Orlando Acosta

March 3, 2022

ECON 200

ECON 200 1st Writing Assignment

Hosting the Olympics was once regarded as an honor and profitable but as the number of

explicit costs associated with the Olympics have risen, countries must now consider if the

Olympics is worth the investment. Prior to the 1960s the Olympics had significantly fewer

athletes and events which made the games profitable but since, “The number of Summer

Olympics participants almost [doubled] and the number of events [increased] by a third during

the 1960s” (McBride, Para. 4) costs have gone from the low billions to costs north of $50 billion

dollars. Due to these high costs the Olympics often leave hosting countries in crippling debt.

Although debt is never a good thing, countries receive many benefits associated with this debt.

So the only way to truly determine whether or not hosting the Olympics is worth the investment

is to view it with a: government, supplier, demander, society, and a socially benevolent dictator

perspective.

Looking at the costs and benefits from a government perspective, hosting the Olympics

is not worth the investment. Starting off with the bid for the Olympics, “The cost of planning,

hiring consultants, organizing events, and the necessary travel consistently falls between $50

million and $100 million” (McBride, Para. 10). If and when the country gets the successful bid it

must incorporate all sorts of renovations to accommodate over tens of thousands of athletes,

employees, and viewers. The International Olympics Committee (IOC) a non-profit organization

that acts as the owners of the games, “...Requires cities hosting the summer games to have a

minimum of forty thousand available hotel rooms…” (McBride, Para. 13). Hotels alone are very
expensive but other infrastructure costs still must be considered. Renovations in transportation

with things like airports, trains, and roads are a common occurrence when hosting the Olympics.

Sports related ventures such as stadiums can also be added to the bill of infrastructure. Total

infrastructure costs range from as low as $5 billion dollars and as high as $10 billion dollars.

When looking at figure one we see that countries that spent over $2 billion dollars on

infrastructure, with the exception of Seoul, incurred a debt at the end of the Olympics.

Infrastructure is the largest cost in planning for the Olympics but it is a necessary one and if a

country does not already have an infrastructure in place its likely not going to be worth the

capital. In addition to Infrastructure, governments will enact new laws and new policies

regarding the environment. Common projects involve cleaning up streets, rivers, lowering

pollution levels, refurbishing land, etc. These environmental costs are costly and tend to be in the

billions. During the 2008 Olympics Beijing spent over, “...$11.25 billion on environmental

cleanup.” (Wills, Para. 6). In the 2000 Olympics Sydney spent over $3 billion dollars on

environmentally friendly materials, new water systems, and restoration of damaged land

(Olympics, Para. 3). So overall with costs of bidding, infrastructure, and the environment hosting

the Olympics is not worth the investment for governments.

Figure 1
 Suppliers within the hosting country have a mixed response when it comes to the

Olympics. More established and renowned companies are far more willing for their country to

host the Olympics than local companies are. Bigger companies such as Coca-Cola, Nike, Toyota

and Mcdonalds are able to spend more on sponsors, advertisements, and have larger influence in

the media and therefore are able to attract a significant amount of consumers overseas and

locally. Smaller businesses typically don’t have the necessary funds to promote their products on

a stage as big as the Olympics. Smaller companies also have to worry about their supplies with

this new influx of tourists. The increase of tourists will increase traffic, parking access, and delay

overnight deliveries times (Hirst, Para. 16). Both larger and smaller companies will hire more

employees but larger companies have the flexibility to allocate these employees to different

facilities whereas smaller companies are usually cramming these employees into the fewer

buildings they own, resulting in greater losses of marginal production. When the Olympics end

hosting countries are usually left with debt, creating larger taxes. These bigger more established
companies will have generated enough revenue to deal with larger taxes and still provide larger

incomes for those associated with the company, raising many of their employees' standards of

living. Smaller companies that did not see the same substantial growths in revenue have a

tougher time paying for these increases in taxes and as a result deduct income off of their

workers, lowering standards of living. A negative for both smaller and larger suppliers is that the

country's citizens also have to pay larger taxes, resulting in smaller incomes and less consumer

spending. Overall hosting the Olympics is worth it for bigger suppliers that can afford

advertisements and the increase in taxes but for smaller local suppliers it is not worth it because

in most cases they are making little to no profit.

Viewing the Olympics from a demander perspective the Olympics is more of a burden.

Demanders are typically left paying the country's debt through taxes. Depending on how much

debt the country was left in it could leave taxpayers paying additional taxes for decades. In 1976

the Montreal Olympics left taxpayers paying 1.5 billion dollars in taxes which took nearly thirty

years to pay off. The Sochi Winter Olympics of 2014 will leave Russian taxpayers paying about

$1 billion dollars annually for the foreseeable future (Mcbride, Para. 17). This increase of taxes

is bad news for demanders as there will be increasing prices everywhere in the country due to the

increased demand of these new tourists. Inelastic goods such as gas, and clothing still have to be

paid for at least in the short term so you are losing more money than you were prior to the

Olympics. Even when considering the few benefits demanders receive from the Olympics such

as cheaper transportation costs; the Olympics will lead to reduction in income for many

demanders which leads to a lower standard of living. The reduction in demander income,

increasing taxes, and having to pay larger prices make the Olympics not worth it for demanders.
 The Olympics are costly from many viewpoints but thinking of society as a whole the

Olympics might be worth hosting. During the Olympics hosting countries welcome hundreds of

thousands of tourists. In 2016 Rio de Janeiro, “...Announced that the city received 1.17 million

tourists during the Olympic games” (Kalvapalle, Para. 1). These tourists come from all over the

world each having different cultures, languages, and practices. When these tourists arrive in a

hosting country it helps diversify that society allowing society to market off of these new

cultures. New businesses will arise in the food industry, automobile industry, technology

industries, and much more industries! Similar businesses will then enter the market to jump in on

the success creating competitive markets which is good for the economy. Another benefit of

hosting the Olympics is the increase of jobs. Some argue against how effective the Olympics is at

creating jobs since, “Most jobs went to workers who were already employed” (Wills, Para. 7)

and though this may be true we have seen that the Olympics do create just enough jobs to be

effective for those who are unemployed. In 2012 jobs created by the Olympics was a major

success with over 100,000 jobs being created and, “At the same time, the jobless total fell

unexpectedly by 50,000, to a 15-month low of 2.53 million, or 7.9 percent” (Prynn, Par. 3). The

increase of jobs leads to lower unemployment rates which ultimately results in higher GDPs.

Figure 2 shows that every country aside from Brazil and South Korea had an increase of GDP

the year they hosted the Olympics from the year prior. So when considering the new competitive

markets, the reduction in unemployment rates and the common increases in GDP hosting the

Olympics is worth it society point of view.

Figure Two (Statistics provided via Macrotrends)

 The Olympics is such an impactful event and its influence spreads all across hosting

countries. Looking at the scope of the Olympics from a wider perspective perhaps as a socially

benevolent dictator the games are worth it for a variety of reasons. Once the expensive costs of

infrastructure, and the environment are implemented the hosting country will be able to reap the

benefits of what was built for the Olympics for the foreseeable future. The country will live in an

environment that is less polluted as policies, laws, and actions were taken preparing for the

Olympics and for tourists. These environmental actions will create effective environmental

systems that are good for the economy. In the 2000 Olympics Sydney, Australia deployed an

urban water recycling system that saves 850 million liters of drinking water each year

(Olympics, Para. 3). Although there will be negative impacts on different ecosystems with the

destruction of animal habitat, hosting countries can relocate these animals into different regions

that have less human activity than their prior environments which might benefit these animals in

the long run. The Olympics may destroy animal habitat, and reduce animal populations but in the

long run both animals and humans can live in a cleaner more sustainable environment.
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