Josh Geisel
The Olympic games are hosted every other year by the country who is willing to spend the most money on the games, this money is often seen as an investment and a small cost compared to the potential profit for the country. Usually, the budget of the games is well below the amount of money a country can afford and the predicted profit makes the games seem like a no-brainer when it comes to investments. With the games, comes a massive expectation to out-do the last host of the Olympics which in turn means more money needs to be spent. The budget can be quickly diminished before the games even start as the countries don’t take into account setbacks and problems while creating the games.
Almost every Games for the last few decades have gone over budget at least a little bit. In 2014, Sochi held the Olympic games and the final cost was 289% of their budget and 51 billion dollars. To put the 51 billion dollars in perspective, The Dallas Cowboys stadium is regarded as one of the best stadiums in the United States and that stadium costed 1.3 Billion dollars to build, which is only a tiny fraction of how much money was spent in Sochi. Although the budget of the Olympics includes: building infrastructure, travel costs, payroll of employees, and other expenses. This is still a lot of money and is more than any other by almost 10 billion dollars.
Isn’t the money spent on the Olympics only an investment for the huge profits that will come in the end? The profits, in the end, are anything but guaranteed. Over the years there have been many games that came out ahead such as The Vancouver Winter Olympics which raked in almost 2 billion dollars for the country and The Beijing Olympics which earned about a billion dollars. But these countries are outliers compared to other Olympics such as the Sydney Olympics which lost over 2 billion dollars and even the Athens Olympics which lost a whopping 14.5 billion dollars in their investments.
Why would a country host an Olympic Games if it is such a bad investment? The Olympic Games is unlike any other world event. 3.6 billion people are expected to watch the 2018 Olympics this year which is nearly half of the world’s population. The Host country is definitely put on the world’s stage during the weeks of the Olympics which can make or break how other people feel about the country for years to come. A good Olympics will boost tourism for years to come and in turn increase economic growth. But a bad showing of the Olympics can ruin the future of the country in terms of tourism, which is why countries are willing to spend so much money for the Olympics and lose money. The money lost in the Olympics can and will be made up in the end if the country spends the money to make the Olympics great which is why the investment in the Olympics isn’t as bad as it seems.
Works Cited
“Cost of the Olympic Games.” Wikipedia, Wikimedia Foundation, 11 Feb. 2018, en.wikipedia.org/wiki/Cost_of_the_Olympic_Games.
Goldblatt, David. “Cost of Hosting the Olympics: How It Got So Expensive.” Time, Time, 26 July 2016, time.com/4421865/olympics-cost-history/.
McCarthy, Niall. “The Massive Cost Of Hosting The Olympic Games [Infographic].”Forbes, Forbes Magazine, 4 Aug. 2016, www.forbes.com/sites/niallmccarthy/2016/08/04/the-massive-cost-of-hosting-the-olympic-games-infographic/#6b2b6f772e38.
You may be right that the if a country puts on a good showing for the Olympics they will attract more tourism, but I still don’t see how spending that much money would make any sense. Maybe it is just me but I wouldn’t want to travel to Athens, just because they had good facilities for the Olympics. There is no way that they are going to make back their 15.1 billion dollars lost during the Olympics by having increased tourism, at least anytime soon. I believe that it is only wise for countries that already have most of the facilities for the Olympic games built to host, otherwise it is a expensive and not really good investment.
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When I was watching the olympics the commentators talked about this issue and showed how over budget every olympics have gone lately. Beijing, even though it made money, went almost 4 times over budget, which is crazy. Another thing I learned was that the olympic committee has gone from taking 4% of profits made to taking 80% in the last games, which has made the games even less appealing to host. Due to this only 2 cities have bid on the 2022 olympics and I think they need to either take less profits from host cities, or use multiple different cities or countries to host, because currently the outlook for the future of the olympics is not looking great.
ReplyDeleteI think that the Olympics are way over priced. These are crazy numbers and the only reason countries want to host the Olympics is to bring attention to themselves. But in the end the damages out way the cost.
ReplyDeleteThe olympics is a great way, as you mentioned, to boost tourism for years to come. These few weeks leading up to the olympics, during and after the games, all provide the city with stable travel/visitors along with a rise in consumers buying goods. If a country is chosen to host the olympics, it has been shown that no matter how rough their economy may be, they go to great lengths to host the world’s biggest “party”.
ReplyDeleteWhen you hear the Olympics, you think of the major sport and games that are played by different countries. But no one thinks about the cost. You showed how much countries invest into the Olympics and what it does. It can generate a profit for the country but it can also cause a large downfall to it as well. I was surprised when you said a country went so far past the budget. It was insane! the fact a country pushes out that much on for the Olympics.
ReplyDeleteFor such a big investment for a country to make, it is just not worth it to bid to host the games in the future. Once countries really start to see that even with “increased tourism” and great facilities for the games, the amount a country spends (upwards of 50 billions of dollars) is nearly impossible to get back. Which in the future is going to affect the games, as if this trend of spending lots and not getting it back continues, it would be as appealing and desirable for countries to hold the olympics.
ReplyDeleteI can see how a country doing a great job hosting the Olympics can be beneficial to its level of tourism and bring in some extra money, but I am a little worried about South Korea's potential benefits. Although South Korea is beautiful and the places where events are held are large and extravagant, I'm slightly concerned that their tourism won't boost as much as they hope because of the country's proximity to North Korea. However, after watching the Olympics religiously this year, I think South Korea is doing a great job hosting and will hopefully make a worthwhile profit.
ReplyDeleteI agree with your stance that the Olympics can lead to an increase in tourism. For example, Sochi generated more tourism after the Olympics because people didn’t know about Sochi before. However, I think the high cost makes hosting the Olympics not worth it. The host country is only in fame for 16 days. After that, they are left with tons of debt. Some host countries have had to increase their taxes by around $50,000 per year for over twenty years in order to pay back their debt. Some countries also don’t even use the stadiums that were built after the Olympics. So overall, I feel it is not worth it to host the Olympics.
ReplyDeleteAlthough the Olympics is always an intriguing event, there is no doubt that too much money is spent. I was shocked to find out that Sochi spent 51 billion dollars, and personally, I find it very unintelligent. Like you also said in your post, even though the profit from the games is large, it is not nearly this substantial. But who’s going to be the first to cut this spending down? Surely, the cut in spending will be evident in not only in events such as the opening ceremony, but it will be evident in the facilities. Perhaps Tokyo, the host of the 2020 Summer Olympics, will start the trend?
ReplyDeleteWhen thinking about spending in terms of what we have learned in Economics, I feel as if the opportunity cost, for the most part, greatly outweighs the benefits, and still question why countries would want to host the Olympics. Granted, the country will forever be in record of hosting, but there is a great amount of risk taken, influencing an entire economy of a nation. Though amazing to watch, a two week Olympics can do a great deal of damage, economically.
ReplyDeleteNo matter what country the Olympics is hosted in, what makes it so easy for them to decide exactly how much is too much to spend on the Olympics? Do certain countries have different budgets than other countries base on their financial stability? Also, if each new Olympic hosting is trying to outdo previous Olympic games, then does the budget of the Olympics each year continue to rise or remain the same?
ReplyDeleteIt is very interesting that the prolonged benefits of the Olympics can include future prospects such as tourism. Although countries may lose money, the future increase in foot traffic adds the their hopes of profit and economic gain. But, does the profit of the Olympics depend on the safety of the country? For example, the Vancouver Olympics were hosted in a safe country, and made money, while Rio is not as safe as Vancouver.
ReplyDeleteTourism for a country is quite important to its growth not only in population, but also in investments as well. I agree that wherever the Olympics are held, it can be both beneficial but might also devastate the country. Investing so much money into the Olympics is a risk that country has to make, because the whole world watches and comes to the event, not just one or two countries.
ReplyDeleteAlthough it does seem like a great idea to host the Olympics, I am very curious on what happens to the Olympic buildings after the Olympics are over. Aside from tourism, the buildings are way to big to be used for an actual team. The stadiums in Rio de Janerio and Sochi have been abandoned because no one took care of them after the Olympics. For example, the hockey rinks at the Olympics are bigger than any other hockey rink because they need to hold a lot more people than a regular hockey game would. After the Olympics is finished though, the country has no use for such a big hockey rink anymore and even if they did play games in it, the rink would see empty because of how many seats would still be empty. It is also very hard to convert an Olympics stadium to a place that can be used daily. In Peyongchang, the Olympic stadium holds 35 thousand people and there population is just 40 thousand.
ReplyDeleteI am very intrigued by this article and I am very surprised to see truly the mass amounts of money that Countries truly spend on the Olympics. Like you said with the 51 billion spent in Sochi, I wonder if Russia truly believes that they will get a return on the 51 billion over the course of the Olympics and then the tourism after the fact. I understand that the Olympics is one of the most notable events to hold, as it gives that country publicity across the globe, but if they are going to lose out on billions and billions of dollars when a lot of countries like the US are in debt, is it truly worth hosting?
ReplyDeleteIt does seem like a good idea to host the Olympics because of all the people who would pay to come and watch and all the publicity your country would get. However, if it costs 51 billion dollars to host it, then the ticket prices would have to be very high so that the hosting country could break even or earn a profit.
ReplyDeleteI think the cost of the Olympics is a really interesting topic. It's shocking just how much it can cost a country to host. I wonder if you factored in the extra revenue from an increase in tourism following the Olympics how much that makes up for the price of the event though. I'm also curious as to how it's decided where the games will be hosted, and what process occurs to choose if a country is financially able to host.
ReplyDeleteIt is very interesting to see how much a country will spend for an Olympic Games event. It is interesting to also see the countries that lose billions of dollars for hosting the Olympics. What areas did the country spend too much money? And where did the country make not as much money as they thought they would have? Another thing I wonder is if one type of Olympics is greater than the other. Does summer cost more than winter? Or is there one that brings in more money? Overall the cost of the Olympics can create a lot of different questions regarding costs and losses but it is a very interesting topic because countries spend a lot more for these games that I would have ever guessed.
ReplyDeleteI agree, I think the hosting the Olympics is a great idea as it can bring in lots of money. Along with that you must also be very careful in financing it and predicting to make money and not lose it. Another part of it is how much the money spent actually goes to. If the US spends a billion dollars on a new stadium for ice skating then they should come up with other uses for the stadium because the Olympics are only for a couple of weeks. Countries will get their moneys worth if they can actively use it or have it for the next time that city hosts the Olympics.
ReplyDeleteI definitely see your point where hosting the olympics would be beneficial for the country. Even though they are spending billions in order to build the stadium, in the long run it ends up benefiting the country, and bringing in much more income. However, this time around, I’m not sure that this will end up being worth it for South Korea. They’re are spending quite a bit above the budget, and it may not be as high of a benefit in the long run for them.
ReplyDeleteIt is very interesting to see how much a country will spend for an Olympic Games event, or even any national event. Take the superbowl for example as well, there is so much money goes into these events of entertainment, when there is so much more important things to spend the on.
ReplyDeleteI don't understand why a country such as South Korea would host the Olympics as I feel like it only makes sense for a country with adequate infrastructure to host a huge event such as the Olympics, as the extreme upfront cost that comes with improving overall infrastructure can be voided, and the positives that come with the Olympic tourism can be seen. This isn't always the case for these big sporting events, like the Super Bowl for example, Minnesota saw a huge amount of economic profit from the event (around 395 million) and a lot of that had to do with the extremely small cost for city services related to Super Bowl LII for Minneapolis (around 4.9 million) as they recently paid a huge upfront cost to build their new stadium. Since they already paid this cost anyways so it made a lot of sense for them economically to host this event.
DeleteMore-so nowadays, it's becoming more and more of a burden for countries to host the Olympics, a recent case being Rio de Janeiro. Countries invest billions of dollars in investment, hoping the games can bring an economic boom. However, many countries are experiencing undesired effects from the games, with state of the art stadiums abandoned after a short time of use.
ReplyDeleteI think that people forget about how much money actually has to go into the Olympics. Its not just building the huge stadiums for the event, but also the employment and the aftermath of having millions of people come to watch. Also, many of the buildings are not used after the games, and an amazing building that cost a billion dollars is not unused and not taken care of. A lot of small things can greatly effect the tourism that follows the Olympics, like that scandal where some athletes lied about being robbed. Something that small can cause a countries games to be unsuccessful.
ReplyDeleteI read an article recently that countries have begun hesitating to bid on hosting the Olympics due to the costs mentioned in this post. The Olympic committee, however, has promised to make changes to the Olympics in order to significantly reduce cost. For example, the Olympics Village will not be as luxurious, and buildings/structures will be more sustainable and reusable. South Korea will hopefully be the last Olympics to be so incredibly costly.
ReplyDeleteI think that the idea of whether or not countries can obtain a net positive in returns for hosting the Olympics is an interesting topic. Some countries like Greece who recently went into debt partially because of its exorbitant spending for preparing to host the Olympics, are great examples of why countries should really take into consideration whether or not the benefits to hosting will be more than the costs. Unless that country is in sound financial standing and knows that they will gain benefits from hosting they should be very wary to apply to get picked. It's just how to figure this out and be sure that countries must find a way to accomplish.
ReplyDeleteWith the Olympics currently happening, all eyes are on South Korea and how much they have spent on the games. However, the costs don't end after the Olympics are over. There are further costs with up keeping the huge facilities that were built for just one event. If the stadiums continue to be used, they incur costs (such as employment and maintenance) but are also able to bring in some profit. But, if the stadiums fall into disrepair, they are very likely to gain bad press for the country. This is evident in Rio, the Olympic host in 2016, as many news sources criticize the current state of the large stadiums.
ReplyDeleteThe Olympics is an interesting topic, because as you said, countries undergo a great amount of risk to host the event, yet since the modern olympics have been going on for over one hundred years it seems like an obvious source of tourism and attraction. The opportunity cost is extremely high since the billions of dollars spent on hosting could theoretically go towards others costs that the country might be facing.
ReplyDeleteThis is a very interest point that can be viewed many different ways. But, I agree that hosting the Olympics has more negative consequences than positive ones. Even though the city that the olympics are hosted gets alot of tourism it does not last forever. The amount of tourism the city gets during the olympics helps cover the cost of the olympics but the cities that host it are left with big debts to pay off. For example, the article said that the Dallas Cowboys Stadium cost only $1.3 billion to build while the Olympic complexes cost billions more to build each. In my opinion it is better to invest in a stadium that we be used more frequently so that the economic growth of the city will have a constant flow of economic growth. In conclusion, many cities that host the Olympics end up losing more money than they gain because the complexes that are built are only used for 2 weeks or so while a complex such as the Dallas Cowboys Stadium can be used constantly throughout the year. This creates a constant economic growth and source of income for the city.
ReplyDeleteThis is a very interesting topic! I know that the first real Olympic economic failure took place in 1976 at the Montreal summer games. The original projected cost was $124 million and was found to be underestimated by billions. In the end Montreal found themselves with $1.5 billion in debt that took almost three decades to pay off. While this was an extreme case of an Olympic economic disaster, I think only countries with economic stability should be given the chance to host in order to avoid situations like this.
ReplyDeleteAt the outset, the Olympics seems like a great way to increase GDP and tourism, boosting the economy, but it is a very temporary situation that turns sour shortly after. Attempting to re-service buildings after the Olympics to attempt to help them keep relevance is a desperate attempt to squeeze more revenue from these massive investments, but within a few years the buildings and infrastructure lose their relevance and become a burden on the government.
ReplyDeleteHosting the Olympics is a perfect way to boost the GDP. Since the Olympic athletes are coming from all over the world, they are sure to draw a supporting crowd with them. Local hotels, and restaurants need to be ready to produce more of their products. However, I believe there should be a certain list of countries that are allowed to host the games. For example, Montreal couldn't handle all of it, and the games turned out to be a massive burden to them.
ReplyDeleteThis is a cool topic. It is interesting that a country would spend so much money just to be seen. The cost is in the billions, and it is amazing that countries would pay out that much money for the Olympic games. No wonder the Olympics are so strict when it comes to drug testing, cheating, and all that stuff. If people knew that the games were rigged (if they were), that would mean a loss in tourism, and local businesses not gaining money. All of the hosting countries pay-out comes from tourism usually. If they do not receive that tourism, that means that they could lose billions of dollars.
ReplyDeleteYes, I would agree that the cost of the Olympics is grand but the benefit doesn’t account for the immense losses in any profitable outcome. Tourism isn’t going to magically mend the huge financial deficient brought by the event. Countries like Rio have drastically been set back by hosting in 2016. Also, it’s a huge gamble on if the participants that year are entertaining enough to attract people to visiting the country. While, making the event memorable is mostly determined by the competition. These factors aren’t controllable making this venture risking. Concluding, hosting the Olympics is like betting but with taxes, and the economic stability of your country. #notworthit
ReplyDeleteI know that with the Olympics in the more recent years have come with catastrophic economic problems and totally useless abandoned building that took millions to build. While during the Olympics the increased tourism helps in the moment but after they've left the people are left with huge taxes and economic problems.
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ReplyDeleteWhy wasting your precious time online looking for a loan? When there is an opportunity for you to invest with 500$ and get a returns of 5,000$ within seven business working days. Contact us now for more information if interested on how you can earn big with just little amount. This is all about investing into Crude Oil and Gas Business.
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