How Olympic Costs Can Soar

Composed of 94 boats parading down the Seine, today’s Paris Olympics’ opening ceremony celebrates the gathering of close to 10,500 athletes, 206 national Olympic committees, and approximately 120 national leaders.

It is expensive.

Olympic Costs

We can start with why it has been too easy to ignore previous Olympic costs overruns. It reminds us of why the warrior Ulysses insisted that his crew tie him to the mast. Only then could he resist the Sirens’ song and continue his journey home:

The Past

Similarly the Olympics have an almost irresistible allure. In Boston’s Olympics 2024 “Bid Book,” the pictures of cheering fans and of triumphant athletes were captivating. They convey energy, use state-of-the-art technology, and create jobs. Indeed, their razzle dazzle can create an Olympics push that can be unstoppable.

More recently though potential hosts have said that the cost exceeded the benefits. Boston pulled out of the bidding for the 2024 Summer Olympics as did Rome, Budapest, and Hamburg.

Years later, we find Olympic venues suffering from overspending on specialized infrastructure projects (that are abandoned after the games), the Olympic Villages, security, and media centers. Contradicting the surge in visitors’ business, we just have normal tourism being offset by Olympic visitors. Then, also disappointing, the long term legacy effects are usually minimal. As a result, the host cities wind up with a burdensome current and future cost.

Paris

So how has Paris responded?

According to The Washington Post and NY Times (copying London), they have tried to use the existing venues that let them minimize construction but they did have to build an Olympic Village, an 8,000 seat arena, and an aquatics center. Meanwhile, we can watch beach volleyball next to the Eiffel Tower, fencing at the Grand Palais, and equestrian events near Versailles. As for where the money will come from, of course, it is the taxpayers. But also, the operations segment of the budget is privately financed and the Olympic Committee contributes $1.31 billion. Finally, there will be the ticketing revenue and (perhaps) a tax windfall from hotel revenue.

And, I should add the recent swim in the Seine by Paris’s Mayor Hidalgo. They tell us that cleaning up the Seine was not in the Olympic budget because they were going to do it anyway.

Our Bottom Line: The Numbers

The following numbers display the gargantuan dollars (with Rio the highest), people, and events. (Outturn refers to construction costs.):

So, where are we? Defining cost as what we sacrifice, I conclude that we would sacrifice too much if money forced us to radically change the Olympics. As a first step, the NY Times says to copy London. Your opinion?

My sources and more: For more on the cost of the Olympics, the NY Times, here and here, is the place to start. Then, from there, this Georgetown article, The Washington Post and the Paris schedule came in handy for more of the facts. And finally, for the academic perspective, this paper from a sports economist is ideal.