unlock Your Wealth Radio Show? If so, then please leave your comment or questions in the space provided below and share this article with your friends and family on Facebook and Twitter. Your comments or question could be chosen as our featured Money Question Monday and a phone call by financial expert Heather Wagenhals could dial your way to be live on the Unlock Your Wealth Radio Show.
Photo Credit: www.news.com.au.