Economic Downturn in Olympic Host Cities

Nolan Fahey

It is the ultimate goal of every city to host the famous Olympics. To get two weeks in the limelight of the entire world is seen as a chance to show off just how awesome your country is. What’s not to love about hosting the Olympics? You get a chance to massively increase your infrastructure, increase tourism and turn an economic benefit in the long run. The trouble is, the only thing that happens is a massive increase in spending on infrastructure and an increase in jobs for a few years preceding the event. The gains from the broadcasting of the events, and ticket revenue are nowhere near enough to compensate for the expenses of the more recent Olympics.

As you can see in the graph, all of the Olympics since 2004 have cost more than sponsorship and ticket and broadcasting revenue combined. Although the cities are able to convert some of the venues into multi-use facilities that see some use in the years after the Olympics, these venues and the exposure to the world are not enough to spark waves of new tourists. In fact, before the Olympics, the cities see a decrease in tourism, and don’t always gain that back fully. During the Olympics the cities experiences large dips in tourism outside of Olympic spectators and athletes, and these “tourists” hardly boost the local economy as much as regular tourists because of their interests in the Olympics prevent them from taking part in other activities that would stimulated the local businesses. Yet as these cities continue to see economic losses, other cities clamber over each other to bid to host the next Olympics. There are a few potential fixes to maximize economic benefits to host cities and countries. As experienced with the last couple Olympics, the larger cities fail to increase tourism directly to the city as a result of the Olympics, however smaller cities with lesser known attractions are able to boost national and international knowledge in their places of interest. A potential solution would be for smaller cities to host Olympics, not cities that are know of world wide, and already have large numbers of tourists visiting, because it is unlikely for them to boost already relatively high numbers. Smaller cities may be able to increase tourism in the later years, and spawn new suburbs to accommodate the increase traffic. These cities may not have the finances to build adequate venues, however they may be able to take out loans from the government or from larger cities, as they will most likely be able to pay them off better than a larger city would. Another way to make the Olympics host able for smaller cities is to construct less permanent structures. Along with being cheaper to construct, they do not require expensive demolishing if it ends up derelict and in the way of future projects. The U.S. Olympic Swimming Trials are sponsored by the Mutual of Omaha is hosted in a portable pool, which allows the trials to be held in a different city every four years, any city with a sizeable hockey or soccer arena is able to host the Trials.