Olympics 2024: The Alarming Economic Reality Of The Sporting Event

Events cost money and a look at the balancesheet of the biggest sporting event on the planet reveals that they are often loss making exercises. Historically, cities that have hosted the Olympics end up spending more than their estimated budget.

The Olympics have the second highest average cost overrun of any type of megaproject at 159%, according to the study, "Oxford Olympics Study 2024: Are cost and cost overrun at the games coming down?"

In fact, every Olympic host has spent more than the estimated budget since at least 1960. This overspending has led to many cities withdrawing from the Olympics bid for hosting rights.

The expenditure has led to excruciating economic pain for some of the host countries in the past.

The paper highlighted that "cost overruns and associated debt from the Athens 2004 Games weakened the Greek economy and contributed to the country's deep financial and economic crises, beginning in 2007 and still playing out almost a decade later".

It also mentioned the startling case of Rio de Janeiro, host of the 2016 games, where the situation deteriorated to such extremes that the city had to declare a state of emergency and pull out funds from its natural disaster reserves.

Potential hosts of the Olympics 2024 withdrew from their bids on similar grounds. In 2015, apart from Paris, Budapest, Hamburg, Los Angeles, and Rome submitted their first-stage bids for hosting the 2024 Olympics. But eventually, all of them backed out amid a lack of economic support and the potential for debt.

This led to only Paris and Los Angeles remaining on the hosting platform and hence, they were unconventionally awarded the 2024 and 2028 editions of the Games without a proper bidding process.

Presently, cost escalation for the 2024, 2028, and 2032 Summer Games is already above the 10-15% level of the contingency amount that host countries set aside for the international sports gala.