How does hosting the Olympics reshape a country’s economy? The truth is, it’s hard to put numbers on the true economic effect of the Olympic Games but there are measurable statistics that we can use. Hosting the games requires a ton of strategy, planning, and coordination; to make a profit out of it is even harder. We will be looking at the economic effect of the Paris 2024 Olympics and comparing other countries that have hosted the Olympics.
Behind the Torch: How the Olympics Reshape Economies
What Does it Mean For a Country to “Host” the Olympics?
Countries that have put in a bid are awarded the opportunity to host the Olympics between 7-11 years before the event itself. The IOC or International Olympic Committee will vote on who they think will be the best fit for the Olympic games of their respective year. When a country hosts the games, they are expected to provide accommodations for athletes and to have places that meet the guidelines to run all games and events.
The Details About the Paris 2024 Olympics
Exceeding many expectations, economists’ beliefs, and inflationary pressures, the Paris 2024 Olympic organizing committee closed their financial account with a surplus of at least €26.8 million.
The Paris 2024 Olympics were truly an impressive feat, not only making a profit but also doing so while also cutting their carbon footprint by 54.6% (compared to averages of the London 2012 and Rio 2016 games).
This was the third time Paris has hosted the Olympics, tying it with London for the two cities that have hosted the games the most times. Although hosting the Olympic Games sounds like all fun and glory, there are many costs and factors that come into play.
Unveiling the Costs of Hosting the Olympics
The Olympics are one of the most expensive and biggest events to host and take place over several days. Every country has their own approach when it comes to hosting the Olympics; some spend their money more wisely than others. Total expenditures for hosting the games ended up being around €4,453.9 million.
Two new stadiums that were created for the Olympic Games: Olympics Aquatic Center and the Adidas Arena. The construction and creation of the Adidas arena cost around €150 million. The Olympics Aquatic Center cost around $204 million to build.
The colorful opening ceremony along the Seine River, would end up costing over €100 million, and even more if you factor in security costs. The Olympic Village was spread throughout 3 different cities, costing upwards of $1.5 billion. Other things such as the Seine River cleanup, staffing, security, broadcasting, renovations, and other logistics are hard to measure.
Revenue from hosting the Paris 2024 Olympics
Total revenue made from hosting the Olympics ended up being around €4,480.7 million.
The majority of this revenue came from ticket sales, approximately €1.333 billion. Over 12 million tickets were sold during these games, and ticket sales exceeded estimates by over €348 million. Another €1.238 billion came from sponsorships and partnerships.
The IOC (International Olympic Committee) also allocated around €1.228 billion to help fund it. Public subsidies totaled €204.1 million, which was used entirely to fund the Paralympic Games. These financial results also meant that the organizers would not have to spend the €43 million reserve package, which was available if necessary. The overall cost increase from the estimated cost was only 17%, which is the smallest in Olympic Games history.
Intangible Economic Benefits
Hosting the Olympics not only creates a physical money surplus but also brings a lot of intangible benefits. Some of those benefits include global recognition, publicity, and urban development.
Hosting the Olympics gives the country a reason to improve many things in preparation for such a big event. Additionally, investors are more likely to invest in and support a country that has successfully hosted the games.
Intangible Economic Detriments
Not everyone in the world is a huge fan of the Olympic Games. Many locals living in cities that host the Olympics actually believe that it is detrimental to either them or their community. Inflation spikes due to the increase of tourists, forces locals to pay a higher price. Additionally, many local businesses lose customers due to road blockages and construction for the games.
Regular customers choose to stay home during these times because of how busy and hectic things can get. “The situation is catastrophic. Since July 18, in the gray zone where access is limited, the drop in attendance in bars and restaurants has been between 40% and 80%,” protests Frank Delvau, president of the Union of Trades and Industries of the Paris-Ile-de-France Hotel Industry.
Where Does the Money Go?
The money from the Paris Games went to 6 individual categories. International Olympics Committee, Paris Organizing Committee, French Government, Local Authorities, Businesses, and Regional Economy.
Examples (Successes and Failures)
Paris 2024
The Paris 2024 Olympics is a great example of how hosting the games can actually be profitable and beneficial for a country’s economy. Not only did they make a profit, but they were also able to benefit from many other factors. The cleaning process for the Seine River which is known to be not very clean, wasn’t really taken too seriously until the preparation for the 2024 Olympics, where the plan was for the athletes to swim in the Seine. Also, what once served as the Olympic village for the athletes is being turned into a Parisian neighborhood.
Athens 2004
The 2004 Olympics were held in Athens, Greece, and to this day they still have debt to be paid because of the games. They created venues for the games, which were left underused and even disused after, and have been paying to maintain them. This event was grossly miscalculated, and although the event itself was a success and Greece enjoyed the spotlight during the Olympics, the financial burden was deeply regrettable.
Reforms and Future Considerations
To save on costs, host countries should use existing infrastructure instead of creating temporary or custom venues for specific events. Countries should start to prepare for the Olympic Games for years to come, even if very subtly. Support local businesses by creating pop-ups or features instead of having big brands steal the show. Get the local community involved when making big decisions that will also affect locals.
Conclusion
Taking all of this into account, you can see that even with many intangible effects, the Olympics have a huge effect on a country’s economy. Paris was able to create a profitable event and gained mass publicity as well as general attraction because of the Olympic Games and therefore it was economically beneficial to the country.
Not only was a profit made (which will be put into sports in France), they did so while reducing carbon footprint emissions by over 50%, cleaned up the city, and made many renovations in the city of Paris, ultimately making it a wealthier and more pleasant place to be in. However, although this benefited the country itself, it has had harsh effects on local restaurants in Paris.
Not every country, and especially with Greece in 2004, was able to be as successful as Paris was in 2024.
