YOU DECIDE: Do the Olympics Benefit the Economy Of the Host City?

The International Olympic Committee (IOC) selects a host city many years before the Games will be held there. For example, it was announced on July 2, 2003, that the 2010 Winter Olympics would be held in Vancouver, British Columbia, Canada. Host cities are announced so far in advance because the city needs time to prepare for the Olympics. Billions of dollars are spent on new arenas, housing, infrastructure, and telecommunications. If your city is chosen to host the Olympic Games, it can mean an enhanced international status, but it can also mean a risk of economic hardship after the Olympic flame has been extinguished.

Let’s take a look at a few of the benefits and costs of hosting the Olympics.

Benefits

Tourism

An increase in tourism to the host city can be an immediate benefit of hosting the Olympic Games. Once a host city has been chosen, it may experience new levels of international exposure and prestige that draw crowds of tourists both before and after the Olympics. Those tourists will spend money on the hotels, restaurants, and entertainment in the host city. This money provides a significant boost to a city’s economy.

Construction

Billions of dollars must be spent on new facilities and infrastructure for the Olympics. Because building sports arenas takes a lot of workers and materials,  many levels of the city’s economy can benefit from all the new construction. Hundreds of construction jobs are created, and many support industries, such as electrical and plumbing companies, will see an increase in business. Improved infrastructure can also provide a city with greater economic capacity. Better roadways, as well as improved airports and seaports, can raise a city’s productivity, leading to a stronger economy.

International Prestige

Once it is announced that a city is competing to host the Olympics, or when it is actually awarded the event, that city is immediately recognized as an attractive place in which to live or do business. As a result of this global attention, the city is able to establish new business relationships with international partners that can have a lasting positive affect on the host city’s economy.

Costs

Preparatory Spending

It takes billions of dollars to prepare the city for the Olympic Games. When the city is not able to secure the necessary amount of private funding and sponsorship for new stadiums, media facilities, and infrastructure, it can incur a large post-Olympic debt. For example, preparations for the 1976 Olympic Games in Montreal, Canada, were paid for with public funds. Budgetary shortages created a financial disaster, and taxpayers in Montreal were not able to pay off the Games until 2006.

Maintenance of Facilities and Infrastructure

Building new facilities for the Olympics creates jobs and stimulates the local construction sector of a city’s economy. But what happens to those new facilities when the Games are over? Maintenance can cost millions of dollars a year. If the Olympic facilities are not used for future sporting or entertainment events, they quickly become a drain on the city’s economy.

Lost Opportunities

When a city decides to bid for a chance to host the Olympic Games, it gives up the money that could be used to benefit its citizens or boost its economy in other ways. If a city decides to bid to host the Games and is successful, it must find ways to integrate the new facilities and infrastructure in ways that provide for long-term economic growth.

 

Dig Deeper

What Do You Think? Given the benefits and costs of hosting the Olympics, do you think it would be wise for your city—or a big city near you—to host the Olympics? Would your city benefit from all the new arenas and improvements in infrastructure, or would it hurt your city in the future?

You are a member of the International Olympic Committee. It is your responsibility to select the best possible host city for the next Winter Olympic Games. What questions should you be asking each potential host city to make sure they are ready to host an Olympic event?