Economics of the Olympic Games – Are they worth it? ; Aakash Rai

The Olympic Games is the most prestigious sporting event in the world attracting the world’s best athletes to compete against each other whilst being watched by millions across the world. Host Nations spend billions building stadiums, homes and other facilities used by athletes to make the city Olympic-ready, but is all this government spending worth it?

China spent $45 billion on its 2008 Summer Olympics. Its hopes were that all this spending will boost the economy of Beijing and the rest of China. By spending so much money building new infrastructure, thousands of jobs in architecture and construction were created. It is estimated that 70000 people worked on construction for these Olympic games, reducing unemployment in Beijing by 15%. Furthermore, many jobs were created during the games themselves. Due to an influx of tourists, many sectors such as hospitality increased the number of jobs due to increased demand. An increase in tourism also boosts consumption in the region as tourists both domestic and international spend money on hotels, restaurants, and leisure activities. This money is then continuously recirculated in the economy-boosting GDP.

A key reason why nations want to host the Olympics is also the prospect of long -term economic growth. Since the Olympic Games are broadcast to millions, the host city becomes a household name. Tourists flock to the city after the game, thereby boosting jobs and economic growth in the area. Companies direct FDI to the city as it is seen to be prosperous and stable. This helps create new businesses in the local area providing much-needed tax revenue for the government.

However, in recent years the appeal of the Olympic Games has been diminishing. Countries are not getting the same level of economic benefits as was perceived. This is mainly due to the face that the IOC (who manage the Olympic Game) takes most of the broadcasting and sponsorship money leaving very little for the host country.

The biggest economic issue of the Olympic Games is the sheer cost of holding such a large event. For the 2016 Olympics in Rio, over $5 Billion worth of money was spent building stadiums for the sporting events. This caused massive outrage for the citizens of Rio as this money could have been invested instead into tackling the widespread issues with poverty and slum housing. Furthermore, once the Olympic Games were over, the huge stadiums which were built provided no utility for the citizens of Rio causing them to fall into disrepair. Since 2000 less and less cities have been bidding to host the Olympics due to the lack of economic benefit provided by such games.

The Olympic Games were once a symbol of national pride and sporting prowess as well as an economic boon for the host nation. However, in recent years the Olympic Games simply do not have the same appeal that they used to for the host nation. But despite its many flaws, the Games are still a people pleaser. The Games are still a matter of pride for the people and will continue to be for many years.