What Olympics Are For
In 2017, the International Olympic Committee will announce which city will get to host the 2024 Olympic Games. Four cities are competing to have the Olymips assigned to one of them: Rome, Paris, Budapest, Los Angeles. The American Olympic Committee (USOC) had to renounce its first choice, Boston. In fact, the capital of the State of Massachusetts had to contend with citizens' opposition, rallying under the "No Olympics" banner. The government had to choose L.A. as a fallback option, in order to keep the US in the game. Following on Bostonians' footsteps, the people of Hamburg voted against hosting the Olympics in the Hansa city: 51.7% said they opposed the €7.4 billion candidacy. A previous referendum in Munich had similarly determined the withdrawal of Bavaria's capital city from the bid to host the 2022 Winter Olympics.
Situations like these highlight the many paradoxes surrounding the desirability of major sports events. While the prestige accruing to the city and country hosting an edition of the Olympics is undeniable, on the other hand, skepticism is mounting vis-à-vis the financial and environmental impact of the large sports facilities that need to be built, which often leave a trail of huge debt behind. The discussion thus revolves around the economics of hosting the Olympic Games. A negative example is provided by Montreal 1976, whose $250 million initial budget skyrocketed to more than $2 billion, a pile of debt that Canada was able to repay only in 2006, thirty years after the fact.
If you adopt a short-term perspective, mega sports events hardly qualify as investments yielding positive returns. This is also because the sheer scale of the investment needed to organize world-quality events has been growing steadily over the years. Rome estimates it will invest €6 billion in the Games, similarly to what Paris is forecasting, and more than L.A.'s $4.1-billion budget. Considering only direct revenues coming from sponsorships, sales of TV rights and tickets of sports event, which reached a maximum value of $880 million in the 2012 London Olympics, hosting the Games is hardly sustainable in short run.
If you look at the history of the Games from 1960 (Rome) to 2012 (London), you can notice that all editions went over budget. But if you take a medium- and long-term perspective, then the benefits are more evident for the host city. Take for instance Barcelona, whose 1992 Olympics were a financial disaster with a $6 billion loss, but which completely renovated and transformed the Catalan city. Or even the 2000 Athens Olympic Games, which went into the red to the tune of $10 billion, but which completely overhauled transportation and urban mobility in the Greek capital.
Transparency is paramount when it comes to an Olympic bid. Organizing committees must be able to supply long-term legacy planning, underscoring the social, environmental, cultural, and economic benefits for the host city. Given the high financial risk taken by candidate cities, the International Olympic Committee (IOC) would do well to make its final decision on the basis of clear and shared criteria.
Uncertainty surrounding cities' bids is caused by variability in technical standards, but especially by considerations of political opportunity that are frequently at odds with principles of sound management, which should be predominant in determining which city deserves to host the Olympic Games. All the more since it's about sports, the rules of the game should be clear and fair to all parties concerned.