The Olympics are full of pomp and circumstance. From the grandiose opening ceremony to the spirited fans, nationalism and excitement abound. We can’t help but follow the athletes’ compelling stories and watch as record after record is broken.
But it isn’t just the games that are fascinating — the business of the Olympics is interesting as well. This year more than ever people are questioning whether the Olympics are worth the cost, especially if the host country (like Brazil) has never held the games before.
Costs can easily add up if a country has to update its infrastructure and transportation systems, plus pay for the facilitation of the games and security. Historically, countries go significantly over their proposed budget when hosting the Olympics. But it’s an investment they’re willing to make to gain recognition and hopefully receive a return on their investment.
To determine the return of the Olympics, we looked at Olympic games over the past forty years. We compared how much they costed each host country and if the country made a profit or ended up in debt. All costs, profits, and debts have been adjusted for inflation.
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In the last decade, we’ve seen two of the most costly Olympics happen — Summer 2008 in Beijing, China and Winter 2014 in Sochi, Russia. Impressively, both of those Olympics made the host countries a profit. However, not all host countries have been so lucky.
The Summer 2004 Olympics in Athens, Greece, for example, are known for expediting Greece’s debt crisis. Though there’s no accurate estimate of how much Greece lost from hosting the Olympics, their debt reached 110.6% of the gross domestic product — the highest in the European Union — post Olympics.
Short term profit and loss isn’t the only thing to think about when hosting the Olympics. Of course, breaking even or making a profit is great, but what about the upkeep and use of infrastructure post-Olympics? In Greece, the stadiums built for the Olympics sit unused and abandoned. However, Barcelona used the new developments to their advantage. They helped to revive the city and the facilities are still used today.
Is it worth it to host the Olympics? There’s no easy answer. But it is does have high costs that a country will carry for years to come.