Today, all sports events and organizations are now organized with very important budgets.
In this context, undoubtedly, the Olympic games are the most important, most valuable and the most expensive sports organization in the world. At the same time, being able to organize this organization is a huge prestige issue for countries. Every four years, the ambitious cities that are candidates for this event enter a tight race through their government to host the next Olympic games. Again, such a race is on the agenda for the 2020 Olympics.
On September 7, 2013, the International Olympic Committee for the 2020 Summer Olympics will decide which event will be held in Madrid, Tokyo and Istanbul.
Organizing the Olympics Is Expensive
Thanks to the Olympics, that country invests heavily in many areas, from the metro to accommodation, sports complexes to communication infrastructure, to the city where the games will be held. Huge budgets of up to Billion Euros are needed for these investments. Although these investment expenditures have the effect of creating employment in the short term, the return of long-term investments, such as infrastructure modernization, requires long years.
As a matter of fact, the researches show that the reimbursement of the Montreal 1976 Olympic Games took 30 years.
In an analysis made 7 years after the 2000 Sydney Olympics, when ‘indirect factors’ were included, it was calculated that the net loss to the Australian economy was $ 2 billion.
Again, the cost of the 2004 Athens Olympics to the state had reached about 8.9 Billion Euros. Unfortunately, the Greek economy was not able to overcome these costs and there were serious differences between the expected return and the actual return.
The huge $ 38 billion spendings by the Chinese government to the Olympics in Beijing in 2008 caused the enormous social reaction. From the financial point of view, the 2008 Beijing Olympics, which was realized with a spending of 38 billion dollars in Beijing, was revealed by researches that there was no significant contribution to the economy in the short and medium-term.
Again, the financial portrait of the 2012 London Olympics reached $ 19 billion. Statements by British officials reveal that the London Olympics did not achieve the expected development in the economy.
The conclusion from this is that, given the external positive effects of the Olympics, it does not seem possible to say that these games always make an indirect net contribution to the economy.
Is Organizing the Olympics a Profitable Business?
According to the results of these studies in general: The economic impact of the Olympics is actually directly related to the economic and social development of the country in which it is organized. While high costs in developed economies require very serious expenditures for these investments, the costs incurred can be relatively lower in less developed economies because the costs are relatively low. In terms of the efficiency of the efficiency, the high standards of development bring that economy to a significant return advantage, while other countries find it difficult to generate income over their costs.
However, Olympic spending seems likely to be an increase in the economy of that country if the country has a high unemployment rate and is in the serious economic bottleneck. However, there is a possibility that the cities whose infrastructure and appearance changed with the Olympics will reach a serious competitive advantage in tourism in the following years, as in the example of the 1992 Barcelona Olympics.
Given the economic difficulties and bottlenecks today, this may also be the background of the Spanish government’s nomination for Madrid.
In the Olympics held to date, the economic damage of the host country was much greater than the economic gain in all of the Montreal (1972), Atlanta (1996), Seoul (1988), Sydney (2000), Athens (2004) and Beijing (2008) Olympics.