Running on fumes — the Games are expensive to host, but Paris may well turn a profit

Many of the world’s best athletes are currently competing in the first Olympic Games to be held in Paris since 1924.

The French capital is buoyant with excitement and its local businesses filled with paying tourists from all over the world. Indeed, it’s difficult not to be tempted into booking a weekend getaway to see the spectacle up close.

But is the Olympics really a good deal for host cities? The evidence suggests a resounding no. Host cities almost always blow their budget on the Games, having to invest heavily in specific sporting facilities, as well as accommodation and transportation for the influx of athletes and tourists.

The delayed Tokyo Games in 2021, for example, ended up costing an estimated $15.4-billion, exceeding the proposed budget by 244%. And it was a similar story four years before – the Rio Olympics cost 352% more than the initial proposal.

As part of the bidding process to stage the Games, potential host cities and governments are required to guarantee that they will cover these costly overruns. So, given the financial drain a home Olympics so often proves to be, it is no surprise that there has been a steady decline in the number of formal bids to host the Games over the past decade.

A total of 11 cities submitted applications to host the 2004 Athens Olympics, followed by 10 bids for Beijing in 2008 and nine for London in 2012.

After London there was a significant reduction. The 2016 Olympics was awarded to Rio from just four bids, 2020 went to Tokyo from three and there were only two bids submitted by cities wanting to host the 2024 Games. This declining interest prompted the International Olympic Committee (IOC) to award the 2028 Olympics to Los Angeles, the only other bidder for the 2024 Games, without undertaking a public bidding process.

The reduced interest in hosting the Games has been influenced in large part by negative public opinion. The cost of the 2004 Olympics, for example, was thought by many to have triggered Greece’s financial crisis.

Within days of the closing ceremony, Greece warned the euro area that its public debt and deficit figures would be worse than expected. It subsequently posted a deficit more than double the eurozone limit and years of economic hardship followed. More than 400,000 people emigrated; by 2013, the unemployment rate for people aged under 25 had reached 58%.

There is also a feeling among the public that the cost of hosting the Olympics will ultimately land at the feet of the taxpayer.

Montreal, which hosted the Games in 1976 and where a mammoth US$1.1-billion was spent on a new Olympic stadium alone, famously needed decades to pay off its debt.

Fear of the massive costs involved led both Boston and Budapest to withdraw their bids to host the 2024 Olympic Games, citing a lack of public support and strong political objections.

In 2015, the then mayor of Boston, Martin Walsh, said hosting the Games was “a commitment that I can’t make without ensuring the city and its residents will be protected”. He added: “I refuse to mortgage the future of the city away.”

In Budapest, more than 250,000 people signed a petition demanding that the city drop its bid and direct the money towards building modern hospitals and well-equipped schools.

But the Games are not always accompanied by a bleak legacy. In 1984, the Los Angeles Olympics was held using almost entirely pre-existing infrastructure. And that year, the Games turned a $215-million profit. There are reasons to believe Paris could follow suit. The organisers have, as far as possible, used existing facilities and low-cost temporary venues.

This includes a stadium in the shadow of the Eiffel Tower on the Champ de Mars that will host the beach volleyball. And, so far, the cost of the Games looks to have stayed close to the original budget of $8.5-billion.

Hosting the Games can also provide lasting benefits for local communities to inherit, regardless of the cost. The London 2012 Olympics, for example, provided new facilities, housing and transport links that have contributed to the regeneration of the city’s eastern boroughs. In a poll conducted 10 years after the Games, two-thirds of London adults agreed that hosting the Olympics had left a positive legacy.

Next steps for the IOC

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.