What is the gain of hosting the Olympics?

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The opening ceremony for the Tokyo Olympics on Friday featured kabuki, fireworks and a nearly empty stadium.

It is not difficult to associate the Tokyo Olympics with the pandemic; the lack of fans rules out the pump and the usual circumstances, and the merchandise is still labeled “Tokyo 2020,” despite taking place in 2021.

Economists are skeptical that Japan could possibly recoup the cost of hosting the Olympics. Although estimates of the cost of the Games vary, some experts have estimated it to be around $ 35 billion.

“For many cities and countries this is a business of hemorrhaging money, and it looks like for Tokyo it is potentially the same,” said Robert Baade, of Lake Forest College, who studies the economics of professional sport.

The COVID-19 pandemic has also thrown a potentially catastrophic wrench in hopes of profiting from the Games. Parts of the country have already declared a state of emergency in response to the pandemic, vaccine deployment has been slow across the country, and dozens of COVID-19 cases have already been linked to the Tokyo Games. A Japanese poll found that 83% of those polled were against the Olympics being held there this summer.

“The risk-reward profile linked to the organization of the Olympic Games has eroded and considerably eroded [for Tokyo]”Baade said.” The economic implications of the Olympics becoming something of a super-spreader event are significant. In fact, studies that some economists have done would indicate that if it were an event far-reaching, the economic cost to Japan would eclipse what it has cost them so far to host these Games.

The International Olympic Committee often praises the benefits enjoyed by host countries, such as the boom in tourism or a sporting legacy, according to Baade.

Often, he said, the costs far outweigh the gains: There are substantial environmental costs and valuable real estate near the heart of downtown epicenters is depleted. People near sports venues are sometimes displaced and often experience an increase in the cost of goods and services associated with reduced services, such as public transportation. And sometimes that burden is placed on taxpayers.

There are a few promising examples of what success at the Olympics looks like, Baade said. This includes Barcelona, ​​which bolstered the city’s global profile as a sporting destination, and the 1984 Los Angeles Olympics, which generated a net profit from existing infrastructure.

But the real net cost of hosting the Olympics has darker consequences for most cities.

Some have linked Athens’ hosting of the 2004 Olympics to Greece’s debt crisis. When Montreal hosted the Olympics, the city found itself with over $ 1 billion in debt that took decades to pay off. The Rio 2016 Olympics ended up costing more than $ 13 billion, with debts of at least tens of millions.

And while some venues are built to be temporary – in Tokyo, which includes 10 of the 42 Olympic venues – those that aren’t, including some in Athens and Rio, can be left behind.

These countries then have to deal with the social and political ramifications of the Olympics once all the teams have left.

“When people are asked to pay with their taxes or through reduced utilities to host the games, and when economic expectations are not met, these people are going to be angry,” Baade said. “So the riots in Brazilian cities, when citizens started to understand the implications of hosting such expensive events, rather than bringing a country together politically, I think the Olympics have the potential to really fracture a nation socially and politically. “

Why would a city even want to host the Olympics, given all its costs?

For some countries, it’s a source of national pride, said Andrew Zimbalist, professor of economics at Smith College and author of several books on the economics of the Olympics and other pro-sporting events.

“Tokyo last hosted the Olympics in 1964, and it was kind of a world outing party,” Zimbalist said. “They were now establishing themselves as a mature member of the international capitalist community as opposed to a member of the Axis Powers during World War II.”

Zimbalist said he sees Tokyo’s bid for the 2020 Olympics as a chance to show the world that Japan has recovered from the Fukushima disaster in 2011, although the country is still recovering a decade later. .

Increasingly, however, major cities are choosing not to bid for the chance to host the Olympics. It’s just not worth the cost, Zimbalist said.

Considering the cost, it makes sense that countries in the north of the world have historically been more likely to host the Olympics. Although international, the Olympics are often held in wealthy countries that either have an existing infrastructure to host the events or are willing to pay money to build them.

The United States, for example, has hosted the Winter Olympics and the Summer Olympics a total of eight times, with a ninth scheduled for 2028. The first ever Olympics in Africa – the Summer Olympics youth – are planned for 2026 in Senegal.

Baade said he would not be surprised if developing economies or BRICS countries (Brazil, Russia, India, China and South Africa) showed increasing interest in hosting the Olympics.

“On the political front, I think a lot of these emerging economies want a bigger voice in world politics and world affairs more generally. And so they would like to occupy that central stage for a while. And so they’re ready to make that kind of investment, ”Baade said.

The last time the United States hosted the Olympics was for the 2002 Winter Games in Salt Lake City. The general feeling of city residents ahead of the games was excitement, said Stephen Goldsmith, who was the city’s planning director at the time.

He said there had been a decline in advocates for affordable housing, mobility and accessibility, but small businesses were excited about the prospects of increased tourist incomes. But these hopes were sometimes not realized.

“There is a belief that the citizens of the community are going to benefit tremendously from the games,” he said. “And I have witnessed small businesses that went out of their way to welcome citizens of the world to Salt Lake City and surrounding sites, only to find that they were not benefiting from it.”

Goldsmith said companies had increased their food and drink stocks, but tourists were content to stay within the Olympic Village limits.

“I think it’s fool’s gold,” Goldsmith said, “because when I witness the kind of suffering that so many people hoped for [the Games] would benefit – themselves, their employees, their businesses – lost from this, and they lost a lot of money, something that I’ve never seen a final calculation. “

The Salt Lake City Olympics weren’t a complete failure, at least when it came to debt and unused infrastructure. The Olympics saw an expansion of the city’s light rail system, and the Athletes’ Village was turned into dormitories for the University of Utah.

Yet Goldsmith’s advice to other cities or countries interested in the Olympics? No. It’s not worth the shot.

As long as countries have an interest in establishing or re-establishing their prominence on the world stage and are willing to spend the money, the deals can continue, Baade said.

While the prospect of the Olympics never being held in a particular location or alternating between cities that already have the necessary infrastructure seems unlikely to Zimbalist, he sees it as the most logical solution.

“The Olympics were designed in 1896 as a sporting event, and they became a building event. We have to give them back, and the way to do that is to find the permanent venue that has the necessary sports infrastructure, transport, communications and hospitality infrastructure, ”Zimbalist said. ” It’s doable ; it will save economically, it will save environmentally, it will save socially and it will restore the positive image around the Olympic Games.

In the digital age, Zimbalist said, “by having them in one place we can still bring the Olympics to the rest of the world.”

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