By RDG Director of Innovation and Global Research Doug Radcliff
“The best way to predict the future is to create it.”
“A growing number of economists argue that the benefits of hosting the [Olympic] games are at best exaggerated and at worst nonexistent.” I started thinking about the impact of the Olympics on host cities as Paris is currently in the midst of preparing for the 2024 Olympics, which will be the first Olympic games I attend! It is an interesting process – seeing a city prepare. Metro lines being extended and created, stadiums, both temporary and permanent being constructed, construction sites around the city, building repairs, etc., etc. The city truly is changing. The Olympics are anticipated and eventually attended by tens of millions of people. Are these major events that require new city development projects – the Olympics, the World Cup, the Super Bowl (to a lesser extent as it uses existing stadiums) – truly worth it for the hosting city?
There are numerous costs a city incurs. First and foremost is the price of submitting a bid to the International Olympic Committee (IOC), generally into the millions of dollars and involves preparing, evaluating, hiring consultants, events, travel, etc. Many cities spend between $50 and $100 million in total. Tokyo spent approximately $150 million on its 2016 bid and close to $60 million in 2020. Once a city wins the bid, the real costs come into play – road system development, airports, stadiums, security, etc. For example, Paris is currently in the process of extending multiple metro lines as well as creating entirely new ones. The final total cost of hosting the Olympics being in the tens of billions of dollars.
Furthermore, the expenditures greatly outweigh the revenues. In 2008, Beijing experienced revenues of $3.8 billion and expenditures of $40 billion. In 2012, London generated revenues of $5.2 billion and costs of $18 billion, $4.4 billion of which came from taxpayers. Paris is on track for approximately $8–9 billion in expenses, with roughly $2–3 billion of it coming from public finances. Of course, there are positive benefits that result from hosting the Olympics – increases in jobs, tourism, international attention, etc. But the reasons for hosting the Olympics are clearly not economically driven, at least not in the short run. Meaning, whatever the motivation, cities need to find ways to minimize the short-term negative economic impact of the Olympics as much as possible.
This is why the IOC needs to emphasize sustainability. They need to start in the bidding process. Cities need to display they already have certain basic infrastructure in place, or the cost burdens will be far too significant. For example, Paris will be using several existing stadiums, such as Bercy Arena, Stade de France, and La Défense Arena (as well as constructing several temporary ones). Furthermore, through increased transparency, the plans should outline the use of locally and regionally located companies in order for the hosting city and region to best feel the positive impacts, and furthermore, to begin feeling those impacts early on. Additionally, if new stadiums and infrastructure are needed, they should be developed with the post-Olympics future in mind and how they can continue to benefit the community and society of the hosting city. Paris is building one permanent stadium for the Olympics – Le Centre Aquatique Olympique de Saint-Denis. After, it will be used as a swimming and cultural center.
Yes, there are many positive effects one’s city can experience when hosting the Olympics –having the global spotlight and its impact on branding, significant infrastructure improvements, etc. Clearly, an Olympic bid is an investment in the cities’ future. Opportunities like the Olympics and World Cup provide cities the opportunity to cut through red tape and get things done that perhaps have been slow to progress. Therefore, it is okay to “lose” money in the short-term when building long-lasting, post-Olympic infrastructure that ties into the long-term quality of life improvement strategy of the city. For example, the development of the public transit systems. Additionally, cities could convert the athletes’ housing during the games into affordable housing afterwards. In Paris, the athletes’ village will be converted into housing and office space post-Olympics. The only catch – it isn’t particularly affordable. Although it is cheaper than surrounding areas, the cost of apartments are more expensive than those in the direct neighborhood.
What does this all ultimately mean? It signifies the sustainability of the project must be deeply analyzed when pursuing these major events. Will it stand the test of time and serve a purpose in the post-event world? It is time to place sustainability at the forefront of the Olympics.