Good explanation of Olympic Games economics
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:
- Olympic bids show conflict between rulers and subjects
- Is it heresy to say that the Olympics could be good for Boston?
- London Olympics spends $10,000 on each security guard’s uniform
- London Olympic Park and costs
- Should Olympic athletes be paid from ticket revenues under the Fair Trade system?

