With Tokyo 2020 taking place this year, the Olympics is the topic on everyone’s lips. As planning takes place so far in advance, it is already known that China, France, Italy, and the USA will host the next few winter and summer games. Each country will be eager for the glory that comes with such a prestigious global event.
Given how hotly contested the honor of hosting is, one would be forgiven for thinking there was some financial incentive tied to it too. In many ways, the Olympics is big business, so it seems logical that it must provide a significant financial boost to a host city’s economy.
The Costs and Profits of the Olympics
There’s no denying the Olympics is a costly affair. According to Business Insider, the Sochi Winter Olympics were supposed to cost $12 billion but ended up requiring a budget of over $50 billion. This is a huge sum to spend, which again leads to the assumption that there must be profit involved to counterbalance this enormous outlay.
So what gains are these host cities expecting to justify such a sizeable cost? The answer is income for their national and local economies through tourism, marketing, and other means. Over a million tickets were sold for Sochi 2014, and over 3 million visitors traveled to the city over the course of that year. Undoubtedly then, this would have been a profitable time for hospitality and retail businesses in the area.
Ticket sales are not the only money-maker they’re relying on, nor is it only local businesses who can benefit. For example, the online gambling industry often reports on and gets involved with such events. Providers like William Hill offer odds on various sports, games, and matches including those taking place in the Olympic games. During such a momentous sporting occasion, with so many international teams involved, it makes sense that sports and betting industries would see an increase in business.
The long-term economic impact can be hard to calculate, as the consequences of the Olympics are so far-reaching. Dozens of different sectors can be impacted, along with a country’s reputation as a whole. The value of the latter is hard to put into figures but may be beneficial in terms of politics, tourism, and national morale.
Was the Sochi Winter Olympics worth it?
The success of the Sochi Winter Games is a hotly contested topic, largely due to the incredible expense, which made it the second-costliest Olympic Games in history. The Russian state is still actively paying for this in 2021, to the tune of roughly $1.2 billion per year in interest and tax revenue.
This is because the venues and infrastructure built specifically for the games must now be maintained — a cost that isn’t always realized when discussing the effects on the host country. The event didn’t put the country in everybody’s favor, either, as some residents felt as though the disruption to the area, and the amount of money spent on the Olympic Games, wasn’t in their best interests.
That being said, the games brought people and business to the area and showcased Sochi to the world. The resort city saw an increase in visitors over the winter months following the Olympic Games in 2014, as viewers clearly saw the beauty of the area at that time of year.
Perhaps those who flew in to watch the Olympics returned again, or those watching the international broadcast of the event admired the landscape and decided to visit and try out some winter sports for themselves.
In the end, it’s impossible to calculate the real cost and benefit of hosting the Olympic Games. Certainly, the 2014 games drew the eyes of the world to the city of Sochi, and most of them liked what they saw, and that in itself may well be beyond value in the long term.