As Paris prepares to host the world’s premier athletic spectacle over the next few weeks, the City of Lights is set to shine a spotlight on exceptional human achievements and performances. Yet, the grandeur of the Olympic and Paralympic Games is increasingly overshadowed by financial strains and environmental concerns.
Historically, the Olympics have proven to be a double-edged sword. While they offer a global stage for athletic prowess and national pride, the cost of staging these mega-events has ballooned, leaving host cities grappling with long-term financial burdens and infrastructural challenges. Recent decades have seen the Games plagued by budget overruns, gentrification, and environmental impact.
Victor Matheson, a professor of economics at the College of the Holy Cross, underscores the scale of these costs. “This will be the first Olympics since Sydney where total costs are projected to stay under $10 billion,” he notes. “The IOC was running out of cities willing to host the Games due to the financial risks involved.”
The financial landscape of the Olympics has been tumultuous. The lavish spending associated with the Games has often resulted in significant cost overruns. Recent estimates indicate that five of the last six Olympics exceeded their budgets by over 100%, with costs soaring as high as $50 billion for the Sochi 2014 Winter Games and around $40 billion for the Beijing 2008 Summer Games, according to an Oxford University study.
Andrew Zimbalist, a sports economist and author of “Circus Maximus,” highlights the historical shifts in Olympic economics. The 1984 Los Angeles Games marked a turning point, demonstrating that leveraging existing infrastructure and securing corporate sponsorships could lead to a profitable event. The LA Organizing Committee ended up with a surplus of $215 million, setting a precedent for future hosts.
However, this profitability has not been universal. The financial allure of the Olympics has driven cities to spend vast sums on bidding processes and infrastructure, only to face escalating costs once they secure the Games. According to Zimbalist, this has led to significant financial strain, with many host cities ending up with substantial debts.
The hidden costs of the Olympics extend beyond mere financial figures. Zimbalist points out that the impact of hosting the Games often includes environmental damage, displacement of lower-income residents, and the creation of underused “white elephant” facilities. The Tokyo 2020 Games, for instance, saw a discrepancy of $17 billion in reported costs versus actual expenses, a figure that underscores the opaque nature of Olympic accounting.
Economists Amanda Phalin and Victor Matheson suggest that for the Olympics to be truly sustainable, they must undergo substantial reform. Phalin advocates for a more sustainable approach, suggesting that a permanent host city or a rotating pair of cities might be a more viable model. She highlights the example of Lake Placid, New York, which, despite hosting the 1980 Winter Olympics, has continued to invest in Olympic facilities to maintain their utility and attract tourism.
Paris organizers are making strides toward sustainability with the 2024 Games. In alignment with the IOC’s Agenda 2020, the Paris Games will feature only one permanent sports facility—a low-carbon, bio-based aquatics center—while relying on existing and temporary structures. Efforts are being made to reduce the carbon footprint and ensure that temporary structures are repurposed effectively.
Looking ahead, Los Angeles will host the 2028 Games with a similar focus on sustainability. The LA Games will utilize existing infrastructure and will hold some events in Oklahoma to minimize the need for new construction.
Despite these efforts, experts argue that more drastic changes may be necessary to ensure the long-term viability of the Olympics. As Phalin puts it, “The current model of hosting the Olympics every four years with a massive build-out of infrastructure is simply not sustainable.”
In conclusion, as Paris showcases its commitment to a more sustainable and fiscally responsible Olympic Games, the broader challenge remains: how to balance the grandeur and global appeal of the Olympics with the pressing need for financial prudence and environmental stewardship. The success of Paris’s approach may well set a precedent for future Games and shape the future of this historic global event.
