Is hosting the Olympics worth it anymore?

Recently Paris and Los Angeles (LA) were announced as hosts for the summer Olympics of 2024 and 2028 respectively. There’s even talk about eSports becoming an official Olympic sport. Clearly, long-held beliefs about the Olympics are changing.

Interestingly, this is the first time two host cities have been announced at the same time, normally there is a four year wait between each winning city being announced to the world. Another unique development within both these bids is that Paris and LA will primarily rely upon existing infrastructure and stadia for their games, instead of building new, expensive Olympic stadiums and athlete villages.

Hosting the Olympics Becomes A Drag

There’s a simple reason for this, where once the Olympics, run by the International Olympic Committee (IOC), could easily handpick the best bids, the tables are now turning and they are having to adapt to a new reality. Previously, would-be host countries bid on the assumption that the games would boost their local economy significantly, no longer however.

A public prosecutor has even gone as far as to say that there was “no planning” post-Olympics in Rio.

Rio 2016 saw $12 billion poured into building 27 glitzy new arenas and infrastructure, that sadly, within a year, are now crumbling (click the above link to see this shocking state of affairs).

These buildings, built for very specific reasons now have no tenants or income, with Brazil’s federal government having to pay for all the maintenance costs, including 3,604 apartments in the athletes´ village. A public prosecutor has even gone as far as to say that there was “no planning” post-Olympics in Rio.

Things are so bad for Rio that the city has been near bankruptcy, Brazilian athletes who won medals haven’t been paid bonuses. Worst of all, this crisis, is also impacting on every day services in the city, even one of the top universities (State University of Rio de Janeiro), having to shut for an undetermined time.

There is precedent for this too, with Athens 2004 also suffering the same fate of Rio, with stadia abandoned and crumbling.

Contrast this with London. The city spent $10.4 billion on the games, but reported a minor profit of $87 million in March of 2013, while the stadia and infrastructure is still in use today.

What does the future hold for Olympic bids?

• Joint bids: Joint bids will become much more prevalent in future years. Singapore and Malaysia had actually been mulling a joint bid ahead of the 2024 decision, but ultimately pulled out of applying. However, this approach makes complete sense and spreads the immense cost and risk that an Olympic bid can cause. Football has already shown the success that joint bids can have. The World Cup in 2002 was the first jointly-held tournament, in Japan and South Korea. Meanwhile, Euro 2020 will see 13 cities across 13 different European countries, hosting one or more game, with Wembley stadium hosting the semi-final and final.
• Increased focus on existing infrastructure: As mentioned above, the upcoming Olympics in 2024 and 2028 will be quite unique as they will rely on existing stadia and infrastructure, which both Paris and LA are lucky to have in place already. Many future Games will follow this model to minimise the huge costs associated with building facilities from scratch.
• Different relationship with the IOC: As reported by ESPN, despite host countries, going to the wall, the IOC’s is sitting pretty, as they have long-term fixed revenue thanks to a host of sponsors and worldwide broadcast rights. Currently it has amassed $3.2 billion against liabilities of $1.2 billion. Given the disasters that have befallen Rio and Athens, eager bids from naive host cities are likely to be a thing of the past. Budapest dropped out of the 2024 race due to unrest and 260,000 signing a petition to quit the race.

Where once the Olympics were seen as a privilege to host, this isn’t the case now. That doesn’t look like it will change in the coming decades either. Hosting the Olympics needs to change with the times, or risk become an irrelevance in the sporting world.

If you want to read more about how the Olympics can inspire brands, read more here.