As China prepared to host the 2022 Winter Olympics in Feb. 2022, observers 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 2020 summer games). For the 2020 games, Japan reportedly originally budgeted $7.4 billion, a number that quickly rose to $15.4 billion but was later pegged at $13.6 billion. With an estimated revenue of $6.8 billion and costs that could end up well over $15 billion, the 2020 Tokyo games could become known as one of the most costly in history. A final breakdown is expected sometime later in 2022.
- 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—and 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.
- At a projected cost of less than $4 billion, Bejing could be one of the least expensive Olympics on record, though experts warn that cost could easily double.
The Impact of COVID
As if the normal unexpected costs of managing a megaevent like the Olympics weren't enough, Japan had to deal with a one-year postponement due to the COVID-19 pandemic and the economic consequences that ensued. Indeed, economists projected that the eventual total losses would end up in the tens of billions of dollars.
Though the COVID pandemic was certainly unexpected, the financial planning around the Tokyo Games was already facing criticism prior to 2020, 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 costs of building new event venues and upgrading infrastructure, much of which went unneeded due to the spectatorless games.
Olympic Winners and Losers
Japan's Olympic financial disaster was not the first and probably won’t be the last. Read on to learn about other countries that faced Olympic-size losses, along with those that emerged with a more positive financial outcome.
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 in the host country.
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 until 2006—30 years later—to be fully paid off.
Some have argued that Quebec’s 1980 referendum for independence from Canada was sparked by Montreal’s budgetary woes. Another result of the economic fallout was the birth of Canada’s national lottery, a scheme originally devised to help repay the Olympics losses.
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 triumph for outstanding infrastructure and immense sporting achievement. Despite receiving almost unanimous praise from viewers around the globe, though, a lack of forward-thinking and legacy planning has left the citizens of Sydney debating if Olympic economics means 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 had risen to approximately $5 billion by the time the first medals were awarded, $1 billion of which was covered by public funds. 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; by that time, it had become little more than a sightseeing stop for tourists.
A Greek Tragedy
The Olympic Games were held in Athens, Greece, in 2004. Some have speculated that the financial hole dug by excessive and irresponsible spending—in excess of $15 billion at the time—helped lead to the enormous Greek financial crises of the 2000s and 2010s.
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 estimate the cost per household at more than $56,000, which has been 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 prior to the games was of the financial costs involved—and whether Britain could survive such an expensive outlay—the discussion afterward was filled with the positive social ramifications of the event and its empowering influence on U.K. youth.
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 economies frequently don’t. Nations have long had a history of bad financial repercussions following their hosting of the Olympics.
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 sporting 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.
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 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.
|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||$53 million|
|2016||Rio de Janeiro (S)||$4.6 billion||($2 billion)|
|2018||Pyeongchang (W)||$12.9 billion||$55 million|
|2020||Tokyo (S)*||$13.6 billion||($6.1 billion)|
Based on an initial bid of just US $3.9 billion, Bejing, site of the 2022 Winter Olympics, would appear to be getting off easy compared to Pyeongchang, South Korea, which ran up costs of $12.9 billion in 2018. A bid, of course, is not the actual cost, which tends to at least double by the time all costs are added up.
It remains to be seen how big an impact the loss of international ticket sales (foreign visitors are not allowed to attend), COVID restrictions, the cost of a new high-speed rail system (not included in the budget), and other expenses that always come into play will have on Beijing's ultimate costs.
What Was the Most Expensive Olympics in History?
It will likely be the 2020 Tokyo Summer Olympics, held in 2021 due to COVID-19. Until final figures are in, however, the reigning champion of cost overruns is Sochi, Russia, which spent a record $50 billion on the 2014 Winter Olympic games. Interestingly, this didn't translate into a huge loss. In fact, Sochi claimed an overall profit of more than $53 million.
Which Olympics Lost the Most Money?
Rio de Janeiro, host of the 2016 Summer Olympics, lost $2 billion, putting it at the top of the list of Olympic money losers.
What Is the Biggest Expense for Olympics Host Cities?
The biggest expense for Olympic host cities is the number of venues that must be created, which are often left to deteriorate after the Olympic Games are over.
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