Do The Olympics Help Or Hurt Their Host's Economy?

The Olympics are, for the most part, a welcome two week distraction and one of the rare instances where the focus of the entire world is on one place at one time. The games give each country’s best and brightest the chance to prove they have what it takes to compete on a world stage. It gives the winningest athletes the chance to be recognized for feats the vast majority of us could never dream of achieving. However there is one place the Olympics falls short. Hosting the games does not bring the economic boon that is promised. Preparations by the host cities are now well in the tens of billions of dollars for facilities that go vastly unused after the games conclude. In this global age, it’s time to rethink how the Olympics are conducted without having to nearly bankrupt a host site.

The time where having a single host city hold the games is over. The cost to host the upcoming games in Rio has ballooned over budget to nearly $16 billion dollars. The costs to host the winter games two years ago in Sochi and 4 years ago in London came in around the same threshold. The buildings in Sochi are now largely abandoned and the economic benefits from the London games are still debated. Why are we holding on to this archaic structure that all the games must be held in the same locale? If London is a rare exception of having seen some benefit from being the host city, was there not a better way to invest $16 billion to see a more sizeable return?

The appeal of hosting the Olympics makes sense in theory. The eyes of the world are upon you to display your country. The money from tourism will boost the local economy. Maybe the substantial investment in infrastructure will spur a renaissance and pay off down the road. It all sounds appealing, but now that we have better ways to track people’s spending habits, it all goes out the window. In Beijing tourism dropped significantly in 2008 as travelers actually made it a point to avoid the city, as well as China altogether. It’s estimated that it will take 30 years to pay off the debt created by hosting those games. In London, 2004, around 90% of ticket sales were purchased by citizens of the U.K., meaning that spending was simply redistributed and not actually created. The money spent by Brits to go see the games is disposable income that would have stayed in the local economy whether the Olympics were being held in London or not. Those are the negatives of games that went well, now let’s take a look at this year.

Rio, a beautiful ocean side city on many travelers’ bucket list. It may be on fewer travelers’ lists after the next few weeks. One of the largest arguments for hosting the Olympics is that it’s essentially an advertisement to the world for your city. Well how’s that going to work out for Rio when every story is about its pollution, crime, and corruption? Social media posts from athletes have been overwhelmingly negative with some flat out refusing to participate. The other examples cited in this article at least generally cast their home country in a positive light and still failed to live up to the economic payoff promised. Now take those negatives and apply them to the fact that Rio is essentially showcasing what an undesirable place it is to be to the rest of the world. These Olympics could wind up setting the city and the entire country of Brazil back a decade, or even more.

So is there a solution? Yes. Is it perfect? No. Host sites should bid on individual events or packages of events for which they already have the infrastructure built. As cities emerge to compete on the global level, they can build the structures they choose to bid for the events they feel could be the most beneficial for constant use with the possibility of hosting in the future. This makes the event a true global spectacle with events happening all around the world all tied back to one overriding cause. This scenario also brings back in play the economic benefits of host sites. Without billions and billions of overhead to offset, the increase in spending may actually wind up paying off. If tourists are avoiding Olympic cities due to large crowds, maybe smaller groups of events would actually attract them. The largest problem to solve in this scenario is how to handle the opening and closing ceremonies, but it’s a problem that could more than likely be solved for less than the $16 billion venues are paying now to host the event.

The world is more connected than ever and the Olympic Committee needs to realize this and adapt accordingly. The citizens in some of these countries, this year in Brazil especially, are feeling abandoned when they live in poverty yet their government somehow finds more than $10 billion to build a stadium that will be used for three weeks. Maybe this year will be the tipping point. Maybe the pollution and the broken promises for Rio will be a wake-up call for organizers that the Olympics can be and have been a detriment more often than not for their hosts, but they have been historically resistant to change. Almost as resistant as the super bacteria in Brazil’s water are to antibiotics.