Economic Benefits Of Olympic Games

The economic virtues of hosting the event are loudly extolled by those who are endeavoring to hold it, but from a correct economic cost-benefit analysis perspective, does an Olympic Games generate positive net benefits for the host nation? The answer to the question of why a country would want to host the Olympic Games is an extremely complicated one. There is a high level of hype surrounding the Olympics; the majority of it is centered around the economic goal of the hosting country and city. It is often assumed that the amount of preparation will create large economic benefits. Long-term economic benefit from the Olympics depends critically on how well venues and infrastructure can be incorporated into the overall economy in years following the games. This paper outlines the reasons why hosting the Olympics is disadvantageous to the hosting country through a cost-benefit analysis.

Hosting the Olympics is not just a single project. It is a series of multiple projects. Housing must be provided, athletic venues must be built, and city infrastructure must be built. Some of these are projects that may have happened without the Olympics but are rescheduled in order to accommodate the Games. All of these projects have benefits to the city besides that of hosting the Games.

Getting to host the Olympics is a game in itself. It begins ten years before the opening ceremonies and cities must compete nationally to represent their country as a candidate. Local committees are run by private business interests that stand to gain from the construction and tourism brought in with the events. Financial management and good preparation are important in establishing a successful Olympic event. It is necessary to separate short-term effects from l...

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...tor spending. In addition, the government of the host country is not willing to reveal the whole truth about the cost because of the negative political consequences that it might suffer. Events of the scale of the Olympic Games, which attract large amounts of money from outside a local economy, are forecasted to have economic impacts in the billions of dollars. Studies, however, have consistently found no evidence of positive economic impacts from mega-sporting events even remotely approaching the estimates in economic impact studies .

Economic impact, when correctly calculated, is not nearly as large as is generally assumed when creating the initial plan to win the bid to host the Olympics. When combined with the substantial upside risks inherent in costs of public works projects, the expected overall benefit of hosting an Olympic Games is substantially negative.