How much it costs to host the Olympics – with South Africa looking to bid
Hosting the Olympic Games is expensive for any host city, with a price tag of at least R218 billion (excluding non-sport-related expenses). It proves to be a very high-risk, high-reward venture for prospective countries.
Every four years, billions of people from all corners of the globe tune in to watch what is widely regarded as the epitome of sporting greatness – the Olympic Games.
“The Olympic Games are the largest, highest-profile, and most expensive megaevent hosted by cities and nations,” explained University of Oxford researchers Bent Flyvbjerg, Alexander Budzier and Daniel Lunn.
Around 10,500 athletes, including 138 from South Africa, are currently in Paris to take part in the current iteration of the Summer Olympic Games.
The International Olympic Committee (IOC) predicts that around 15 million tourists will visit the French capital, bringing in an expected revenue of between $7.4 and $12.4 billion dollars.
While it is widely viewed as a prestigious event and a privilege to host it, it comes with expensive caveats and risks.
In their paper titled Regression to the tail: Why the Olympics blow up, Flyvbjerg, Budzier and Lunn outline that the average sports-related costs of hosting the games are around $12 billion (R218.8 billion).
Non-sports-related costs, such as airport infrastructure and hotel upgrades, have not been included in this hefty price tag and are typically several times the above (and below) mentioned number.
Most expensive games
According to The Oxford Olympics Study 2024: Are Cost and Cost Overrun at the Games Coming Down? by Alexander Budzier, the estimated sports-related costs of hosting the Olympics vary but have reached a whopping R526 billion before.
The Rio 2016 Summer Games were the most expensive, costing $23.6 billion (R429.41 billion), followed by London 2012 at $16.8 billion (R305.68 billion).
Budzier highlights that Tokyo 2020/21 officially cost $13.7 billion (R249.28 billion), but there significant budget exclusions. Including additional costs like land and Tokyo’s budget, the Tokyo Games could range from $19.2 billion (R349.35 billion) to $33.4 billion (R607.72 billion).
For the Winter Games, Sochi 2014 topped the list at $28.9 billion (R525.84 billion), followed by Beijing 2022 at $8.7 billion (R158.30 billion).
Every Olympics from 1960 to 2020 (data not yet available for Paris 2024) has run over budget, at an average of 172% in real terms – the highest overrun on record for any type of megaproject, according to the paper.
All of these figures most often exclude the substantial indirect costs for urban and transportation infrastructure, raising questions about the true cost of hosting the Games.
The successes and failures
Professor of Economic History at Stellenbosch University, Johan Fourie, wrote that scholars have identified four main reasons why cities volunteer to host the Olympics.
This includes:
- Economic Benefits: The Games can stimulate local economies through increased tourism, job creation, and infrastructure investment.
- Global Recognition: Hosting the Olympics enhances a city’s international profile, attracting future tourism and business.
- Urban Renewal: Investments in sports facilities and infrastructure can revitalise neglected areas and improve local quality of life.
- National Pride: The event can foster a sense of national pride and unity.
However, “there is little evidence to support these claims,” said Fourie.
“The truth is that mega-events are largely underwhelming: they are mostly just a good night out that often leaves cities with a headache rather than a heritage” due to their hefty price tag, he added.
While there are possibilities of cities earning a handsome amount of revenue, hosting the Games has proven to hurt some.
“The economic burden of hosting the Olympics has become a significant deterrent – the costs associated with preparing for and hosting the Games are staggering,” said Shammi Rana, secretary-general of the International Council of Traditional Sports and Games.
“This financial strain is compounded by the fact that many of the anticipated economic benefits, such as increased tourism and international recognition, often fail to materialise,” said Ranaq.
However, Ranaq said that “instead, cities are [often] left with expensive, underutilised venues – these ‘white elephant’ stadiums, built for the grandeur of a few weeks, often find no purpose post-Games, leaving taxpayers to bear the financial burden for years.”
Prevalent examples of cities which incurred hefty blows as a result of hosting the Olympics include Athens (Greece), Montreal (Canada) and Rio (Brazil).
“The Cost overrun and associated debt from the Athens 2004 Games weakened the Greek economy and contributed to the country’s deep financial and economic crises,” said Flyvbjerg, Budzier, and Lunn.
“Similarly, in June 2016 – less than two months before the Rio 2016 opening ceremony – Rio de Janeiro’s governor declared a state of emergency to secure additional funding for the Games.”
“When Rio decided to bid for the Olympics, the Brazilian economy was doing well. Now, almost a decade later, costs were escalating, and the country was in its worst economic crisis since the 1930s, with negative growth and a lack of funds to cover costs,” added the researchers.
In Montreal in 1976, the Games totalled CA$606 million in revenue, CA$383 million in operating expenses (hosting the Games), and CA$1.21 billion in capital expenditures—720% over budget.
This left the country with a deficit of CA$ 922 million. Canada’s subsequent 30 years of debt repayments incurred as a result of the Games was enough to discourage other cities from bidding so liberally.
However, the Games are not always accompanied by a bleak legacy.
In 1984, the Los Angeles Olympics were held using almost entirely preexisting infrastructure. That year, the Games made a US$215 million profit.
According to researchers Sid Panayi and Borja García, “there are reasons to believe Paris could follow suit—the organisers have used existing facilities and low-cost temporary venues as far as possible.”
Such possibilities of success are reasons why there have been increased calls for South Africa – specifically Cape Town – to throw its hat into the ring for the 2040 summer games.
“I would argue that Cape Town has a strong case for hosting the Games of the XXXVII Olympiad. First, we would need to spend as little as possible on permanent sports infrastructure,” said Fourie.
A study by Cape Town 2040, an organisation devoted to investigating Cape Town and the Western Cape’s viability for hosting the 2040 Summer Olympic and Paralympic Games, shows that 84% of the sports facilities needed are already available or can be temporarily built.
If a bid is made, it would be the city’s second.
Cape Town was eliminated in the penultimate round of voting for the 2004 Games, which ended up in Athens.
Read: What athletes get paid for Olympic medals in South Africa vs other countries
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