Sports Economy Olympic Games

At first sight, hosting the Olympic Games is a wonderful event for a country. Every one must be happy and most of all proud when their country are hosting the Olympic Games.  Recently, we have seen that the organization of the 2024 olympic games has been given to France and particularly Paris. As a french citizen, i’m really happy with this, but i can say that the excitation in France is really mixed. Be at the center of this worldwide event, feel the emotions, see all the stars that will participate and enjoy the atmosphere of the Olympic Games are some of the things that make France people really enthusiastic. Many journalist are already writting about the great impact that this will represent for France : the tourism, the economy, the development of sports facility and many other things.

But this is not as simple as this, hosting the olympic games represent a huge cost in terms of constructions, installations and sports facilities. To make the organisation of olympic games something profitable, incomes have to be higher than all of these costs. History shows that some cities like Munich in 1972 or Montreal in 1976 got huge losses. Otherwise, some cities like Barcelona in 1992 or Atlanta in 1996, took advantage of hosting the Olympic Games and made benefits.

Hosting the Olympic Games is now like winning an auction. Spectators expectations, CIO ‘s demands and the competition with other city make the costs going higher and higher. We call it « The winner’s curse ». Win this auction require an ambitious project to seduce. That’s why cities are often underestimating the real value of their project

Today, hosting the Olympic Games is more and more expensive. London in 2012 expected to pay around €7.4 billions to be ready. Finally the cost was about €14.8 billions.

I think that there is an important correlation between making the organisation of the Olympic Games something profitable and make the population happy and proud to have hosted it.

Rio 2016 : 

In 2009, Rio de Janeiro won the right to host the 2016 Olympic Games with a $15 billion bid, a sum equal to over $2,000 for each citizen of Rio, even before the expected cost overruns.

Hosting the Olympic Games permitted Rio to accelerate on several projects. Many infrastructures have been built for the athletes : RIO created 70 new hotels and residences and invested $1.5 billions in the tourism industry, $2 billions to renovate or build new facilities. These constructions of hotels and other infrastructure was estimated to require some 16,000 staff to work in the new buildings and residences, creating training and employments opportunities. Rio spent approximatively $6.7 billions to renovate its port and to develop public transits. These things could be profitable for the population for a long term.

In term of tourism, Rio took advantage of this event : The Olympics helped the country to achieve record tourism figures in 2016. Over the 12 months, Brazil welcomed 6.6 millions tourists, which represents a 4.8% increase. In term of revenue generated by tourism, the total was about $6.2 billion in 2016, an increase of 6.2% on the previous year. On a common trip of 12 days these tourists spent approximatively $107 per day.

Despite that, one year after the Olympic Games, Rio is facing many difficulties. The number of tourists decline of 37% during the summer 2017. So the revenue generated by this sector went down too.

Most of the facilities that have been built for the Olympic Games are now deserted, while Rio had spent $2 billions to renovate or build new facilities. They didn’t find sports teams to use regularly these facilities. Thus, the government is currently making adjudication to turn these facilities into schools or hospitals.

Moreover, Rio is facing a terrible economic situation. Since June 2016, Rio de Janeiro state went bankrupt. The total cost of the olympics was about $10 billions: 57% financed by private funds and 47% by the public budget. All this amount of money invested is less money for other sectors. So now, Rio de Janeiro state owes €100 millions to the university. Teachers are not paid and students are late in their program. Moreover, almost 200,000 civil servant of Rio de Janeiro state did not get their entire wage since may 2017. And these are just some of the examples that show the difficulties that Rio is facing currently.