Olympic games can have a significant impact in the host cities’ economies both in the short and long-term. The finances of the host cities are influenced by the total investment that the Olympic games demand, in the hopes of attracting tourists, foreign investment, jobs, international recognition, and overall infrastructure upgrades. Industries such as transportation, construction, communications, and logistics are directly impacted in the short term.
Evidence from previous Olympic games suggest that there are substantial immediate benefits for the host cities at many level, mainly in infrastructure; however, it seems that there is no guarantee that the event will generate a profit for the host, and in some cases the long-term effect in the economy can be not only negligible, but even detrimental.
Atlanta spent $2.4 Billion in preparation for the 1996 Olympic games with $500 million stemming from taxpayers to fund several projects.
- Urban renovation. Several projects were developed in the areas of streetscaping, road improvements, the construction of the Centennial Olympic Park, airport expansion, public transportation, and public housing.
- Benefits. Atlanta got short-term benefits in the areas of employment and tourism.
- Employment. 77,00 new jobs were created in Georgia.
- Tourism. The tourism sectors such as hotels, food, drink, entertainment, car rentals, airlines, and other travel businesses handled approximately 1.1 million tourists brought by the Olympic games.
- Economic results. Atlanta was able to lure businesses with the international position obtained.
- More attendees than ever before for an Olympic game with the City of Atlanta reinforcing its position as a global commerce hub.
- By 2006, number of international companies settling in the city had grown 30%, to 1,600.
Sydney spent $6.8 Billion in preparation for the Olympic games. Sydney appears to have obtained both short and long term benefits from hosting the 2000 Olympic games.
- Benefits. Sydney benefitted from several resources like game related revenues, tourism, and business generation.
- Game revenue. Sydney achieved total revenue of over $1.2 Billion from ticket sales and sponsorship.
- Tourism. It is estimated that revenues from inbound tourism up to 2011 were in upwards of $6 Billion.
- Business. New business generated by the Australian Technology Showcase and the international exposure account for over $6.2 Billion in revenue.
- Economic results. Sydney enjoyed long-lasting financial rewards from the massive exposure and publicity obtained that created new business opportunities. In addition, the Olympic park that was built serves as a business and exhibition center, which attracts even more business.
Athens had a total cost of $15 Billion in infrastructure developments in order to host the Olympic games.
- Benefits. Athens invested on a metro system, airport, a new tool motorway, conversion of streets into pedestrian walkways, a light rail system, and the rehabilitation of over 1,000 hectares for several purposes. Hundreds of hectares were used to create parks, recreation zones, and environmental educational areas.
- Economic results. By 2008 most venues were in disrepair, due to the high annual costs of maintenance of around $785 million. Athens experienced short-term positive impact, but many have deemed the long-term effect on the local economy to be neutral or even detrimental.
Beijing spent $40 Billion, making it the most expensive Olympic games ever organized.
- Benefits. Beijing was able to benefit from major improvement in several areas, such as mobile communication, clean energy, television, and Internet.
- Urban renovation and development. Several urban areas were renovated like old streets, landmarks, residences from the Imperial period and the Forbidden City. Beijing also planted a new green area three times the size of NY’s Central Park.
- Economic results.
- GDP growth. It was reported a GDP increase of 14.5% per year for 2001 to 2007 period.
- Long-term impact is still pending. Tourist sector seems to have benefitted, but the manufacturers have suffered based on stricter environmental control policies.
London had an estimated budget of $18 Billion for the Summer Olympics of 2012, which were spent on infrastructure, contingency fund, security, regeneration of the lower lea valley, and Paralympic sports funding,
- Benefits. Olympic host nations attract investments due to their increased global profile and by the addition of infrastructures that are built or renovated. With London being a high profile city already, it should benefit from Olympics exposure by maintaining its status against emerging and other established cities.
- Pending economic results. Only time will tell if it was a good business to host the Olympic games for London.
Olympic host nations spend billions in preparation for such events, hoping to get a higher return on investment. However, not all previous Olympic hosts have been able to benefit in the long term. While hosting the Olympic Games is certainly an honor and a privilege, it may not always be the safest financial bet.