The Olympic price tag: Hosting costs often far exceed gains, analysis shows

Hosting the Olympics is not all shiny

Hosting the Olympics can yield massive economic gains, as France’s $12 billion boost from playing hosts for the Summer Games in 2024 shows. But data tells a different story: Staging the Olympics is no easy feat.

While the Olympics website claims Los Angeles will accrue an economic benefit of $18.3 billion by hosting the 2028 games and Sydney will make $13.4 billion for the 2032 event, analysis shows that in most games, costs from hosting the event have far surpassed gains.

While the Olympics website projects economic benefits worth $18.3 billion to Los Angeles for hosting the 2028 games and $13.4 billion for Sydney in 2032, analysis shows that hosting costs have far surpassed gains in most games.

Against this backdrop and potential hurdles, the Indian Olympic Association has sent a letter of intent to host the 2036 edition of the event. Paris’ success appears to be an exception to the norm.

Research published by the Council on Foreign Relations tells us that Paris hosted one of the least expensive games in nearly 16 years, spending only $8.7 billion in 2024 compared with $13.7 billion spent by Tokyo, a whopping $23.6 billion spent by Rio for the 2016 event, and $16.8 billion spent by London for 2012.

Moreover, analysis shows that countries hosting the games almost always surpass the initial cost estimates.

Despite being economical, the Paris games cost 115 percent more than the city had initially estimated. The boost to the GDP was a meagre 25 basis points, or 0.25 percentage points, for the third quarter.

On the other hand, cost overruns in Rio were 352 percent.

However, there are also gains to be made. While the games did not significantly impact the London economy, they did boost Barcelona’s image as a tourist destination.

Other benefits, which the Olympics claim, involve efficiently utilising resources after the event. In Tokyo, the game venue was awarded a thirty-year lease at less than its construction cost. In India, the Commonwealth Games experience from 2010 was similar.

A 2009 NBER study indicates that the intent to host the games has brought unrequited gains from the signal that countries are moving to a more liberal regime.

Beijing’s award in 2001 was accompanied by China’s entry into the World Trade Organisation, while the 1964 Tokyo Games coincided with Japanese entry into the IMF and the OECD.

However, opinion is divided as another paper in the Economic Inquiry journal found no long-term impact of hosting the games on GDP or trade openness.