There is a single greatest festival in the entire world that is celebrated by all people, putting aside religion, politics, and ideological differences. This refers to the modern Olympic Games, a sporting festival that occurs once every four years, with a distinction between the Summer and Winter Games. Every athlete dreams about getting a chance to compete in the Olympics at least once in their lifetime, some are lucky to participate in multiple Games. Its popularity is such that countries spend massive amounts of time, energy and money just to perform their best at these Games. However, behind this curtain of pride, fame and pomp lie a few cold and, sadly, painful truths that few realise.
The budgets involved in hosting the Olympic Games have always been large, and they continue to grow with the rising costs, technology and standards of living - the Tokyo 2020 Games had a cost of $15.4 billion, with recent government audits claiming that the real cost might be much higher than that. The true example of overwhelming costs can be seen through the 2008 Beijing Olympics ($40 billion) and the 2014 Sochi Winter Olympics ($50 billion). Not only are these massive budgets, but the final amounts tend to go above the original plan - since 1960, the Games have had overruns averaging 172%. Comparatively, Japan’s overrun was only 111%. The original budget for the Tokyo Olympics was cited as $7.5 billion in 2013, which rose to $12.6 billion by 2019; the postponement due to the pandemic added $2.8 billion to the final total.
Most people would assume that surely cities volunteer for such a mammoth task only if there were massive financial benefits as well. However, the reality is that hosting the Olympics is usually a financial loss to one’s country and provides little economic boost, even after including the returns from tourism and ticketing sales. It also involves years of planning and building infrastructure to support this endeavour. Hence, the question arises, why would any city (or country) be willing to host the Games? Well, the answer to this fascinating question requires us to look at the broad picture and macro-analyse.
Spending Types
To understand this broad picture, we must examine the costs involved in hosting the Games. Firstly, general infrastructure is a major cost, which includes transportation, accommodation and other supporting services. Second, there is the sport-specific cost, such as infrastructure for competition venues and services to maintain them. Finally, we have the operational costs involving general administration, support services in the Games, opening and closing ceremonies and security. The aggregate of these leads to the Total Cost of hosting the Games. It is easier said than done, however, since the categorisation of costs is a rather tricky business. Some of the costs involved, such as supporting infrastructure, are those which the government would have incurred eventually; one could say that these are just costs that have been preponed. On the other hand, some costs are incurred specifically for the Olympics, such as the competition venues and accommodation for athletes. Hence, total costs are often carefully calculated.
Impact of the Games
The Olympic Games tend to have a significant impact on the host country, both positive and negative. It provides for a rise in the positive publicity of the host, but may also have a hit on its economy. The 2004 Games in Athens have been cited as a major contributor to the Greek government debt crisis. As stated before, the Games don’t have any positive impact on the economy of the host; to put it in an analogy, ‘The Olympic Games are like a party you throw for your friends and overspend, hoping that they leave with a positive picture of you’. The Games also impact the public image of the host country itself; for instance, the massacre of athletes in the 1972 Munich Olympics led to a drop in public ratings of Germany.
A final impact is on the citizens themselves - there have been multiple instances of human rights violations due to the Games. To make way for Beijing’s 2008 Olympic infrastructure, an estimated 1.5 million people were forcibly evicted from their homes with minimal compensation. The neighbourhoods were destroyed and residents were removed to the outskirts of the city. Along with this comes the very raw sum of hosting these Games, the brunt of which has to be borne by the taxpayers of the nation - of the total price of the 2020 Tokyo Olympics, the Japanese taxpayers have contributed to around $8.7 billion.
The Benefits
Now that I have battered the essay with the negatives of hosting the Olympics, let’s look at its advantages. The first, and most obvious one, is the boost in tourism (albeit short-term). The fame and pomp of the Games draw upon hordes of sports enthusiasts, both domestically and internationally. This leads to the second advantage of advertisement of the country, which helps the long term tourism and foreign investment coming into it. The creation of new and improved infrastructure helps in improving the standard of living and thereby the overall performance of the region, pushing local industries to become global competitors and key players in the economy.
An interesting observation is that the creation of sports infrastructure helps in boosting the athletic potential of the country, often creating future champions and medal-winners. There is also the home advantage that the country’s athletes get, a proven benefit. Japan’s most successful Olympic years were in the 1964 and 2020 Games, both of which were conducted in Tokyo; so, hosting the Games boosts one's chances of receiving more medals. Finally, there’s the very “Olympic legacy” and civic pride felt by the citizens on having hosted the Games - something that countries value greatly.
The very basic answer to the question posed at the beginning of this essay is that each country hosts the Games to fulfil some core goal, with the benefits mentioned as additional advantages around it. Each country thus has a basic motive behind such an action, either to advertise itself to the world outside or help its community on the inside, sometimes both. The given logic makes more sense from the examples below:
Impact on Japan
Like any other Games, the 2020 Olympics have had a significant impact on Japan. Its success has brought in 58 medals, including 27 golds, and a rise in public ratings for Japan. It has also created a futuristic infrastructure that would help in raising the standard of living in Tokyo while providing better facilities to its athletes. Parallel to the aforementioned benefits, there is a predicted boost in tourism which would be observed when countries begin opening their borders to international travellers.
Of course, the Games have had several negative impacts on Japan and its economic decisions. Japan’s very decision to conduct the Olympics despite the pandemic has managed to create some frowns among activists, healthcare personnel and even citizens, and it has brought the country’s priority towards safety under criticism, which may affect its tourism. Japan also faced several losses when its major event sponsors, such as Toyota, pulled back from their advertisement campaign in order to prevent a bad light on their public image after noticing the discontentment among the citizens. While the large-scale campaign may have brought in a massive tourism boost under normal circumstances, the pandemic has created an additional loss of a few hundred million dollars, at least for the time being. Along with tourism, the ticketing sales budget was estimated at $800 million, which was completely washed away. Such a significant shortfall will be borne by government entities such as the Tokyo Metropolitan Government. The very cost of hosting will inevitably delay any planned projects as budgets would reduce to compensate for the losses. However, the costs cannot directly affect the Japanese economy, whose sheer size of $5.38 trillion (GDP, 2021) provides considerable stability.
To allay the impact faced by Japan, the IOC (International Olympic Committee) contributed to approximately $1.3 billion of the total cost. Despite these losses (tourism and ticketing), the IOC stands to be the real winner of the Olympics - even without the fans, it was assured approximately $3 billion - $4 billion from the sale of broadcasting rights. Since the IOC is a sports and entertainment business, 75% of its income comes from selling these broadcasting rights and 18% from sponsors.
Current Situation
The impacts faced by host countries combined with the constant profits made by the IOC at their expense have made countries less eager to bid for becoming an Olympic host. Despite the legacy, civic pride and all that jazz, leaders are coming to terms with the truth that the realistic drawbacks far outstrip the optimistic benefits. There have been several calls for making a better system wherein countries are not impacted as much, but no concrete solution has been reached. For now, we can only hope for the creation of a way that will effectively and efficiently save the world’s greatest festival.
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