Costs and Benefits of Hosting the Olympics

Source-This post on Costs and Benefits of Hosting the Olympics has been created based on the article “Should India host the Olympics?” published in “LiveMint” on 26 July 2024.

UPSC Syllabus–GS Paper-2– Government Policies and Interventions for Development in various sectors

Context -India recently expressed interest in hosting the 2036 Olympics at the IOC Session. Economists suggest this interest might be driven more by national pride or political reasons rather than economic benefits. Given India’s current spending on social programs, it’s worth asking if the country should spend so much on hosting the Olympics.

What are the financial implications of hosting the Olympics?

1) High Costs and Financial Burdens -Hosting the Olympics is very costly, with the Summer Games averaging over $8 billion. History shows that host nations often face large financial burdens. For ex- Montreal’s 1976 Olympics left a debt of over CAD$1.5 billion, and Greece’s 2004 Athens Games contributed to the country’s debt crisis.

2) Cost Overrun-The London, Rio, and Tokyo Summer Olympics together cost over $50 billion in 2022 terms, which was 185% more than the budgeted amounts. This does not include extra infrastructure costs.

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What are the arguments against hosting Olympic games by India?

1)  Cost Overruns vs. Olympic Expenses– India is used to cost overruns. By the end of 2023, 580 major projects, each costing over ₹1,000 crore, had exceeded their budgets by 25%, reaching ₹25.84 trillion. However, this is still small compared to the cost overruns often seen with the Olympics.

2) Challenges in Securing Private Sector Funding– Most Olympic funding comes from the private sector, but in India, the government struggles to get companies to increase their spending. It’s unclear if Indian companies will invest billions in hosting the Olympics without seeing direct benefits.

3) Post-Event Venue Neglect -Hosting a multi-city Olympics in India would require significant new infrastructure. However, past events like the post-2010 Commonwealth Games demonstrate that specialized sports venues are  neglected once the event concludes.

4) Limited Economic Impact -The estimated economic gain (Hosting 2024 Olympic) of €11.1 billion translates to about €650 million per year, just 0.03% of France’s 2023 GDP. The National Institute of Statistics and Economic Studies has stated there is no clear evidence that hosting major sporting events benefits the host country’s economy.

5) Uncertain Costs of Hosting -True cost of hosting the Olympics is often unclear. For ex-the Oxford Olympics Study 2016 found reliable cost data for only about two-thirds of the Games held since 1960.

6) Lack of Appropriate Benefits of Olympic Infrastructure– Despite the high costs and private investment required, the new infrastructure from hosting the Olympics may not be as useful as hoped. For ex- the 2016 Rio Olympics led to corruption, crumbling stadiums, and worsened the economic crisis.

Question for practice

What are the arguments against hosting Olympic games by India?