This interview with Andrew Zimbalist, an economist who studies the cash bonfires that cities stage for athletic events, has some interesting points:
when the tally is accurately made we’ll find that Rio has spent somewhere in the order of US$20 billion to host the games this year, they’ll receive back something around $3 billion in revenue, so there’s a deficit there of $17 billion. … What was previously seen by many people around the world as a city of immense natural beauty and great partying and a fun-loving lifestyle I think is now seen as a city that is severely troubled with water pollution and water shortages, with violence, with economic recession, with corruption in business and with political instability. So it’s more likely that the Games will have a negative impact in the long run than a positive impact, in addition to the short-run deficit.
[Where does the $3 billion in revenue come from?] They’ll receive about $1.2 billion from corporate sponsorships, domestic and international. They’ll receive about $1 billion from international television money. They’ll receive $300 million or $400 million from ticket sales and then there will be some miscellaneous revenues.
Now when the typical tourist doesn’t come and they are replaced by the Olympic tourist the Olympic tourist goes home and tells his friends, relatives and neighbours that he saw some wonderful competitions but the Olympic tourist doesn’t go to the typical tourist sites. When a normal tourist goes, if a normal tourist goes to London they go to Piccadilly Circus, they go to the theatre, they go to the museums and they come home and they tell their friends, neighbours and relatives about what a lovely place London is to go. So you get a word-of-mouth effect, which according to studies in tourism is the most important way to grow tourism. You get a word-of-mouth effect from the typical tourist that you don’t get from the Olympic tourist. So not only does the number of tourists not grow typically when you host a mega event, and sometimes even falls, but you lose the word-of-mouth benefit from promoting tourism.
Related:
If it loses so much money, why do cities and nations fight to host the thing? For a long time, I’ve thought it certainly must be the opposite. It would seem that the games make so much money that it makes sense — to a very large group of people — to build entire cities and sport complexes and event sites to host them, sometimes even when that means leaving all of that infrastructure to rot afterwards. You can’t build a temporary city to lose $17B on it. No one would do that. I mean, right? In a world of hard numbers, someone, somewhere has to be making enough money to make the time and hassle worth it. (There’s always rumors about IOCC being corrupt, but this has to be bigger than that.)
Don’t get me started. The Olympics are way past their shelf life. Why have they not run out of sucker hosts?
There’s a clear trend of fewer and fewer cities competing for the games. London in 2012 had 9 competitors, Rio 8, and Tokyo (I believe in 2020) only 4.
(as seen in BBC, quoted from inexact memory).
On the other hand, bidding for such expensive events in certain places is a legalized way for regimes there to spread state money to oligarchs. The Sochi winter Olympiad allegedly cost $61B – and that money went from Russian people’s pockets to those of Putin’s cronies.
The 1976 Montreal games lost so much money that only one city bid for 1984: Los Angeles. Being the only bidder they didn’t have to submit to the IOC’s demands. Not coincidentally, the LA games made money.
My theory: make it permanent in Greece, re-use the infrastructure.
On a related note, the president of Zimbabwe has ordered the arrest of their entire Olympic team for not winning any medals (he’s kind of got a point?): “We have wasted the country’s money on these rats we call athletes. If you are not ready to sacrifice and win even copper or brass medals (referring the 4th and 5th positions) why do you go to waste our money… If we needed people to just go to Brazil to sing our national anthem and hoist our flag, we would have sent some of the beautiful girls and handsome guys from University of Zimbabwe to represent us.”
http://www.pmnewsnigeria.com/2016/08/24/mugabe-orders-arrest-detention-of-zimbabwean-olympic-team/