Bùi Tấn Thành

It costs a lot of oney for a country to

host an international sport event, such
as the Olympic Games or the football
World Cup. Some people think that this
is a waste of money, while others
believe the opposite. Discuss both these
views and give your own opinion
IELTS™ 8.0+
1.
There is fierce competition between nations to host major international sports events
like the World Cup or Olympics as it is a unique opportunity to boost the national
reputation of the host nation. In spite of its undeniable benefits, I believe that the costs
are too great and therefore governments should prioritise other key issues to better
benefit their citizens.

On the one hand, becoming a host nation for global events such as the World Cup or the
Olympics brings a number of economic and infrastructural benefits. During these
events, there is an influx of tourists from all over the world who need places to stay,
restaurants to eat in and traditional products to purchase. The efforts made to cater to
these tourists will remain long after they have gone. The cost of renovating a hotel might
pay for itself during the event and then begin turning a large profit in later years. The
other main area of development is related to the rapid expansion of quality
infrastructure. Nations will be forced to invest in new sports facilities like swimming
pools and stadiums as well as make renovations to pre-existing infrastructure like roads
and airports. For example, China used the Beijing Olympics as an opportunity to
modernise old buildings and roads.

On the other hand, these competitions use up tremendous resources from the host
nation for a temporary competition. To ensure the success of these prestigious events,
governments must waste a large percentage of the nation budget in the years leading up
to the competition, oftentimes in the billions of dollars. The newly constructed facilities
usually fall into disuse after each tournament. A salient example of this is Brazil as many
of the swimming pools and sports facilities that were used in the 2014 Olympics are
currently abandoned and becoming decrepit. Meanwhile, there are other pressing issues
that have been festering including the need for new schools for underprivileged students
and quality healthcare for the elderly population. If the government had prioritised these
issues the country would be in a better position and its citizens would have a higher
standard of living.

To summarize, due to the exorbitant costs, I am of the belief that the government should
not allocate such a large percentage of its financial resources to hosting global events
with negligible long-term impact. Instead these events should be hosted in the same
countries year after year so that the new infrastructure pays for itself over time.

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2.
Many people are divided over having a sports tournament for international competitors
occuring in their country. While some believe that money is wasted in hosting it, others
believe the event’s benefits justify its costs. Although these justifications seem
reasonable, I am inclined to express my disapproval toward this decision.

Organizing global sporting events might not be a wasteful venture. Certainly, new jobs
will be created, particularly those in the construction and service industries. The former
is expected to need more workers to build sporting facilities and lodging for the arriving
athletes, while the latter obviously demands more hospitality providers for the sports
tourists. Altogether, this results in a higher income overall for the population. Another
point of note is that hosting international sports tournaments produces an opportunity
to improve a country’s recognizability on the global stage. Such events, it is claimed, may
leave lasting impressions in foreign visitors and allow a nation’s tourism industry to
flourish for many years to come. The values created from organizing these events seem
significant enough to justify the decision.

However, I firmly believe that a nation is squandering its wealth by hosting international
sporting events. The expenses involved in such an endeavor, from lobbying for the rights
to host to constructing sporting facilities, are massive to the point of extravagance. As a
consequence, the home government incurs an exorbitant amount of debt, which
ultimately falls to the taxpayers to foot the bill. After a tournament has concluded,
meanwhile, the constructed facilities might end up a waste as well. This is likely the case
for the host of Olympic-style events, as arenas and sports complexes for less popular
disciplines fall into disuse. Even when they are used, the purpose is usually particular,
and the public, as usual, has to pay for their maintenance. It is hence reasonable to
oppose the holding of international sports tournaments.

In conclusion, organizing sports events for athletes from all over the globe is largely a
waste of money, and can be one of the worst financial decisions a nation can make. Any
government which likes to explore the possibility of doing so, in my opinion, would need
a good reason for it.

Đề bài, bài mẫu IELTS Writing Task 2 chủ đề: Hosting international sporting events

3.
Organizing international sporting extravaganzas like the Olympic Games or the FIFA
World Cup undoubtedly demands substantial financial investments. While some argue
that such expenditures are wasteful, others contend that they bring considerable
benefits to the host country. This essay will thoroughly discuss both viewpoints before
concluding that I am in favor of the former.

Admittedly, proponents of hosting international sports events may argue that the
benefits outweigh the costs. The key rationale behind this thinking is that these events
can significantly boost a nation's tourism industry, stimulate local economies, and create
numerous job opportunities. For example, the 2016 Rio Olympics drew millions of
tourists, injecting billions into the Brazilian economy and providing thousands of jobs in
the process. This underscores the belief that hosting such events can be a sound
economic investment.

However, I side with those who claim that the organization of global sports events is not
a prudent financial investment. This is because the exorbitant costs associated with
constructing state-of-the-art stadiums and upgrading infrastructure can place an
immense strain on a nation's budget. For example, the 2004 Athens Olympics left Greece
grappling with significant debt due to overspending on infrastructure projects,
burdening the country's finances for years to come. Additionally, global-scale sports
events often result in underutilized facilities once they conclude, giving rise to
maintenance expenses that further drain public funds. This can be seen in the case of
the 2016 Rio Olympics, where some venues were left unused, necessitating ongoing
maintenance funded by taxpayers. The unfulfilled promise of repurposing these
facilities for community use exacerbates the financial strain on the host city.

In conclusion, I feel that hosting international sports events is often a wasteful financial
endeavor. While there are potential benefits, the enormous costs, long-term financial
burdens, and underutilized amenities typically overshadow these gains.

Word count: 298

Giải đề IELTS Writing Task 1 và Task 2 ngày 12/10/2023

4.
Hosting major international sports events like the Olympics or the FIFA World Cup
comes with a significant financial commitment. While some argue that these expenses
are extravagant, others believe that hosting such events brings a multitude of
advantages. This essay will examine both perspectives before presenting my own
viewpoint.

Advocates contend that the costs associated with hosting these events are justified due to
the potential economic benefits they bring. Organizing a major sports event draws in
tourists, stimulates local businesses, creates job opportunities, and encourages
infrastructure development. Moreover, it showcases the host country’s culture, heritage,
and capabilities to the world, leading to global recognition. Consequently, these events
can act as drivers for economic growth, leaving a lasting positive impact on the host
nation.

Detractors argue that the resources earmarked for hosting these events could be better
utilized for critical social issues like education, healthcare, and poverty alleviation. They
posit that the short-term financial gains may not outweigh the long-term costs, as the
infrastructure built for these events may become underused or unsustainable after the
event concludes. Critics also assert that the resources invested could be redirected
towards addressing more immediate and essential needs of the populace.

In conclusion, I believe that hosting major international sports events can be a beneficial
investment, provided there is careful planning and consideration of long-term benefits.
While it is imperative to ensure that funds are judiciously allocated and that the event
leaves a lasting legacy, the potential economic, cultural, and social benefits should not be
disregarded.

Giải đề IELTS Writing Task 2 ngày 12/10/2023 – international sports event

5.
While some individuals postulate that hosting monumental sporting tournaments, such
as the World Cup, amounts to a misuse of national resources, others assert that these
events can meaningfully enrich a nation's profile. In this discourse, I shall explore both
perspectives, culminating in my own considered viewpoint.

At the outset, there exists a cohort who contend that the financial allocations for grand
sporting spectacles often eclipse pressing societal needs. For instance, Brazil's
significant investment in the 2016 World Cup offers a sobering narrative. The nation
embarked on erecting sophisticated stadiums; however, post-tournament, venues such
as the Arena da Amazonia languished in underutilization. Simultaneously, a large
fraction of the generated revenue was appropriated by international organizations,
leaving Brazil grappling with subsequent financial burdens. Therefore, countries might,
in their zeal, inadvertently sideline immediate and pivotal needs.

Conversely, numerous nations have gleaned considerable advantages from

orchestrating such large-scale competitions. Beyond mere economic augmentation,
these showcases offer a platform to amplify a country's resilience and technological
acumen. As a case in point, the 2021 Olympics in Japan, despite prevailing trepidations,
rejuvenated its tourism industry and spotlighted Japan's innovative prowess.
Metropolises like Tokyo experienced an influx of international aficionados, leading to a
tangible boost in local commerce. Such tournaments, therefore, can cast far-reaching
positive ripples across a nation's socio-economic landscape.

In deliberation, I posit that the commitment to hosting international sporting spectacles

should emanate from a judicious assessment of a country's prevailing challenges
juxtaposed against prospective dividends. In situations where nations confront acute
challenges such as public health crises, their energies and resources should be
judiciously redirected. Yet, for those with a resilient economic foundation and a cogent
strategic vision, such international showcases present lucrative opportunities.

In conclusion, while hosting large sporting gatherings has its allure, nations must decide
with caution, factoring in their own unique challenges and potential gains. Drawing from
instances like Brazil and Japan, the varied outcomes are evident. It is, therefore, clear
that each nation should tailor its decision based on its unique context. Looking ahead,
it's anticipated that countries will evaluate such undertakings with increasing prudence,
ensuring citizen welfare remains at the forefront.

Some people think that it is a waste of money for countries to host big sporting events
like the world cup, and that the money would be better spent on other things

Related articles to this topic

The Finances Behind the 2022 World Cup
By Adam Lyjak
With the 2022 World Cup officially underway in Qatar, people all around the
world are flocking to the stadiums and to their TVs to watch their countries
play soccer on the biggest stage. Statistically the largest sporting event in the
world with a predicted average of 5 billion spectators expecting to tune in to
this year’s tournament, it’s no secret that the World Cup requires ample
planning to entice the globe’s viewership. With the tournament only taking
place every four years, host nations are required to be adequately prepared
both financially and with infrastructure. From building venues and residences
to preparing the teams and players, the hosts need to be dedicated to working
hard to support the mass inflow of tourists flying in to watch the tournament.
With so much riding on the tournament’s success, how exactly does the money
get efficiently allocated, and which people are behind these decisions for the
2022 World Cup?
When Qatar—a small, extremely wealthy Middle Eastern nation—was selected
to host the World Cup in 2010 by the FIFA Executive Committee, it was
considered a monumental risk (Craig, 2022). To those knowledgeable of the
inner workings of FIFA and the general landscape of the World Cup, this
decision and the degree to which it would pay off for FIFA and Qatar itself was
in question. Among others, then-FIFA President Sepp Blatter stated that
selecting Qatar was a “bad choice” because of how small the nation was and its
ill-equipped ability to handle the vastness of the event and being under the
world’s microscope(Craig, 2022).
Fast forward to 2022 and the completion of the project, numerous media
accounts have confirmed that Qatar spent $220 billion on the World Cup—a
staggering 15 times more than Russia did in 2018 as the previous hosts (Craig,
2022). Surprisingly enough, less than $10 billion was spent on the
construction of the Qatari stadiums. The majority of the funds were actually
spent on hospitality, transportation, and telecommunications. In Doha, the
capital city of Qatar, $36 billion alone was spent on creating an extensive
metro system, new airports, and new hotels to help alleviate the large crowds
coming in from around the world (Zimbalist, 2022). This project was always
going to be a massive financial commitment for Qatar. To put it into
perspective, Qatar’s annual average GDP is around $180 billion. Having been
awarded the World Cup in 2010, the country has spent an average of $18.3
million each year, amounting to about 10% of its yearly GDP (Zimbalist,
2022). By comparison, Russia, the host of the 2018 World Cup, spent around
$14 to 15 billion USD and has an annual GDP of about $1.7 trillion. Russia’s
GDP is a staggering 9.5 times greater than Qatar’s, and they spent
substantially less money on the World Cup. Because of the small size of Qatar
and the limited real estate, most of the stadiums will be dismantled after the
tournament once they are devoid of their use and transformed into schools,
health clinics, cafes, and other service buildings (Craig 2022). Fortunately,
some of the new infrastructures will continue to remain a useful contribution
to Qatar after the soccer tournament. For example, the highways connecting
cities and stadiums will make longer travel quicker and more efficient. While
all of these figures fall on the cost side of the book, what about the revenues?
When it comes to the tournament’s revenue, it is important to differentiate
between the revenue FIFA is receiving compared to the revenue Qatar itself
will obtain. According to Forbes, FIFA is reaping 7.5 billion USD of revenue
while Qatar is receiving only 1.56 billion USD. Qatar’s revenue is primarily
coming from tourism and business travel. Although this seems like a tiny
number compared to what they are spending, the reality of is that most World
Cup host nations do not end up profiting from having the tournament on their
soil. Many things built for the tournament are often unable to be turned back
into hard cash. For a wealthy nation like Qatar, the overarching goal hope of
hosting this tournament is not centered around the amount of money they will
make. With billions of soccer fans tuning in from all around the world, Qataris
hope that their country will make an impression on the world and put them on
the map. If all goes well, hosting this event could result in a more significant
role in foreign trade, world politics, and tourism (Craig, 2022).
Qatar’s economy is already experiencing a near-term boom. With just over a
million tourists in Qatar for the tournament, the domestic demand for food
and hospitality services has exponentially increased and will provide a boost to
its already growing economy (Taylor, 2022). Longer term, however, Qatar’s
compensation for hosting the World Cup is more complicated to quantify than
just monetary figures. With the confirmed news from multiple sources that
Qatar dangerously treated and exploited the workers they employed to build
infrastructure for the tournament, the 2022 World Cup already had a negative
connotation long before it kicked off. According to Taylor, many European
cities have avoided broadcasting games to the public due to the cruelty that
was allowed behind the scenes during the construction of the stadiums. This
tension between Qatar and other Western countries would put Qatar in an
even more difficult spot given the lingering issues with other Gulf Cooperation
Council (GCC) countries. Luckily for Qatar, a successful World Cup could go a
long way in the world accepting the nation as a desirable destination to visit or
reside in. The Qatari government is expecting triple the number of annual
tourists in 2030—up from 2 million in 2019 to 6 million by the end of the
decade (Taylor, 2022). The hope is that some of the structural frameworks will
be preserved and used to support new visitors in the future.
The main takeaway that host countries come to realize after hosting the World
Cup is how much of a laborious and financial project it is. The countless hours
and dollars spent to accommodate teams, locals, and tourists while adhering
to land and economic policies show that the rewarding satisfaction of hosting
a successful event does not come without extreme monetary impacts.
MJE (2023). The Finances Behind the 2022 World Cup – Michigan
Journal of Economics. [online] Umich.edu. Available at:
https://sites.lsa.umich.edu/mje/2023/01/10/the-finances-behind-the-
2022-world-cup/#:~:text=Fast%20forward%20to
%202022%20and,hosts%20(Craig%2C%202022). [Accessed 10 Apr.
2024].

‌QatarFIFA World Cup 2022: How much money host nation

spent on the most expensive men’s tournament?
Qatar spent nearly 16 times more to prepare for the 2022 FIFA World Cup
than the amount invested by the previous host Russia. Wild celebrations
erupted on the streets of Doha in 2010 when the announcement was made
about Qatar hosting the 2022 World Cup. And during the last 12 years, Qatar
prepared the stadiums, airports, transport links, and accommodation facilities
to ensure a smooth kickoff of the big event by launching the largest
infrastructure project in the history of the World Cup.
However, there’s plenty of controversy surrounding the cost of the
tournament’s infrastructure.
How much Qatar Spend to host the 2022 World Cup?
According to the Tass news agency of Russia, the highest total spending
toward infrastructure confirmed by Qatari officials was $200 billion. Even the
finance ministers of Qatar admitted to spending $500 million per week for
years on the infrastructure project.
According to a report from The Tass, the cost of building the eight stadiums
was quoted as $6.5 billion. The figure was spelt out by Fatma Al Nuaimi, the
Supreme Committee for Delivery and Legacy of the World Cup’s
Communications Executive Director.
In 2016, Hassan Al Thawadi, the committee's secretary general, said the cost
of building the stadiums was between $8 billion to $10 billion when he was
asked about it in London.
What are the things on which Qatar spent money?
The cooling systems that were put in place in all but one of the eight stadiums
have drastically increased construction costs. These systems were installed to
keep players, fans, and the World Cup pitches at an appropriate temperature.
The turf used so far in the World Cup pitches was grown using imported grass
seeds using special nurseries, as creating and maintaining them requires them
to be well watered and kept in cool environments.
Huge spending also went towards building private islands, apartments, villas,
and hotels. Doha Metro cost $36 billion, and The Pearl accommodation
complex was built with $15 billion.

ET Spotlight Special (2022). Qatar FIFA World Cup 2022: How much
money host nation spent on the most expensive men’s tournament?
[online] The Economic Times. Available at:
https://economictimes.indiatimes.com/news/international/us/qatar-fifa-
world-cup-2022-how-much-money-host-nation-spent-on-the-most-
expensive-mens-tournament/articleshow/96319520.cms?from=mdr
[Accessed 10 Apr. 2024].

Game Plan: The True Cost of Sports Events

Sports tourism continues to be big business in the United States, with amateur
athletes spending more than $10.6 billion for events each year, according to
the SportsEvents 2017 annual report. The benefits of hosting an event can be
huge for a destination. A large-scale event raises the profile of the city or
region, brings much-needed sales and lodging tax revenue, and helps
municipalities build or upgrade recreational facilities. For sports
organizations, tournaments and events serve as fundraisers but are also a
celebration of sorts: a culmination of a season of practice, training and hard
work. But benefits have to be weighed against the costs, some of which may
not always be obvious. The costs of hosting a sporting event varies depending
on the size, type of event, time of year and location.
Tom O’Hara is director of marketing and business development for the United
States Specialty Sports Association (USSSA), a multi-sport governing body
that offers programs in baseball, softball, basketball, volleyball, flag football,
lacrosse, golf, soccer and martial arts. O’Hara offered a list of costs to prepare
for when hosting and running a sports event:
● Marketing of event
● Facility user fees or field rental
● Additional name insured for facility/park
● Umpires/officials
The amount for officials varies. For example, the Alabama High School
Athletic Association rate ranges from $40 per contest for junior high
competitions to $60 per contest for high school events. Average pay for youth
baseball home plate umpires is between $25 and $30 per game, while base
umpires should get $15 to $20.
● Umpire-in-chief fee
● On-site tournament director fee
● Scorekeepers (may be volunteer)
● Awards
● Athletic trainer (if not provided by the facility)
● Lighting (if not included in facility user fees)
● Balls (if not included in the entry fee)
Russ mentioned a few other costs that planners need to consider:
● Facility security
● Staff and officials’ accommodations, travel, rental cars and per diem
● Hospitality
● Gifts
● Program and ticket printing
● Signage
Then there are those items you learn to provide after a lot of experience. “I
personally provide water and fruit—such as oranges, apples, etc.—for officials
working my events,” O’Hara said. “They must keep hydrated.” For race events
such as a 5K, marathon or triathlon, there are different costs to consider. In
addition to some of the items already recounted, you may also need:
● Permit from the city or municipality, which may have an application fee
● Police officers to stop or block traffic
● Portable potties
● Timing equipment rental
● Those much-coveted race T-shirts
O’Hara said some facilities will charge an additional fee if the event brings in
outside vendors, such as bat and equipment companies. Facilities may also
require vendors provide an additional name insured policy holding the field
owner harmless, O’Hara said.
Sports planners can expect a range of item costs to be covered by the facility or
center but those costs vary depending on individual parks, so be sure to ask.
“Some parks are privately owned, some parks are owned by a municipality
(city or county),” O’Hara said. “Some parks charge per field, some by day or
weekend. Some include the lighting, some do not.” Concessions, for example,
are typically excluded in your user agreement. “Some parks, ESPN Wide
World of Sports for instance, provide trainers and include lighting and
security,” he said. Those costs are included in your User/Field Rental
agreements. So, again, ask questions and read your agreement carefully.
Sports commissions are excellent resources for planners to use while
organizing athletic events. “The local sports commission knows the area; help
them help you make connections with local providers for specific event needs,”
said Michelle Russ, director of sales for the Gulf Shores & Orange Beach
Sports Commission. “We are a one-stop shop that planners can utilize for a
variety of reasons from helping secure discounted accommodations or finding
the perfect venue to suggesting destination activities or delicious dining
options.” Some events, such as the Brett/Robinson Alabama Coastal Triathlon
and the Kaiser Realty by Wyndham Vacation Rentals Coastal Half Marathon,
are coordinated from start to finish by the Sports Commission. Which brings
up the question: What can sports planners negotiate, if anything?
“Typically, there is no negotiating room. There are many organizations
competing for the use of a facility or complex owned by municipalities on any
given date,” O’Hara said. “The fees are the same for any group or
organization.” There may, however, be a bit of room to negotiate with private
facilities. “Especially if you are holding multiple events throughout the season
there,” O’Hara said.

Sportseventsmediagroup.com. (2020). True Cost of Sports Events -

SportsEvents Magazine. [online] Available at:
https://sportseventsmediagroup.com/game-plans/cost-of-events/
[Accessed 10 Apr. 2024].

‌TheMoney Behind The Most Expensive World Cup In

History: Qatar 2022 By The Numbers
When Qatar kicks off the first match of the 2022 World Cup against Ecuador
on Sunday night — mid-morning for American audiences — the world will
finally witness the end result of one of the largest capital campaigns in human
history.
Qatar’s minister of finance said in 2017 the country was spending $500
million per week on infrastructure projects including roads, hotels, stadiums
and airport upgrades to prepare the small Middle Eastern nation to host the
world’s largest sporting event. It will be, by far, the most expensive World Cup
in history. Qatar is estimated to have spent as much as $220 billion in the
dozen years since being chosen as a World Cup host in late 2010, more than 15
times what Russia spent for the 2018 event.
The country has come under intense scrutiny for the hundreds, potentially
even thousands of workers, many of whom from other countries, who died
while working under intense conditions for minimal pay to keep the massive
projects on track.
Even now, it’s unclear whether the “bold risk” Qatar asked FIFA to make in
allowing the country to host will pay off for either the organization or the
home country. Former FIFA president Sepp Blatter said last week the decision
to let Qatar host was a “bad choice.”
“It’s a country that’s too small,” Blatter told Swiss newspaper group Tamedia.
“Football and the World Cup are too big for that.”
Any potential controversy will do little to slow the large amounts of money
being invested, sponsored, gambled or earned during the 29-day global
phenomenon. Before the World Cup begins, these are the most important
dollar figures:
$13,000: The amount of money a bettor would earn on a $100 wager on the
U.S. winning the World Cup. The USMNT have +500, or 5-to-1, odds of
winning their group, which would require them to finish ahead of England,
Wales and Iran.
$42 million: The prize money awarded to the team that wins it all. FIFA
allows each team to decide what share of the purse players receive.
$60 million: The reported annual value of Nike’s deal to sponsor the French
Football Federation. Nike has deals of various sizes with 13 nations in the 32-
team field, the most of any apparel brand. Seven teams will wear Adidas’ gear
and six will wear Puma. New Balance, Hummel, Kappa, Majid, Marathon and
One All Sports sponsor one nation each.
$128 million: The highest-paid player is France’s Kylian Mbappé, who’ll
make $110 million on the field this year through his contract with Paris Saint-
Germain, and another $18 million off the field, according to Forbes estimates.
He could earn an additional relatively small bonus based on France’s results in
the tournament.
$209 million: The amount that soccer clubs around the world receive from a
fund set aside by FIFA to reward them for developing players who play in the
tournament for their national teams. The amount is approximately $10,000
per day per player. The fund has tripled since the 2014 World Cup in Brazil.
$277 million: The widely reported amount David Beckham was paid by
Qatar to serve as an ambassador for the 2022 World Cup, paid out in
installments over 10 years.
$440 million: The total prize pool for the 2022 World Cup, up from $400
million in 2018. By comparison, the 2019 Women’s World Cup prize pool was
$30 million.
$1.7 billion: The costs covered by FIFA for this year’s World Cup, with the
largest expenditures being prize money, operational expenses like hospitality
and logistics ($322 million), and TV operations ($247 million).
$1.8 billion: The amount estimated to be gambled on this year’s World Cup
in just the U.S., according to the American Gaming Association. More than 20
million Americans are expected to wager on the event.
$4.7 billion: FIFA’s expected revenue from the World Cup, according to its
2022 budget. TV broadcast rights account for $2.64 billion and marketing
rights bring in another $1.35 billion, while ticket sales and hospitality rights
add up to $500 million.
$6.5 billion to $10 billion: The range of estimates on how much Qatar
spent to build seven soccer stadiums for this year’s World Cup. After the event,
sections of the stadiums will be deconstructed and donated to other countries
and the buildings repurposed into community space for schools, shops, cafes,
sporting facilities and health clinics. One venue, Stadium 974, was built using
recycled shipping containers and will be entirely dismantled and removed.
$14.2 billion: Russia’s total costs associated with hosting the 2018 World
Cup, according to the Moscow Times. The biggest line items included
transport infrastructure ($6.11 billion), stadium construction ($3.45 billion)
and accommodations ($680 million).
$220 billion: An estimated cost of what Qatar spent over the past ten years
in preparation for the World Cup. Government officials have never confirmed
the number, but in 2017, Qatar’s minister of finance said the country was
spending $500 million per week on capital projects.

Craig, M. (2022). The Money Behind The Most Expensive World Cup
In History: Qatar 2022 By The Numbers. Forbes. [online] 21 Nov.
Available at: https://www.forbes.com/sites/mattcraig/2022/11/19/the-
money-behind-the-most-expensive-world-cup-in-history-qatar-2022-
by-the-numbers/?sh=6a18bf69bff5 [Accessed 10 Apr. 2024].

The Olympic Games Keep Breaking Their Budgets. Can

Skyrocketing Costs Be Controlled?
The Tokyo Olympics are over budget. Way, way over. With an official price tag
of $15.4 billion—and an estimated actual cost of at least $25 billion—this
summer’s Olympics have blown past an initial $7.5 billion estimate, and likely
will end up as the most expensive Games ever.
Well, at least until the next Olympics.
Like colorful outfits during the Parade of Nations and generous condom
distribution in the athletes’ village, enormous cost overruns are an Olympic
tradition. In fact, a recent analysis by three Oxford University scholars found
that every Games since 1960 has run over budget by an average of 172 percent
—a larger average than seen in the construction of giant dams, and one that
places the Olympics in the same cost risk prediction category as (no, really)
natural disasters and terrorist attacks.
To better understand why the Games consistently bust their budgets and how
that can change, Global Sport Matters recently spoke with Alexander Budzier,
a Fellow at Oxford’s Saïd Business School, large project management expert,
and co-author of “Regression to the Tail: Why the Olympics Blow Up.” The
following interview responses have been lightly edited for clarity and context,
with some sections being cut for brevity.

Global Sport Matters: The Olympics are fun. They’re often inspiring. They
make for great TV. And with an average cost since 1960 of $6 billion for the
Summer Games and $3.1 billion for the Winter Games, they are anything but
cheap. What should cities and countries bidding for the Olympics know about
the costs of hosting the Games?
Alexander Budzier: Exactly what you said! It’s not cheap. With the cost itself,
there’s an element that has to do with running the Olympics for two weeks, the
greatest show on Earth. And then, as we now see in Tokyo, and as we saw in
Rio, and that we always see, there’s what the whole thing costs—all of the
surrounding investments in infrastructure. And that’s at least half of the total
cost.
If we take Tokyo as an example, there’s about $6 billion that is the cost of
actually staging and running the events for two weeks. And that is just about
met by the various revenues cities are able to raise, even though we know
there are some questions about whether those are in cash or, as is often the
case, in in-kind donations. But on paper, at least, that is covered. Only then
you have another $10 billion, sometimes more, that you invest in stuff like
stadiums, athletes’ villages, broadcast centers, and transportation upgrades.
And some of those costs aren’t even included in the costs we studied.
So one of the greatest questions for any city or country embarking on [hosting
the Games] is affordability. Can you afford it? And if you're investing in it, are
you investing your money wisely? Do you really have a plan for what to do
with all that infrastructure afterwards? If you don’t, then there certainly is an
element of proceed with caution, and really know what you are getting
yourself into.

GSM: Just to clarify—your study of Olympic costs and cost overruns doesn’t
cover all of the infrastructure costs that come with hosting?
Budzier: No, we were looking at what we call “direct sports-related
investments.” That includes the stadiums, the media and broadcasting
centers, the athletes’ villages. But it doesn’t include things like upgrading your
airport, or expanding a metro, or building a light railway station to serve the
Olympic area.

GSM: That sounds like sports-stadium construction costs in the United States
that don’t include building a new highway interchange next to the stadium, or
upgrading the electrical or water infrastructure in that area, all of those other
necessary infrastructure things. You have to pay for them, too, but they’re not
on the official budget.
Budzier: They’re not on that budget. And that means it's very difficult to
compare those expenses between the different Olympics. These kinds of
additional investments are typically not captured in the "bid books" that are
put together when places bid for hosting the Games.
Those books are one of the main sources of data that we looked at. They very
much focus on what is needed to host the Games, and not necessarily on what
is needed to get people to them.

GSM: Who actually pays for the costs of putting on the Games? Is there a
difference between who pays for the budgeted costs and who pays for any
overruns?
Budzier: With the cost of running the events, the IOC [International Olympic
Committee, a non-governmental organization based in Switzerland that
organizes the Games], always claims that sponsorship, television rights, and
whatever the IOC gives to the host cities covers those costs. But that doesn’t
pay for any of the facilities or other stuff we discussed. The host cities are on
the hook for that, usually with [national] government-backed guarantees to
pay for it—which ultimately means taxpayers.

GSM: You note in your paper that host cities have legally-binding obligations
—that is, contacts with the IOC—to cover any cost overruns.
Budzier: Yes, and that is also part of the massive cost risk. When Rome
dropped out of their Olympic bid [for the 2024 Games], one of the things the
city’s mayor mentioned during their press conference was how the city hosted
the 1960 Olympics and still hasn’t paid back those loans.
GSM: Your paper states that “we cannot count on organizers, the IOC, and
governments to provide us with reliable information about the real costs, cost
overruns, and cost risks of the Olympic Games.” Why not, and how does that
effect trying to research and analyze these costs?
Budzier: It makes it very hard! There’s an apparent transparency over recent
Games, with the bid books being public, and the cost estimate, and the final
accounting also being public. But once you start looking into the individual
Games, it is difficult to really find apples for apples comparisons between what
goes in the bid books and what is given in the final accounts. You don’t quite
know how the money was accounted for. For the Sochi Games, for instance,
we still don’t know what the security costs were. Nobody has any idea.

GSM: So there’s no standardized way that different hosts and different Games
keep their books?
Budzier: Technically, the local organizing committee books are there, and they
sort of publish what they spend. You can follow up on that. But then,
somehow, sometimes budgetary items just disappear. For Rio, for example,
there were some documents published just before the Games where costs were
split between the city, the region, and the state for things like refurbishing the
Olympic Village into housing after the Games, things that later weren’t
counted as official costs.
At first look, you can say, ‘yeah, it’s all very transparent.’ But once you start
moving the numbers, it all becomes a little more complicated and fishy.

GSM: Speaking of fishy numbers, your paper looked at 30 Olympics between

1960 and 2016. For 11 of those Games, you were unable to find the estimated
and actual costs of putting on the event. How is that possible?
Budzier: When we study projects in the United States, it’s possible to get quite
good data going back to the New Deal. If you want to follow-up on the track
record of the Tennessee Valley Authority, which built a lot of energy
infrastructure in the U.S. in the 1930s, 1940s,1950s, you can get reliable data,
because under [President] Roosevelt, it suddenly became a thing that if you
spend public money, even as an arm's length body, you had better account for
it. And for some odd reason, that is not the case for the [older] Olympic
Games.
GSM: Olympic costs can be far more than host cities and countries can afford.
For example, it took Montreal 30 years to pay off the debt incurred by the 720
percent cost overrun on the 1976 Summer Games. Of all the Games you looked
at, what host suffered the greatest subsequent financial hit?
Budzier: In terms of extra money spent, it’s Tokyo. It’s unprecedented. In
terms of consequences, that’s a bit of conjecture. But maybe the Athens
Olympics. Greece hosted the Games, and then, suddenly, the state went
bankrupt. Drawing a line between those two things is a bit of speculation, but
it’s certainly something that once they had to start paying it back, there were
problems.
Some countries can afford the Olympics. Others can’t. You know, my
sympathies for Montreal. But ultimately, Canada is a rich country. I’m more
worried about what is happening in the smaller economies.

GSM: By your accounting, the 2014 Sochi Games cost $21.9 billion. That made
them the most expensive Games ever—at least until Tokyo—and also made
Sochi more expensive than all previous Winter Games combined. Why did
they cost so much?
Budzier: Everybody thinks it was corruption. That’s the working assumption.
Nobody can prove it. But it’s unclear how you could spend so much on the
different bits of infrastructure and how particular types of infrastructure could
be so expensive. Like ice hockey, how much can you really spend on the
stadium? The money must have gone to somebody, somewhere.

GSM: So what has happened with ballooning costs for the Tokyo Games? Is it
the pandemic? Were cost overruns a problem before Covid?
Budzier: So, the official, announced budget in 2019 was $12.6 billion. After the
pandemic and the Games being postponed, that rose to $15.4 billion. A state
auditor has said that there are another $9.7 billion in costs that aren’t being
accounted for and should be accounted for.
So pre-Covid, the Tokyo Games had at 73 percent cost overrun. Now it’s 111
percent according to their own calculations—and if you trust the state auditor,
we’re talking about a 244 percent overrun. It’s hard to see what is due to covid
and what isn’t, because to some extent those costs overlapped.
GSM: In the paper, you describe the budget for most megaprojects as the
maximum value to be spent—but with the Olympics, you write, it is “more like
a fictitious minimum” or a “down payment.” Why is that?
Budzier: The Olympics have a different spending profile compared to other
projects. Normally, you have a little bit of a ramp up, then you have a lot of
activity and spend a lot of money, and then it ramps down. The middle of a
construction period is always the most work-intensive. So you end up with a
bell-shaped kind of curve.
But the Olympics are always back-ended. The activity really happens toward
the end of the Games cycle. So people are, to some extent, completely
unrealistic about planning. It’s a long time period—seven to nine years—and in
the first four years, nobody actually realizes how much things will change once
they actually have to host the Olympics. There are always changes around
security requirements, requirements for the media, all of that stuff.
Another thing we hear over and over again from the Olympic cities is that they
will just reuse their existing [sports and event] facilities. Which doesn’t really
work. The requirements around the Olympics when it comes to security, when
it comes to the media, etcetera, are so much higher than those for the
stadiums that have already been built. People involved in the Games say that it
often would be cheaper to demolish existing stadiums and build new ones
than retrofit.
The other thing is that the people making bids don’t have a particular interest
in putting together a realistic bid. They want to stage the Games! And they
need to sell it to their country and the local population. A really realistic
estimate of cost will probably not be a great selling point to get people on
board.

GSM: Using statistical analysis, you conclude that the Olympics carry a 20
percent risk of a three-fold increase—or higher—in cost. That seems high!
How does that risk compare to the risks of other megaprojects?
Budzier: It’s in the most extreme category of risks that we’ve found so far.
GSM: Your paper also states that Olympic cost overruns are “not just the
unfortunate, happenstance incidents they appear to be, that are regrettable
but will hopefully be avoided in the future, with more awareness and better
luck. Instead, Olympic cost blowouts are systematic, ruled by a power law that
will strike again and again, with more and more disastrous results.” Are you
basically saying that Olympic cost overruns are not a bug, but rather a feature?
Budzier: I think that's a fair way to put it. It’s not like life insurance or the
weather—things we can reasonably forecast, that sort of average out over time.

GSM: Let’s talk about reasons for Olympic cost overruns. Your paper lays out
a number of explanations, starting with the fact that once a city decides to host
the Games, it’s very difficult to reverse that decision—which leaves hosts in a
“in for a penny, in for a pound” position.
Budzier: It’s very hard for a whole city to back out. Something severely bad
must happen. If I remember correctly, Denver is the only Olympic host that
said, “no, actually, we’re not going to do that.” The public voted against it.
Otherwise, the pattern seems to be to throw good money after bad money.

GSM: Another reason for cost overruns is that Olympic hosts—and not the
IOC—are legally obligated to cover them.
Budzier: That’s a point we make about governance structures. The IOC says
they’re looking after the operational costs of the Games. If those increase, they
can always find a bit more sponsorship money or whatever. But the IOC isn’t
involved with the stadiums and all the other infrastructure. The host cities and
countries pay for that.
In projects, you always talk about balancing your cost, your schedule, and your
scope. With the Olympics, the schedule is defined. You know exactly when the
opening date is going to be. In normal times, that is not going to be moved.
Similarly, the scope tends to expand. The governing body for swimming will
say, “Okay, your aquatic center must have these specifications for the pool,
and these specifications for the warm-up rooms.” And you just have to do it.
You need to deliver, and you have no influence over saying “no, let’s do it later
or cheaper.” So something has to give, and that ends up being the costs.
GSM: Your paper also lays out recommendations for lowering Olympic costs
and cost overruns, including budgeting more money up front for
contingencies; making the IOC more responsible for paying for cost overruns;
shortening the delivery period for the Games; and even having cities walk
away from hosting altogether. Which of these steps would be the most
effective if taken?
Budzier: Quite honestly, the last one is probably the least effective: Just walk
away, don't do it anymore. That's probably not in anybody's interest! And it's
sort of a tongue-in-cheek recommendation.

GSM: People have proposed hosting the Games in one or a few permanent
locations—something that could lower costs by allowing facilities to be reused
and also eliminating the eternal beginner syndrome.
Budzier: That is how the Olympics used to run in ancient times.

GSM: Your paper takes that idea one step further by recommending that the
Games “be spread geographically with different events going to different cities,
but with each event having a more or less permanent home, say track and field
in Los Angeles, tennis in London, equestrian events in Hong Kong.” What are
the chances that something like this ever happens?
Budzier: In some ways, it’s against the principles of the Olympic movement.
Participation in sports is kind of their thing. They want to spread Olympic
sports across the globe. So they travel around and go to different continents.
But the question is, does that still work? Because the Olympics increasingly
are a thing that only very rich countries can afford.

GSM: And even those countries are having second thoughts! In the last 20
years, we have seen a dramatic decrease in the number of cities applying to be
Olympic hosts, as well as applicants including Boston, Toronto, Munich, and
Rome walk away from the bid process. Next year’s Winter Games will be held
in Beijing—a city not exactly known for winter sports—and Kazakhstan was
the only other bidder. How important is to the future of the Olympics to get
costs and cost overruns under control?
Budzier: It’s very important. The Olympics are really something that has
gotten out of hand. It is tremendously expensive. The IOC launched its
“Agenda 2020” in 2014 in part to make the Games more cost-efficient. Tokyo
implemented a lot of those ideas. Even before covid, they didn’t seem to be all
that cost-effective. We shall see if they manage to do something for Paris and
Los Angeles (the respective host cities of the 2024 and 2028 Summer Games).
That’s questionable, to say the least.
Is the IOC in any shape or form an organization that can actually turn this
around? I’m not very hopeful.

GSM: Are all of these big costs and bigger overruns inherent to the nature of
the Olympics themselves? Or are they the result of the people in charge of
awarding and staging the Games not being motivated to control costs? Put
another way: could we have cheaper Olympics if we really wanted them? Or is
it just impossible to control costs?
Budzier: I think it’s a matter of behavior. The worst outcome from our paper
would be that people say, “oh, well, these guys found that the Olympics follow
this weird power law, so cost controls are impossible.” Well, what we say is
that while cost forecasting is very hard, cost control is very much possible.
What’s needed is to set a realistic baseline for the costs, up front, and then
deliver to that baseline. Do not accept any other overruns. You do that by
appreciating the monumental task of delivering the Olympics on time and to
specs. Understand how ambition and wanting to show off a bit for the world
also can drive these costs. Don’t kid yourself that you’ll be able to get away
with a big stadium that’s cheap and ugly—it’s going to be on TV everywhere all
the time. You’ll want something pretty!

Kleen, B. (2021). Paying For the 2021 Tokyo Olympics - Global Sport
Matters. [online] Global Sport Matters. Available at:
https://globalsportmatters.com/business/2021/07/21/tokyo-olympics-
breaking-budgets-skyrocketing-costs-controlled/ [Accessed 10 Apr.
2024].

Is the World Cup a giant waste of money?

Football fans can hardly accuse Qatar of being tight-fisted. The Arab state has
reportedly spent $300bn in the 12 years since it won the rights to host the
men’s World Cup. It only expects the tournament to inject $17bn back into its
economy. Much of that spending spree has gone into building infrastructure,
including a whizzy new metro system built to accommodate the 1.5m visitors
expected to show up to football’s biggest party. Organisers insist all the
construction will serve a purpose even after the final goals are scored. They
should hope so. As an investment, sporting mega-events are almost always a
dud

Between 1964 and 2018, 31 out of 36 big events (such as World Cups or
summer and winter Olympics) racked up chunky losses, according to
researchers at the University of Lausanne. Of the 14 World Cups they
analysed, only one has ever been profitable: Russia’s in 2018 generated a
surplus of $235m, buoyed by a huge deal for broadcasting rights. Still, the
tournament only managed a 4.6% return on investment. (The data for
Mexico’s World Cup in 1986 is incomplete. It probably ran a deficit.)

Almost all the main expenses fall on the host country. FIFA, the sport’s
governing body, covers only operational costs. Yet it takes home most of the
revenue: ticket sales, sponsorships and broadcasting rights go into its coffers.
The last World Cup, for instance, scored FIFA a cool $5.4bn, part of which is
then transferred to national teams.

The Lausanne data only includes expenses related to venues, such as

constructing a stadium, and logistics, such as staffing costs. It ignores the
value of indirect projects, like Qatar’s metro infrastructure and new hotels.
Some infrastructure projects make economies more productive in the long
term. But many costly stadiums eventually go unused, and the events rarely
spark economic development in surrounding areas.

Residents of host cities have begun questioning the benefits of their

governments spending billions of dollars on large sporting events. As a result,
fewer countries are volunteering as hosts. Seven cities bid to host the summer
Olympic Games in 2016; for 2024 there were only two eventual bidders.
These huge costs are new to the sporting world. The World Cup in 1966,
featuring 16 teams, cost around $200,000 per footballer (in 2018 prices). In
2018, that figure jumped to $7m. Costs have been driven by building more
new stadiums for every tournament. In Qatar, seven of the eight stadiums
have been built from scratch; in 1966 England did not build any.

Economics aside, Qatar is also struggling to bank the prestige that host cities
aim to attract. According to one analysis, two-thirds of coverage in the lead up
to the World Cup in British media has been critical, focusing on the desert
state’s poor human-rights record. Fans may also be unimpressed by its abrupt
ban on alcohol in stadiums. As with any party, hosting is not all it’s cracked up
to be.

The Economist (2022). Is the World Cup a giant waste of money?

[online] The Economist. Available at:
https://www.economist.com/graphic-detail/2022/11/18/is-the-world-
cup-a-giant-waste-of-money [Accessed 10 Apr. 2024].

‌ oes hosting the Olympics, the World Cup or other major

D
sports events really pay off?
After a long battle, Paris's beloved bouquinistes will be staying put this
summer. The decision, announced on 13 February by the French government,
came after considerable public backlash to the police prefecture's original plan
to move part of the iconic Seine booksellers elsewhere for the inauguration of
the Olympics Games on 26 July.

Meanwhile, less than six months away from the event, Parisians continue to
grumble over a lack of consultations with locals, warnings of gridlocked traffic,
closed metro stations, extensive video surveillance and other grievances. So
for host countries, what was the point of the Olympics, again?

In academia, the debate about the potential positive and negative effects of
large-scale sporting events is ongoing. Although these events are often
associated with substantial economic losses, the long-term benefits are the
main argument in favor of hosting them. These include the development of
material and soft infrastructure such as hotels, restaurants or parks. Big
games can also help put the host region on the map as an attractive place for
sports and cultural events, and inspire a better entrepreneurial climate.

The pros and the cons of big sporting events

The cost of these benefits, as the Parisians have realized, is steep. Host
countries appear to suffer from increased tax burdens, low returns on public
investments, high construction costs, and onerous running cost of facilities
after the event. Communities can also be blighted by noise, pollution, and
damage to the environment, while increased criminal activity and potential
conflicts between locals and visitors can take a toll on their quality of life. As a
result, in the recent past several major cities, including Rome and Hamburg,
withdrew their bids to host the games.

A common feature of the economics of large-scale sporting events is that our

expectations of them are more optimistic than what we make of them once
they have taken place. Typically, expenditure tends to tip over the original
budget, while the revenue-side indicators (such as the number of visitors) are
rarely achieved.

When analyzing the effect of hosting large-scale sporting events on tourist

visits, it is important to take into consideration both the positive and negative
components of the overall effect. While positive effects may be associated with
visitors, negative effects may arise when "regular" tourists refuse to visit the
location due to the event.

This might be because of overloaded infrastructure, sharp increases in

accommodation costs, and inconveniences associated with overcrowding or
raucous or/and violent visitors. On top of that, reports of poverty or crime in
the global media can actually undermine the location's attractiveness.

When big sporting events crowd out regular tourists

In an article published in the Journal of Sports Economics with Igor Drapkin
and Ilya Zverev, I assess the effects of hosting large-scale sporting events, such
as Winter and Summer Olympics plus FIFA World Cups, on international
tourist visits. We utilize a comprehensive dataset on flow of tourists covering
the world's largest destination and origin countries between 1995 and 2019.
As a first step, we built an econometric model that effectively predicts the flow
of tourists between any pair of countries in our data. Subsequently we
compared the predicted tourist inflow in a hypothetical scenario where no
large-scale sporting event would have taken place with the actual figures.

If the actual figures exceed the predicted ones, we consider the event to have a
net positive impact. Otherwise, we consider that it had a "crowding out" effect
on "regular" tourists. While conducting this analysis, we distinguished
between short-term (i.e., focusing just on the year of the event) and mid-term
(year of the event plus three subsequent years).

Our results show that the effects of large-scale sporting events vary a lot across
host countries: The World Cup in Japan and South Korea 2002 and South
Africa 2010 were associated with a distinct increase in tourist arrivals,
whereas all other World Cups were either neutral or negative. Among the
Summer Olympics, China in 2008 is the only case with a significant positive
effect on tourist inflows.

The effects of the other four events (Australia 2000, Greece 2004, Great
Britain 2012, and Brazil 2016) were found to be negative in the short- and
medium-term. As for the Winter Olympics, the only positive case is Russia in
2014. The remaining five events had a negative impact except the one-year
neutral effect for Japan 1998.

Following large-scale sporting events, host countries are therefore typically

less visited by tourists. Out of the 18 hosting countries studied, 11 saw tourist
numbers decline over four years, and three did not experience a significant
change.

The case for cautious optimism

Our research indicates that the positive effect of hosting large-scale sporting
events on tourist inflows is, at best, moderate. While many tourists are
attracted by FIFA World Cups and Olympic games, the crowding-out effect of
"regular" tourists is strong and often underestimated. This implies that
tourists visiting for an event like the Olympics typically dissuade those who
would have come for other reasons. Thus, efforts to attract new visitors should
be accompanied by efforts to retain the already existing ones.
Large-scale sporting events should be considered as part of a long-term policy
for promoting a territory to tourists rather than a standalone solution.
Revealingly, our results indicate that it is easier to get a net increase in tourist
inflows in countries that are less frequent destinations for tourists—for
example, those in Asia or Africa.

By contrast, the United States and Europe, both of which are traditionally
popular with tourists, have no single case of a net positive effect. Put
differently, the large-scale sporting events in Asia and Africa helped promote
their host countries as tourist destinations, making the case for the initial
investment. In the US and Europe, however, those in the last few decades
brought little return, at least in terms of tourist inflow.

Savin, I. (2024). Does hosting the Olympics, the World Cup or other
major sports events really pay off? [online] Phys.org. Available at:
https://phys.org/news/2024-02-hosting-olympics-world-cup-
major.html#:~:text=Host%20countries%20appear%20to%20suffer
%20from%20increased%20tax,onerous%20running%20cost%20of
%20facilities%20after%20the%20event. [Accessed 10 Apr. 2024].

‌The Economics of Hosting the Olympic Games

The costs of hosting the Olympics have skyrocketed, while the economic benefits
are far from clear. This has led to fewer states interested in playing host and a
search for options to lighten the burdens of staging the big event.

Introduction
The Olympics have evolved dramatically since the first modern games were
held in 1896. In the second half of the twentieth century, both the costs of
hosting and the revenue produced by the spectacle grew rapidly, sparking
controversy over the burdens host countries shouldered. A growing number of
economists argue that the benefits of hosting the games are at best
exaggerated and at worst nonexistent, leaving many host countries with large
debts and maintenance liabilities. Instead, many argue, Olympic committees
should reform the bidding and selection process to incentivize realistic budget
planning, increase transparency, and promote sustainable investments that
serve the public interest.
The 2020 Summer Olympics in Tokyo highlighted the ongoing debate over the
costs and benefits of hosting such a mega-event, especially after the ongoing
COVID-19 pandemic forced a year’s delay and sparked public opposition over
going ahead with the festivities during a major outbreak. The multibillion-
dollar bill Tokyo faces in the aftermath of the games is not unique: other
former host cities still struggle with the debts they incurred, leading some
candidate cities for future games to withdraw their bids or scale down their
plans.

When did the costs of hosting the games become a concern?

For much of the twentieth century, the staging of the Olympic Games was a
manageable burden for the host cities. The events were held in developed
countries, either in Europe or the United States, and in the era before
television broadcasting, hosts didn’t expect to make a profit. Instead, the
games were publicly funded, with these advanced countries better positioned
to bear the costs due to their larger economies and more advanced
infrastructure.
The 1970s marked a turning point, writes Andrew Zimbalist, author of Circus
Maximus: The Economic Gamble Behind Hosting the Olympics and the World
Cup. The games were growing rapidly, with the number of Summer Olympics
participants almost doubling and the number of events increasing by a third
during the 1960s. A 2012 University of Oxford study estimated an average cost
overrun of 252 percent for each Summer Olympics since 1976, after adjusting
for inflation. The killing of protesters in the days before the 1968 Mexico City
Games and the fatal assault on Israeli athletes at the 1972 Munich Games
tarnished the image of the Olympics, and public skepticism of taking on debt
to host the games grew. In 1972, Denver became the first and only chosen host
city to reject its Olympics after voters passed a referendum refusing additional
public spending for the games.
The 1976 Summer Olympics in Montreal came to symbolize the fiscal risks of
hosting. The projected cost of $124 million was billions below the actual cost,
largely due to construction delays and cost overruns for a new stadium,
saddling the city’s taxpayers with some $1.5 billion in debt that took nearly
three decades to pay off.
As a result, in 1979 Los Angeles was the only city to bid for the 1984 Summer
Olympics, allowing it to negotiate exceptionally favorable terms with the
International Olympic Committee (IOC). Most importantly, Los Angeles was
able to rely almost entirely on existing stadiums and other infrastructure
rather than promise lavish new facilities to entice the IOC selection
committee. That, combined with a sharp jump in television broadcast revenue
made Los Angeles the only city to turn a profit hosting the Olympics, finishing
with a $215 million operating surplus.
Los Angeles’ success led to a rising number of cities bidding—from two for the
1988 games to twelve for the 2004 games. This allowed the IOC to choose the
cities with the most ambitious—and expensive—plans. In addition, as
researchers Robert Baade and Victor Matheson point out, bidding by
developing countries more than tripled after 1988. Countries such as China,
Russia, and Brazil have been eager to use the games to demonstrate their
progress on the world stage.
However, these countries invested massive sums to create the necessary
infrastructure. Costs spiraled to over $50 billion for the 2014 Winter Games in
Sochi, $20 billion for 2016 Summer Games in Rio de Janeiro, and $13 billion
for the 2018 Winter Games in Pyeongchang.
These costs have led to renewed skepticism, and several cities withdrew their
bids for the 2022, 2024, and 2028 games over cost concerns. Beijing had little
competition for its 2022 bid, with both Oslo, Norway, and Stockholm, Sweden,
backing out upon realizing that costs would be higher than estimated. Boston
withdrew from consideration for the 2024 games, with its mayor saying that
he “refuse[d] to mortgage the future of the city away.” The 2024 finalists,
Budapest, Hungary, Hamburg, Germany, and Rome, also withdrew, leaving
only Los Angeles and Paris. In an unprecedented move, the IOC chose the
2024 and 2028 venues simultaneously in 2017, with Paris and Los Angeles,
respectively, taking turns hosting due to the lack of candidates.

What costs do cities incur for hosting the games?

Cities invest millions of dollars in evaluating, preparing, and submitting a bid
to the IOC. The cost of planning, hiring consultants, organizing events, and the
necessary travel consistently falls between $50 million and $100 million.
Tokyo spent as much as $150 million on its failed 2016 bid, and about half
that much for its successful 2020 bid, while Toronto decided it could not
afford the $60 million it would have needed for a 2024 bid.
Once a city is chosen to host, it has nearly a decade to prepare for the influx of
athletes and tourists. The Summer Games are far larger, attracting hundreds
of thousands of foreign tourists to watch over ten thousand athletes compete
in about three hundred events, compared with under three thousand athletes
competing in about one hundred events during the Winter Games. The most
immediate need is the creation or upgrading of highly specialized sports
facilities such as cycling tracks and ski-jumping arenas, the Olympic Village,
and a venue large enough to host the opening and closing ceremonies.

Tokyo spent as much as $150 million on

its failed 2016 bid, and Toronto decided it
couldn't afford its 2024 bid.

There is also usually the need for more general infrastructure, especially
housing and transportation. The IOC requires cities hosting the summer
games to have a minimum of forty thousand available hotel rooms, which in
Rio’s case necessitated the construction of fifteen thousand new hotel rooms.
Roads, train lines, and airports need to be upgraded or constructed.
Altogether, these infrastructure costs range from $5 billion to over $50 billion.
Many countries justify such expenditures in the hopes that the spending will
outlive the Olympic Games. For instance, some 85 percent of the Sochi 2014
Games’ more than $50 billion budget went to building non-sports
infrastructure from scratch. More than half of the Beijing 2008 budget of $45
billion went to rail, roads, and airports, while nearly a fourth went to
environmental clean-up efforts.
Operational costs make up a smaller but still significant chunk of hosts’
Olympics budget. Security costs have escalated quickly since the 9/11 attacks—
Sydney spent $250 million in 2000 while Athens spent over $1.5 billion in
2004, and costs have remained between $1 billion and $2 billion since.
Also problematic are so-called white elephants, or expensive facilities that,
because of their size or specialized nature, have limited post-Olympics use.
These often impose costs for years to come. Sydney’s Olympic stadium costs
the city $30 million a year to maintain. Beijing’s famous “Bird’s Nest” stadium
cost $460 million to build, requires $10 million a year to maintain, and has sat
mostly unused since the 2008 games. Almost all of the facilities built for the
2004 Athens Olympics, whose costs contributed to the Greek debt crisis, are
now derelict. Gangwon, the South Korean regional government responsible for
most of the 2018 games’ infrastructure, is expected to incur an $8.5 million
annual deficit due to upkeep of unused facilities.
Economists say the games’ so-called implicit costs must also be considered.
These include the opportunity costs of public spending that could have been
spent on other priorities. Servicing the debt that is left over after hosting the
games can burden public budgets for decades. It took Montreal until 2006 to
pay off the last of its debt from the 1976 Games, while Greece’s billions in
Olympics debt helped bankrupt the country.
The debt and maintenance costs of the Sochi 2014 Winter Games will cost
Russian taxpayers nearly $1 billion per year for the foreseeable future, experts
estimate. But while some in Sochi see the unused stadiums and overbuilt
facilities as a waste, other residents argue that the games spurred spending on
roads, water systems, and other public goods that wouldn’t have otherwise
happened.

How do the benefits compare to the costs?

As the costs of hosting have skyrocketed, revenues cover only a fraction of
expenditures. Beijing’s 2008 Summer Olympics generated $3.6 billion in
revenue, compared with over $40 billion in costs, and London’s Summer
Games in 2012 generated $5.2 billion compared with $18 billion in costs.
What’s more, much of the revenue doesn’t go to the host—the IOC keeps more
than half of all television revenue, typically the single largest chunk of money
generated by the games.
Impact studies carried out or commissioned by host governments before the
games often argue that hosting the event will provide a major economic lift by
creating jobs, drawing tourists, and boosting overall economic output.
However, research carried out after the games shows that these purported
benefits are dubious.
In a study of the 2002 Salt Lake City Games, for example, Matheson, along
with economists Robert Baumann and Bryan Engelhardt of Massachusetts’s
College of the Holy Cross, found a short-term boost [PDF] of seven thousand
additional jobs—about one-tenth the number promised by officials—and no
long-term increase in employment. As a study by the European Bank for
Reconstruction and Development explains, the jobs created by Olympics
construction are often temporary, and unless the host region is suffering from
high unemployment, the jobs mostly go to workers who are already employed,
blunting the impact on the broader economy. (Only 10 percent of the forty-
eight thousand temporary jobs created during the 2012 London Olympics
went to previously unemployed people, according to the study.)
Economists have also found that the impact on tourism is mixed, as the
security, crowding, and higher prices that the Olympics bring dissuade many
visitors. Barcelona, which hosted in 1992, is cited as a tourism success story,
rising from the eleventh to the sixth most popular destination in Europe after
the Summer Games there, and Sydney and Vancouver both saw slight
increases in tourism after they hosted. But London, Beijing, and Salt Lake City
all saw decreases in tourism the years of their Olympics.

Economists have found that the Olympics'

impact on tourism is mixed, given the
security, crowding, and higher prices.

In Brazil, the first South American country to host the Olympics, the cost of
the 2016 games exceeded $20 billion, with the city of Rio alone shouldering at
least $13 billion. Challenged by the country’s deep recession, Rio required a
$900 million bailout from the federal government to cover the cost of policing
the Olympics and was unable to pay all of its public employees. The city also
had to invest heavily in a broad range of infrastructure, which was meant to
reinvigorate some of its struggling neighborhoods, yet in the aftermath most
venues have been abandoned or barely used.
Ultimately, there is little evidence for an overall positive economic impact.
Boston’s National Bureau of Economic Research has published findings that
hosting has a positive impact on a country’s international trade. But
economists Stephen Billings of the University of North Carolina and Scott
Holladay of the University of Tennessee-Knoxville found no long-term impact
of hosting on a country’s gross domestic product (GDP).

How much did the 2020 Tokyo Olympics cost?

According to organizers, the budget for the Tokyo Olympics exceeded $15
billion, up from the $7 billion originally projected. According to a University of
Oxford study, based on those operating costs alone, the 2020 Tokyo Games
were “among the costliest on record.” However, the true total costs are almost
certainly much higher. A pre-pandemic Japanese government audit put them
at about $28 billion; Zimbalist now estimates that they will exceed $35 billion.
That is in part because the city had to invest heavily in infrastructure, much of
which had dubious long-term utility. Building new venues cost an estimated
$3 billion. The most expensive venue was the sixty-eight-thousand--seat
National Stadium, which cost Tokyo $1.4 billion, sat empty for the duration of
the games and will incur a reported $22 million in annual maintenance fees.
The COVID-19 pandemic further exacerbated cost overruns: The games’
yearlong postponement ran Tokyo an estimated $2.8 billion. When the city
declared a state of emergency due to a surge in coronavirus cases, the decision
to bar fans from the events eliminated an estimated $800 million in income
from ticket sales and triggered hundreds of thousands of hotel cancellations.
Meanwhile, public discontent over hosting the games amid the pandemic
soared, with protesters criticizing the government for prioritizing the games
rather than health-care efforts such as ramping up the nation’s slow vaccine
rollout. (Japan had fully vaccinated just 8 percent of its population by the end
of June 2021.)

How could the Olympics be made more manageable?

A consensus has grown among economists that the Olympic Games need
reforms to make them more affordable. Many have pointed out that the IOC
bidding process encourages wasteful spending, by favoring potential hosts
who present the most ambitious plans. This so-called winner’s curse means
that over-inflated bids—often pushed by local construction and hospitality
interests—consistently overshoot the actual value of hosting. Observers have
also criticized the IOC for not sharing more of the fast-growing revenue
generated by the games.
Corruption has also dogged the IOC selection process. Bribery scandals
marred the 1998 Nagano and 2002 Salt Lake City games. In 2017, the head of
Rio’s Olympic committee was charged with corruption for allegedly making
payments to secure the Brazil games, and allegations of illegal payments
surfaced in the 2020 Tokyo selection.
In response, the IOC under President Thomas Bach has promoted reforms to
the process, known as the Olympic Agenda 2020. These recommendations
include reducing the cost of bidding, allowing hosts more flexibility in using
already-existing sports facilities, encouraging bidders to develop a
sustainability strategy, and increasing outside auditing and other transparency
measures.
Some think more drastic measures are necessary. Economists Baumann and
Matheson argue that developing countries should be spared the burden of
hosting altogether and the IOC should instead “award the games to rich
countries that are better able to absorb more of the costs.” For author Andrew
Zimbalist, one city should be made the permanent host, allowing for the reuse
of expensive infrastructure. Barring that, many economists argue, any city
planning to host should ensure that the games fit into a broader strategy to
promote development that will outlive the Olympic festivities.
In the meantime, China is gearing up for the Winter Games in February 2022.
Some fourteen years after Beijing hosted the $45 billion 2008 Summer
Olympics, the official 2022 budget is just $3.9 billion. However, as in previous
games, the true costs are expected to soar. The skiing events will require fake
snow, for example, and necessitate the construction of complex water-delivery
systems—which experts say could add billions to the bill as well as prove
environmentally damaging.

Council on Foreign Relations. (2017). The Economics of Hosting the

Olympic Games. [online] Available at:
https://www.cfr.org/backgrounder/economics-hosting-olympic-games
[Accessed 10 Apr. 2024].

Does Hosting the Olympics Actually Pay Off?

Brazil may have never wanted for places to play soccer, but that didn’t stop the
country from spending billions of dollars on stadiums for last month’s World
Cup. The Arena Amazonia, a $300 million edifice designed to look like a
woven basket, was built in a rain-forest city where the professional team
regularly draws fewer than 2,000 fans per game. And Brazil is only getting
started. The country, which is also hosting the 2016 Summer Olympics in Rio
de Janeiro, has embarked on an infrastructure splurge that may top $25
billion. The spending is meant to underscore Brazil’s emergence as an
economic power. The country’s leaders insist that it’s also intended to increase
the nation’s prosperity.
The idea that big sporting events are good for growth is relatively new. A 1956
article in this newspaper noted the curious hopes of Australian officials who
were “somewhat optimistic” that visitors to the Melbourne Olympics might
settle in the city, or perhaps do a little business there. “Ordinarily,” it said,
“being host for the Olympic Games is unlikely to gain a nation much beyond
prestige.” But as the cost of hosting rose inexorably, so did the supposed
benefits. The Olympics and the World Cup are now routinely described as
economic engines. Four American cities — Boston, Los Angeles, San Francisco
and Washington — recently announced that they were flirting with hosting the
2024 Summer Olympics, and in each case a justification was economic
development. In Massachusetts, a state-appointed commission led by a
construction executive suggested that a Boston Olympiad could “catalyze and
accelerate the economic-development and infrastructure improvements
necessary to ensure that Massachusetts can compete globally now and into the
future.”
Such claims are based on the idea that the Games can serve as a tourist
attraction, a chance to catch the eye of global business leaders and a way to
rally political support for valuable infrastructure projects. The lean and
profitable 1984 Los Angeles Olympics are often invoked. So are the 1992
Barcelona Games, which amplified that city’s revival.
But there is strikingly little evidence that such events increase tourism or draw
new investment. Spending lavishly on a short-lived event is, economically
speaking, a dubious long-term strategy. Stadiums, which cost a lot and
produce minimal economic benefits, are a particularly lousy line of business.
(This is why they are usually built by taxpayers rather than by corporations.)
And even though Brazil, like other recent hosts, has sought to make stadium
spending more palatable by also building general infrastructure, like highways
and airports, the public would derive the same benefit at far less cost if the
transportation projects were built and the stadiums were not. The Los Angeles
Olympics were successful, after all, because planners avoided building new
stadiums. Barcelona, long neglected under the rule of Francisco Franco, was in
the midst of a renaissance that would have probably occurred without the
Olympics.
Organizers and their supporters routinely neglect what economists call
“opportunity costs” — in this case, what might have happened if a country
didn’t host the Games. In some of the world’s most expensive cities, perhaps
the greatest opportunity cost is the loss of scarce and valuable real estate.
While many facilities remain in use after the Games or are converted for new
purposes, quite a few sit virtually as empty as the original in Olympia, Greece.
Tourists can ride a Segway around the Bird’s Nest in Beijing for $20.
Similarly, it’s misleading to calculate how much money is spent in a city
during the Olympics. A fair comparison requires some estimate of how much
would have been spent without them. When the Games come, after all, other
kinds of tourism go. During the 2012 Games, the Adelphi Theatre in London’s
West End suspended performances of “Sweeney Todd.” The British Museum
received 480,000 visitors that August, down from 617,000 the previous year.
Indeed, Britain received about 5 percent fewer foreign visitors in August 2012
than it did in the same month the previous year. Those who showed up spent
more, sure, but London spent billions of dollars to lure them. “If Boston hosts
the 2024 Olympics, there’s no doubt that [the city] is going to be overrun with
sports tourists,” said Victor Matheson, an economist at the College of the Holy
Cross in Massachusetts. “But Boston is already overrun with tourists in the
summer.”
Many hosts, of course, don’t care all that much about breaking even. The
Olympics have always been a debutante’s ball for emerging economies, from
Japan in 1964 and Germany in 1972 to China in 2008 and Russia in February.
And there is some evidence that it works. Countries that host the Olympics
experience a significant increase in trade, according to a 2009 study by
Andrew K. Rose, an economist at the University of California, Berkeley, and
Mark M. Spiegel, an economist at the Federal Reserve Bank of San Francisco.
But their research determined that this was also true of countries that made
losing bids for the Olympics — spending tens of millions rather than billions.
The benefit, in other words, came from the signal that a country was open for
business, not from the spending itself. “One city thinks winning the Games is
worth more than all the other cities do,” said Andrew Zimbalist, an economics
professor at Smith College and the author of the coming “Circus Maximus:
The Economics of Hosting the Olympics and the World Cup.” “And that city is
likely to be making an error.”
And while Brazil may be eager to signal its economic might, the Games can
also tarnish a host country’s reputation. The enduring image of the Munich
Olympics is a man in a ski mask; decaying venues from the 2004 Olympics
became a metaphor for Greece’s economic crisis. Sochi’s legacy was
overshadowed by security concerns and warm weather — even before Russia
ended hopes for a tourism boom by annexing Crimea. In a study of the impact
of the 2000 Olympics in Sydney, Australian researchers interviewed people in
four countries — Hong Kong, Malaysia, South Africa and the United States —
one year before and after the Games. They found little change in perceptions,
with one surprising wrinkle: South Africans had soured on Australia “because
of the way in which the Aboriginal issue was highlighted and portrayed by the
South African media,” which drew comparisons with that nation’s history of
apartheid.
Philip Porter, an economist at the University of South Florida who has studied
the impact of sporting events, told me that the evidence was unequivocal. “The
bottom line is, every time we’ve looked — dozens of scholars, dozens of times
— we find no real change in economic activity,” he said. Still, even for
established cities like Boston or San Francisco, there is one clear reason to
chase the Olympics or the World Cup: People like hosting major sporting
events. Economists tend to pay more attention to money than to happiness,
because money is easier to count. But it’s no small matter that surveys
routinely find high levels of public support in the host nation before, during
and after the Olympics and the World Cup. “It’s like a wedding,” Matheson
told me. “It won’t make you rich, but it may make you happy.” The trick is
deciding how much that’s worth.

Appelbaum, B. (2014). Does Hosting the Olympics Actually Pay Off?

[online] archive.is. Available at: https://archive.is/cKi16 [Accessed 10
Apr. 2024].

‌ hy countries should break the crippling cycle of hosting

W
big sporting events
All over the developing world, metropolises are rushing to cement their status
as “global cities”. These are metropolitan centres that compete to become
important hubs of cultural and economic activity in the interlinked global
world. It’s all part of what scholars describe as “the modernity game”. And
sport is rapidly emerging as an important way to display modernity and earn
the “global city” mantle.
In earlier times, Western countries played host to massive events like the
World’s Fair to cement their status as modern world cities. Non-Western
countries were left to “catch up” – and despite their best efforts, few beyond
Japan, South Korea and Singapore managed to do so.
International sporting competitions are the new World’s Fair and can propel
cities up the global city rankings. Hosting the Olympic Games (in summer or
winter, depending on their climate), the Commonwealth Games or a single
discipline event like the FIFA World Cup offers cities prestige.
Pyeongchang County, South Korea is hosting the 2018 Winter Olympics and
Tokyo will host the 2020 Summer Olympics. For “globalising” cities in
emerging market economies, these sporting extravaganzas offer a way to
demonstrate their “rising” geopolitical importance.
For proponents of the “global city” model, this is reason to celebrate. But it
also illustrates the ongoing attempt by non-Western countries to compete not
only in sports but economically and culturally with the former colonial
powers. Who are the modernity game’s score-keepers? Who decides who is
winning and who is losing? Who determines what counts as “global” and what
constitutes the “modern”?
For the moment, the referees still seem to be primarily Western in terms of
historical, geographical or philosophical orientation. The rankings after all
originate from the West and are judged by Western entities. So, win or lose, it
is still the West’s game. They make the rules.
When elites in emerging market economies accept the rules of today’s
modernity game and agree to play by them, they’re re-enacting a centuries-old
inferiority complex in relation to the coloniser. By accepting the rules, they’ve
already lost the game.
They’ve lost in more than one sense. By allowing the (former) coloniser to
define the field of competition, they’ve conceded the ability to craft their own
definition of “modern” and “global.”
Internalising the rules of the modernity game entails an acceptance of
equating positive judgement with “successfully” adhering to Western ideals.
This sounds abstract but concretely, it results in the misdirection of money
that could be better spent elsewhere.
Flexing geopolitical muscle
Countries are using sporting events to illustrate their increasing geopolitical
significance. There are plenty of examples.
China hosted the 2008 Beijing Olympics. India hosted the Commonwealth
Games in 2010, the same year that South Africa staged FIFA’s World Cup
2010. Russia will host the soccer showcase later this year and Qatar will host it
in 2022.
Brazil hosted the 2014 FIFA World Cup and, two years later, the controversy-
ridden Summer Olympics.
The BRICS nations – Brazil, Russia, India, China, South Africa – and other
“developing” countries had to direct already limited resources away from
important social projects to stage these expensive events.
Citizens of these countries have become increasingly wary of the huge costs
and question the wisdom of spending national monies on a once-off spectacle.
South Africa’s 2010 World Cup and the same event in Brazil four years later
were met with protests by citizens who wanted to see their countries’ scarce
resources put to better use. Both countries have high levels of income
inequality.
Similar protests took place before the Rio 2016 Summer Olympics.
Governing elites in each of these instances overrode the waves of dissent with
a dismissive, “on with the games” attitude.
Why do governments direct scarce resources to hosting games over their
citizens’ more basic needs? Why are elites in developing countries so
determined to succeed at the modernity game and make their cities “global”?
One line of argument is that “global cities” attract investment, tourism and
knowledge workers which all help the economy to grow. To attract
professionals, many aspiring “global cities” have also made large investments
in expensive art. Hosting sporting events and art fairs are useful in building
“global cities” for highly-skilled workers and high-end consumers.
But there’s little space for the working-class majority in any “global city”.
These places tend to suffer heightened social divisions and high inequality.
Global sporting events exacerbate these problems: cities’ poorer citizens are
often displaced, “making way” for new stadiums and other infrastructure.
A colonised mentality?
Instead of playing the modernity game, why don’t “developing” countries
change the rules? My research indicates that the elite obsession with “catching
up” with the West does not result in erasing an inferiority complex vis-à-vis
“superior” Western modernity. Instead, it entrenches the inferiority complex
that took root through colonialism.
The Japanese philosopher Takeuchi Yoshimi argued that Japan’s post World
War II modernisation efforts amounted to trying to “catch up” with the
“colonial master”. This, he writes, represents the intensification of the master-
slave relationship between the coloniser and the colonised.
The modernity game, although not modernity, originated in the West. Cities
can only “win” if they adhere to Western standards. Yes, that adherence can be
positive when it yields good infrastructure and access to clean water and
services – assets that benefit many people. But when the “game” only results
in more inequality, it’s clearly time to change the rules.
Melissa Tandiwe Myambo (2018). Why countries should break the
crippling cycle of hosting big sporting events. [online] The
Conversation. Available at: https://theconversation.com/why-countries-
should-break-the-crippling-cycle-of-hosting-big-sporting-events-90181
[Accessed 10 Apr. 2024].

It Wasn’t Always So Expensive to Host the Olympics. Here’s

What Changed
Some things never change. When Baron De Coubertin, founder of the Olympic
movement, estimated the costs of the inaugural 1896 games in Athens, he
thought that a quarter of a million drachmas should do the job. The final bill,
about $10 million in today’s terms, was six times that. The country’s
experience of Athens 2004 was not dissimilar in terms of sticking to the
budget, but the comparison ends there. The final bill for Athens has been
estimated at around $11 billion. Rio 2016 has struggled to stick to its budget,
and the final costs could easily—by my accounting, including infrastructure as
well as the actual games—reach $20 billion.
Of course, the 1896 Olympics hosted just 251 athletes from 13 countries
playing nine sports, while Rio will welcome over 10,000 competitors, from
207 countries playing 28 sports—not to mention over 5,000 coaches and
officials. Still, a 200,000% increase in the bill suggests that something other
than the geometric arithmetic of more states and sports has been at work.
That something, history reveals, is the relationship between the Olympic
Games and global power.
It is worth recalling what a fragile enterprise the Olympics were in the decades
before the First World War, when the games served as the athletic sideshow to
a series of much grander Worlds Fairs and Imperial Exhibitions in Paris, St.
Louis and London. The Olympics of the interwar era showed some growth in
spending, but it was Berlin 1936 that changed the economics of the Olympics
forever. Those were the first games, though certainly not the last, to be
systematically allied to a political ideology and to directly serve as a form of
state-directed global soft power. Such a shift in ambition required a stage
worthy of the show. Berlin built the first multi-sports Olympic park,
constructed a truly monumental 100,00-seat stadium, invented the torch
relay, dressed the city like a film set and, all told, spent around $1.7 billion in
today’s dollars.
In the aftermath of the Second World War, the games reverted to their smaller
interwar form with budgets in the tens of millions. The 1948 London
Olympics, self-consciously thought of as the “Austerity Games,” cost just $30
million. The biggest infrastructural investment was building a pedestrian
walkway less than half a mile long. The organizing committee was ready to
provide Olympic visitors with soap, but asked them to bring their own towels.
Sporting equipment, down to the last basketball and clipboard, was
punctiliously recorded and sold off after the games.
But Berlin had made an impression. Despite the infamy of its Nazi ideology, it
had proved that the Olympics could be an opportunity for a state to assert
itself in the world. Beginning with Rome 1960, the summer games served as
the centerpieces of their host nations’ announcements of domestic
transformation and rising international standing. West Germany used the
Olympics to mark the end of their post-war status as pariahs. Mexico made the
leap into the ranks of industrialized nations. And Tokyo took the trend to a
new level by allying the Olympics with gargantuan programs of urban
development. A titanic wave of poured concrete and infrastructural spending,
costing more than $10 billion, covered the rebuilding of the Tokyo’s sewage
system, 100 kilometers of urban superhighways, two new subway lines, a
refurbished port and airport, a hyper-modern monorail to take arrivals to the
city’s four new five-star hotels, and the jewel in the crown: the Shinkansen or
‘bullet train.’ As with similar adventures in Olympic urbanism since, it was
accompanied by the large-scale displacements of citizens.
The intersection of such high-level symbolic ambition, made all the more
appealing with the arrival of global television audiences in the 1960s and ‘70s,
raised the stakes and the costs of hosting.
Montreal in 1976 showcased three other sources of cost inflation that continue
to plague the games: grandiose and experimental architecture, unreasonably
high prices from suppliers and contractors, and long-term borrowing. The
city’s Olympic stadium—a.k.a. “The Big Owe”—was budgeted at $145 million,
came in at $1.2 billion and required so much debt funding and post-games
repair that the total cost in 1976 was already $2 billion. Though Los Angeles
1984 appeared to offer a stripped down model of the Olympics, in which
adapting existing facilities cut capital costs to the bone, few cities can draw on
L.A.’s extensive sporting infrastructure, and the technical demands of sports
federations have become so exacting that renovation costs are often still high.
Even so, despite the decades of proof that hosting the Olympics could be a
costly and traumatic task, political regimes and city coalitions remained
prepared to shell out—which makes sense, as the payoff was also easy to see.
The 1992 Barcelona Olympics, for example, came at the end of a long period of
imaginative urban change that cost over $7 billion. In front of a global TV
audience, the city went from a rustbelt port to the post-industrial jewel of the
Mediterranean, Many hosts have spent a lot of money trying to repeat the
trick, though none with such good results.
In the 21st century the costs of staging the games has taken another step
upwards. More Olympics-established cities have tried to keep prices down—
Vancouver and London, at the cheaper end of the scale, cost $10 billion and
$16 billion dollars apiece—but, while they do face rising post-9/11 security
costs, they don’t need the Olympics to show off their success. However, rising
powers still chose to host the games to mark their global ascension. It looked
as if Beijing had set a new and surely unbreakable record, spending $40
billion, but the bill for the pharaonic enterprise that was the Sochi winter
games, in 2014, was $55 billion, making those the most expensive Olympic
Games ever held.
Amongst the many issues on the desk of Thomas Bach, the current president
of the IOC, trying to control the spiraling cost of the games remains an urgent
priority. The numbers of cities prepared to bid for the games has been
dwindling, with just two candidates for the 2022 Winter games. Under the
new bidding rules and criteria introduced by Bach in 2014 reuse and
renovation is encouraged, and the four competitors — Budapest, Paris, Rome
and Los Angeles — are all offering games budgeted to cost less than $10
billion.
In the absence though of a more radical reshaping of the games, however, even
this retrenchment may prove impossible to achieve. The Olympics never were
a matter of sports alone, but an important piece of international power
dynamics. Projecting power is expensive—and as long as that’s true, the
Olympics will be too.
Astha Rajvanshi and Syed, A. (2023). Why More Countries Should
Back Out of Hosting Global Sporting Events. [online] TIME. Available
at: https://time.com/6295448/australia-hosting-sporting-events/
[Accessed 10 Apr. 2024].

Why More Countries Should Back Out of Hosting Global

Sporting Events
On Tuesday, Australia pulled out from hosting the 2026 Commonwealth
Games after the projected costs ballooned from $1.8 billion to more than $4
billion, becoming “well and truly too much” for host state Victoria to bear,
Premier Daniel Andrews said in a press conference.
“I will not take money out of hospitals and schools in order to fund an event
that is three times the cost estimated and budgeted for last year,” he added.
Experts say the decision has once again rekindled a debate over whether the
Commonwealth Games are still relevant on the global sporting stage today,
and more than that, if the outsized costs of hosting global sporting
tournaments is worth the trouble.
“When you include all of the costs and the total amount of revenue you bring
in, it’s not a very good financial balance,” Andrew Zimbalist, a professor of
economics at Smith College who has consulted on the sports industry, tells
TIME. “So it’s simply a reflection of the reality that more and more politicians
are realizing it’s very problematic to make a bet.”
The outsized cost of hosting global sporting events
The economic benefits of hosting a global sporting event are often eclipsed by
underestimated costs that already-sizable local budgets can’t keep up with.
Since 1960, every Olympic Games event has exceeded its budget by an average
of 172%, in inflation-adjusted terms, according to research findings by Oxford
University. The Oxford study also found that spending on such events
exceeded that of investments in key infrastructure including transportation.
“When a bid is first put before politicians, they want the politicians to vote yes
so they don’t add lots of bells and whistles to it,” Zimbalist says.
The eye-watering sums for hosting global sporting events was most
dramatically seen in Qatar during the 2022 World Cup, which cost an
estimated $220 billion. The event prompted heavy criticism of the host nation
over its rights record and the death of migrants erecting infrastructure for the
tournament.
Victor Matheson, a professor of economics at the College of the Holy Cross,
tells TIME that building venues to host such large-scale events is justified as a
means to boost tourism—but it often doesn’t work out that way. “There are
politicians who enjoy the spectacle, and then say, well, I’ll be out of office, by
the time we have to come to pay all these bills,” he says.
A potential solution that has been floated by some experts is for one nation to
become the permanent host of a sporting event, so that they always have the
infrastructure ready. “You don’t have to rebuild the whole apparatus, which is
billions and billions of dollars every four years and in a new city,” Zimbalast
says. “There are different ways to organize it that would make much, much
more financial and environmental sense.”
The Commonwealth Games’ second-tier status
The Commonwealth Games were first held in 1930 as the British Empire
Games as a way to foster unity between Britain and its 56 current and former
colonies. “Sport was an integral part of keeping the British Empire together
and keeping Australia linked to the mother country,” says Steve Georgakis, a
senior lecturer of sports studies at Sydney University.
But in the last 20 years, Georgakis says that Australian culture has changed
from being predominantly British to a diverse and multicultural society. As
such, the decision to cancel the Commonwealth Games to many, especially
newcomers or those born overseas, “doesn’t hold much significance at all.”
Questions of identity and politics aside, the tournament is viewed by many as
second-tier. Last year, several athletes, including British diving champion
Tom Daley and Australian swimmer Cate Campbell, chose not to compete in
the Commonwealth Games. Sprinting great Usain Bolt even once called the
tournament “a bit shit,” though he later claimed he was misquoted.
A lack of enthusiasm on the part of potential hosts was seen in 2015, when
Durban, South Africa was the only city that bid for hosting rights. But two
years later, it was stripped of its role due to mounting costs and missed
deadlines. The hosting baton was passed to Birmingham, England, nine
months later.
It remains unclear whether officials can find a new host ahead of the 2026
games.
Astha Rajvanshi and Syed, A. (2023). Why More Countries Should
Back Out of Hosting Global Sporting Events. [online] TIME. Available
at: https://time.com/6295448/australia-hosting-sporting-events/
[Accessed 10 Apr. 2024].

The $1 Billion Cost Of Hosting An F1 Race

A Formula One Grand Prix is one of the world’s most powerful tourism
adverts. As Britain’s Independent newspaper recently revealed, F1’s 21 races
were seen by 390 million viewers on television last year making it one of the
world’s most-watched annual sports series. That’s just the start.
Unlike soccer, athletics or basketball games, some F1 races weave through city
streets where the surroundings are local landmarks rather than banks of
bleachers. This doesn’t just showcase the destination, it makes it part of the
action and there is a high-octane price to pay.
There is no rate card for a Grand Prix and the fees are kept a closely-guarded
secret as the contracts for the 20 races which will take place this year are not
public. Testimony to this, one of the few contracts which has broken cover -
the agreement for a Grand Prix in Valencia, Spain which was discontinued in
2013 - states that the race “promoters shall not at any time following execution
of this agreement announce, publish or disclose to a third party the existence
of this agreement.”
The exact costs and returns are of course well known by the current and
former race promoters and sometimes snippets sneak into the public domain.
All but the British Grand Prix get government funding so some of the
promoters have to lodge official filings which confirm key details of their
finances.
Through analysing thousands of pages of company documents and
interviewing hundreds of race personnel over nearly 15 years this author has
pieced together a picture of how much it costs to host a Grand Prix and what it
is really worth.
For full disclosure, although this data is based on a wide range of independent
sources, it has been compiled by this author and there are few commercially-
available comparisons. Even though there are no public yardsticks to compare
it against, it comes with industry endorsement as the data has been available
through this author’s research firm Formula Money for more than a decade
and has been acquired by 40% of the current race promoters and multiple
potential hosts.
The highlights will be presented below with analysis in a follow-up report on
the impact the races can have. They aren’t always a success.
F1 is famous for races which have been on its calendar for decades. The British
Grand Prix was the first race on the F1 championship when it launched in
1950 and it still takes place to this day. Indeed the race is even held on the
same track – a former airfield known as Silverstone. The history of some races
even pre-dates the creation of F1 itself with its flagship event in Monaco taking
place on the world-famous street track which has remained largely unchanged
since it held its first Grand Prix in 1929. However, other races haven’t lasted as
long.
The Singapore Grand Prix, which became F1’s first night race when it
launched in 2008, is reportedly deciding whether to renew its contract after it
expires at the end of this year. Likewise, it is understood that the Malaysian
Grand Prix, which joined the calendar in 1999, will not take place after its
contract expires next year. A race in France will return in 2018 but hasn’t been
on the calendar since 2008. The German Grand Prix too has had a troubled
history in recent years and although it took place last year it isn’t going ahead
in 2017.
Then come the races which got the red light permanently. The Indian Grand
Prix lasted three years and when the brakes were put on it in 2013 it owed
$51.4 million in unpaid hosting fees as Britain’s Daily Telegraph revealed in
December. The fees have since been cleared but the race remains on hold. The
same goes for the Grand Prix in South Korea which was widely disliked and
only ran from 2010 to 2013. This too came down to money.
On the face of it, F1 races seem like they should be cheap to stage. After all, it
appears that the only facilities required are seats for spectators and a stretch
of asphalt for the cars to race on. In reality this couldn’t be further from the
truth.
There is no such thing as hosting a Grand Prix on the cheap but the quickest
way to pull it off is to run a street race. They tend to be located on public roads
in cities or on the outskirts of town whilst permanent circuits are purpose-
built venues designed specifically to host high level motor races.
Street races are cheaper to get off the ground than those on purpose-built
tracks since they don’t require construction of a new venue. Permanent
circuits take years to build but street circuits can take little more than a year to
prepare. This gives their hosts quick access to the attractions of F1 and means
that there are no fears of being left with a white elephant if they decide to quit
when their contracts expire.
Crucially, street tracks magnify the economic impact as local landmarks can
become inseparable from the on-track action and tourists can return to stay on
the same streets where their heroes raced.
It explains why F1’s new owner, Liberty Media, which is listed on the Nasdaq
with the ticker FWONK, is understood to be in negotiations about several
street races in the United States. F1 currently only has one Grand Prix there
and lags behind local rivals NASCAR and IndyCar.
F1’s sole race in the US takes place in Austin, Texas and has won widespread
praise from fans and the industry alike. Indeed, as Forbes revealed, data from
research firm Repucom shows that it was F1’s most-watched race in 2015
when the weekend was beset by severe storms. The data for 2016 has not yet
been released but it is expected that the US Grand Prix got a significant boost
due to better weather and a performance at the track from music superstar
Taylor Swift which generated international exposure.
In light of this success it would seem to be logical for F1 to make the most of
the race by throwing more marketing resources behind it rather than adding
other events and trying to run before it can walk in the US. However, this
doesn’t appear to be the direction it is going in as Liberty’s chief executive
Greg Maffei said at a recent conference that “one race in Austin is probably not
sufficient. You would like to see more. So we have a race in Montreal, a race in
Mexico City, a race in Austin. You would love to see New York, LA, Miami, Las
Vegas. One or two of those cities.”
Although street circuits are quicker and cheaper to get going than permanent
tracks, their annual running costs are far greater. This is largely due to the cost
of transforming public roads into a race track. Temporary structures, such as
grandstands, need to be bought or hired and the roads need to be upgraded to
meet F1’s strict safety standard, known as Grade 1 homologation, which is set
by its governing body the Fédération Internationale de l’Automobile (FIA).
At a total cost of around $16 million, staffing is the biggest single expense for
operators of street races with the budget for the marketing and organisation
team alone coming to around $6.5 million. Next is rental of grandstands
which costs around $14 million for structures with 80,000 seats. Securing a
3.2-mile street course with safety barriers and fencing costs in the region of $8
million which is also how much it costs to rent the pit buildings. Vehicle, office
and utilities payments are around $6 million with a further $4.5 million of
miscellaneous costs. Capping it all off is a payment of around $1 million for
insurance.
In total, the annual operating cost of an F1 street race is in the region of $57.5
million. Then comes the hosting fee. According to Liberty’s filings, in 2015, the
most recent year for which data is available, the hosting fees paid by the 19
races which took place generated a total of $599.1 million. It gives an average
fee of $31.5 million per Grand Prix but there is a sting in its tail.
Liberty’s filings reveal that the race contracts “may allow for flat fees over the
term, but more typically they include annual fee escalators over the life of the
contract, which are typically based on annual movement in a selected
consumer price index or fixed percentages of up to 5% per year.” Most new F1
race contracts are for a total of ten years so by the end of the agreement the
annual fee comes to $48.9 million as shown in the table below.
It means that over the ten year race duration the hosting fees total an
estimated $396.2 million with the costs of running the race coming to $575
million. It brings the overall expense close to a billion Dollars.
One way to avoid the high annual running costs is to host a race on a
permanent facility. Whilst this doesn’t require re-purposing roads and
building temporary facilities every year it does incur a huge upfront cost.
There are two possibilities. The first is using an existing circuit but this means
that the promoter has to settle for whatever flaws it comes with. Unless it has
been designed with F1 in mind, it could also require upgrading to ensure it
meets Grade 1 homologation which alone can cost tens of millions of Dollars.
In contrast, designing a circuit from scratch gives the promoter complete
creative flexibility which can make all the difference when it comes to
attracting interest in the race.
Take for example Circuit of the Americas, which is home to the US Grand Prix.
Several of its corners were modelled on the most exciting ones from other
circuits and its site was deliberately chosen to give the track an elevation
change of 133 feet.
Before construction could even begin, the 1,000-acre site needed to be
prepared and this was far from straightforward. Several underground gas
pipelines had to be relocated and then came the big challenge. Beneath the
surface of the site was a layer of black clay soil which needed to be stabilised
because it expands and contracts significantly depending on moisture levels.
This had not been a problem previously because the site was scrub land.
However it needed to be resolved in order to build a track on top.
German circuit architecture firm Tilke came to the rescue and recommended
digging a foundation down to nine feet which is deeper than usual. Around 4
million cubic yards of earth were moved for the project which is roughly
enough to fill up the Empire State Building three times.
As shown in the box below, building a typical track costs around $270 million
and then comes the hosting fee as well as the annual running costs which, at
around $18.5 million, are far lower than those for a street race.
It means that, over a typical ten-year period, building a Grand Prix circuit and
hosting an F1 race there costs around $851.2 million. The more frills a track
has, the higher the cost with one of the most expensive being the complex at
Abu Dhabi which includes a marina and a high-tech hotel. It had a price tag
estimated at around $500 million which is double the standard cost. So, in
reality, the total cost of building a permanent circuit and hosting a Grand Prix
on it is likely to hit around $1 billion just as it does for a street race.
Ironically, paying this is the easy part of the process. The race organisers then
have to sell all the tickets, promote the event and ultimately showcase the host
country to the world. Pulling that off is F1’s real Grand Prize.

Sylt, C. (2017). The $1 Billion Cost Of Hosting An F1 Race. Forbes.

[online] 13 Mar. Available at:
https://www.forbes.com/sites/csylt/2017/03/13/the-1-billion-cost-of-
hosting-an-f1-race/?sh=3ecfbb004f79 [Accessed 10 Apr. 2024].