The Best and Worst Olympics Financial Planning
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The economic impact of the Olympics is often considered a boon for the host country. Not only do the Games put the nation in the spotlight, but they also drive tourism, create jobs, and lead to the development of infrastructure. But there is also a downside to organizing such a huge event, especially if the numbers don't add up in the host nation's financial plans. In this article, we compare some of the best and worst financial plans associated with the Olympic Games.
KEY TAKEAWAYS
- Countries around the world enter into heated competition to host the Olympic Games.
- Doing so is supposed to bring an economic boom, increased tourism, and national prestige; for the lucky, the risks prove worth the reward.
- Olympic dreams do not always pan out, however, and in some cases turn into an economic nightmare.
A Price Tag of Olympic Proportions
The price tag associated with hosting the Olympics regularly looms over the planners and the general public. In an interview with Bloomberg before the Paris 2024 Olympic Games, the chief executive officer (CEO) of the organizing committee said that the budget was "under control," but that the months preceding the massive sporting event would be critical for the organization to meet its cost goals.1
As China prepared to host the 2022 Winter Olympics, people wondered how the country would fare financially compared to other Olympic hosts, especially considering Japan's disastrous financial losses in 2021 for the COVID-postponed summer games.23
For the 2020 games, Japan reportedly originally budgeted $7.3 billion, a number that quickly rose to $15.4 billion. The final cost came in at $13 billion against total revenues of $5.8 billion.45 The 2020 Tokyo Games is one of the most costly in history.
China budgeted $3.9 billion for the cost of its Winter Olympics, but an investigation by Business Insider notes that the figure omits massive expenditures on infrastructure including an airport upgrade, new highways, sports arenas, a driverless bullet train, and a new subway line. The real cost, according to the report, would have been about 10 times the budget. The Beijing Organizing Committee later claimed that it took in about $52 million in profit from the games.6
The Impact of COVID
As if the normal unexpected costs of managing a mega event like the Olympics weren't enough, Japan had to contend with a one-year postponement due to the COVID-19 pandemic and the lasting slowdown in international travel that followed.7
Though the pandemic was certainly unexpected, the financial planning around the Tokyo Games faced criticism before its onset, as many argued that the Japanese Olympic committee paid far too much—with a bid budget of $83 million—to win the games. There were also the additional costs associated with building new event venues and upgrading infrastructure, much of which turned out to be unneeded due to the low turnout of spectators.8
Olympic Winners and Losers
The costs of staging an Olympics have grown astronomically over the decades. Lake Tahoe pulled off the Winter Olympics in 1960 for about $100,000. Innsbruck, Austria, shelled out about $900,000 four years later.9
When you consider that that's about $1.1 million and $9.1 million in 2024 dollars, these figures pale in comparison to what some of the countries are budgeting and spending on some of the most recent Games.10
Financial figures listed in this article are in U.S. dollars and do not include intangible costs, such as to the environment, or benefits, such as from tourism.
Canadian Catastrophe
The Montreal Games of 1976 are almost synonymous with economic decline following an Olympics bust. Budgets spiraled out of control, and debts related to the games ballooned. The main Olympic stadium, with an estimated budget of $250 million at the time, ended up costing $1.4 billion and took 30 years to be fully paid off.11
Some have argued that there was a relationship between Quebec’s 1980 referendum for independence from Canada and the Olympic Games.12 Another result of the economic fallout was the birth of Canada’s national lottery, a scheme originally devised to help repay the Olympic losses.13
Australian Ambivalence
The contrast between the success of an Olympic event and its economic impact can be sizable. This was certainly the case with the Sydney Olympics in 2000. Heralded as one of the most positive and well-organized Olympics of all time, the Sydney Games were a triumphant display of outstanding infrastructure, environmental consciousness, and immense sporting achievement.14
Despite receiving almost unanimous praise from viewers around the globe, a lack of forward-thinking and legacy planning left the citizens of Sydney debating if the economics of the Olympics meant boom or doom.
As is often the case with hosting the Olympic Games, the New South Wales government was forced to spend a great deal more than it initially budgeted for the event. The total investment rose to over $5 billion, which was over budget by roughly 90%.15
Then, as a portent of what was to befall Athens four years later, the much-vaunted Olympic Park became dormant as the government struggled to implement its plan of redeveloping the site as a residential suburb. This did not materialize until 2005 when it became little more than a sightseeing stop for tourists.16
A Greek Tragedy
The Olympic Games were held in Athens in 2004. Some have speculated that the financial hole dug by excessive and irresponsible spending—over $15 billion at the time—helped lead to the enormous Greek financial crises of the 2000s and 2010s.17
Cost overruns and mounting debts were never paid off, and several sports venues that were constructed for the games were rarely used in the years that followed. Economists estimated the cost per household for the Olympic Games was shouldered by Greek taxpayers ever since.
When Breaking Even Is Profitable
In the aftermath of the 2012 Olympic Games, host city London and its residents rightfully basked in the glory of what proved to be a momentous and extremely successful event.
Though all the talk before the games was of the financial costs involved—and whether Britain could even survive such an expense—the discussion afterward was filled with the positive social ramifications of the event and its empowering influence on U.K. youth.18
Though this switch was partly due to the goodwill that the games generated, it also reflected the financially sound approach that London authorities took in organizing and hosting the event. Although the stock market often loves the Olympics, individual economiesfrequently don’t. Nations have long had a history of bad financial repercussions following their hosting of the Olympics.19
London's Fiscal Plan
Heeding the numerous lessons of previous countries that suffered long-term financial issues after hosting the Olympics, London chose to invest as part of a sustainable fiscal plan. Most of the sporting venues that it built were dynamic but temporary. In addition to these temporary venues, London authorities also ensured that the Olympic Stadium itself could be utilized fully as a long-term sports venue.
Although the stadium was a permanent structure, it was designed as a versatile sports arena. Renamed London Stadium, the venue is currently home to Premier League football club West Ham United. It also features rock concerts, has hosted the Rugby World Cup, the international and domestic Rugby Union, the Race of Champions, and the Rugby League Four Nations, and was home to the first Major League Baseball games to be played in Europe.20
The lifetime financial position of the London Olympics was to break even, meaning the event paid for itself. All of the named advantages of hosting the games, including the long-term plans for the Olympic Stadium, resulted in a positive outcome for the United Kingdom and its citizens.
The table below shows the financial outcomes for the Olympic Games, both winter (W) and summer (S), from 2000 through 2020. Note that although London's breakeven status is considered a win for Great Britain, some countries even managed to make a profit.
Year
City
Cost
Profit/(Loss)
2000
Sydney (S)
$5 billion
($1.5 billion)
2002
Salt Lake City (W)
$2.5 billion
$101 million
2004
Athens (S)
$2.9 billion
($14.5 billion)
2006
Turin (W)
$4.4 billion
($3.2 million)
2008
Beijing (S)
$6.8 billion
$146 million
2010
Vancouver (W)
$2.5 billion
$721 million
2012
London (S)
$14.9 billion
Break-even
2014
Sochi (W)
$21.9 billion
$52million
2016
Rio de Janeiro (S)
$4.6 billion
($2 billion)
2018
Pyeongchang (W)
$12.9 billion
$55 million
2020
Tokyo (S)
$13 billion
($7.2 billion)
What Was the Most Expensive Olympics in History?
The most expensive Olympics in history is the Sochi Winter Olympics held in Sochi, Russia, in 2014, costing an estimated $52 billion, despite having fewer events, athletes, and venues than other Olympic games.21
Is Hosting the Olympics Good or Bad for a Country?
Generally, hosting the Olympics is financially bad for a country given the staggering amount of money it costs to host the games. The revenues rarely make up for the immense cost.
On the plus side, the host city is the focus of the entire world while the games are on, and gets an unparalleled chance to show off. Hotels, restaurants, and local attractions may earn significant revenues for a couple of weeks. The benefits in future tourist dollars are difficult to measure.
What Is the Biggest Expense for Olympics Host Cities?
The biggest expense for Olympic host cities is the many huge new sports venues that must be created for the games. Many are left to deteriorate after the Olympic Games have ended.
The Bottom Line
Hosting the Olympics can bring a lot of prestige to a nation, not to mention tremendous amounts of money through tourism, which will include flights booked to the country, accommodation, and money spent in the country.
However, it can be difficult to plan an Olympics event, especially when a significant amount of infrastructure needs to be built to accommodate the games. Some countries profit from holding the games, while others lose a tremendous amount.
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