With another Olympic Games set to commence on July 26 in Paris, the time in the cycle where discussion about money spent and money earned takes its own place near centre stage.
Considering the event itself lasts only 17 days, the money changing hands is exorbitant, with facilities and moments expected to resonate for years or decades after. But the question, always, is are the Olympics worth it?
Only two Summer Olympic Games have ever produced a financial surplus according to a report titled “The structural deficit of the Olympics and the World Cup: Comparing costs against revenues over time,” written by Martin Muller, David Gogishvili and Sven Daniel Wolfe in 2022. The surplus of the Los Angeles Games in 1984 hit nearly $1 billion USD in constant 2015 dollars. The Sydney Games in 2000 represent the other profitable Olympics.
Euronews states that L.A. was the only bidder for 1984 and “therefore able to obtain looser requirements from the International Olympic Committee, including the right to use pre-existing infrastructure instead of building new ones.”
The Montreal Games of 1976 show the biggest deficit in history at -$5.7B USD. More recently, the London Games of 2012 show a deficit of -$5.2B according to the report.
To the IOC, the investment in infrastructure has a lasting effect on a country, with the newly-built venues in place presumably for generations to enjoy and spend money in. The IOC told Euronews that “calling it a ‘loss’ is a simplistic and inappropriate approach from a financial and economic perspective.”
Can Paris be a money maker, or at least break even?
Business Insider posits that France will spend as much as $10.6 billion USD to host the Games this year. Some of this cost comes from permanent and temporary arenas including a beach volleyball venue beside the Eiffel Tower, a $200 million aquatics centre and a $150 million stadium.
Can this money be made back, or, at least, will the economy of Paris feel a boost? This is a common selling point by politicians and organizers when selling the Olympics to their constituencies and cities. Ticket prices are a good start. Euronews reports that tickets to attend the opening ceremony range from 90-2,700 Euros. This might not be within reach of a majority of Parisians, but a flood of tourists presumably will buy up the seats.
Paris is no stranger to tourism, especially in summertime. It is assumed that the onslaught of visitors for the Olympics this summer will be a different crowd, more inclined to enjoy sports than visits to La Louvre, but hotels, restaurants and transit will be put to the test either way.
Euronews writes that “the Paris 2024 organizing committee claims that the event will be a ‘lever for boosting employment thanks to over 181,000 jobs mobilized.’ It specified this figure includes jobs specifically created for the occasion, and jobs that will be involved in the Olympics in some way, but already exist.”
But while jobs will indeed be added, pre-existing jobs might just become busier, without any added economic impact. Additionally, many hotels, restaurant chains and travel companies are internationally owned. Many profits will leave the city, and the country.
One interesting player in the Paris Games with a direct tie to the economics of the city is Airbnb. Tough restrictions have been placed on the home share app in recent years in Paris but the Olympics are an opportunity for the company to revamp its reputation in Paris and help locals share in the wealth.
According to WIRED, “three million visitors are expected to attend and Airbnb has been preparing for years.” It expects its 9-year partnership signed with the IOC in 2019 to “lead to hundreds of thousands of new hosts in cities around the globe as the games roll through.”
WIRED reports that Airbnb listings in Paris have increased by 40%, an all-time high. “Suburbs of Paris and other French cities have seen high rates of short-term rental activity.
“The average Airbnb host is expected to earn 2,000 euros during the games.”
Additionally, Euronews states that “a study by financial consultancy Deloitte predicts Airbnb customers attending Paris 2024 will spend half a billion euros on restaurants and leisure activities.”
The Olympics web site estimates the range of economic benefit from the Paris Games to be $7.4-12.2 billion USD. According to Sportspromedia.com, that figure came on the heels of “a new economic report conducted by the Centre de Droit d’Economie du Sport, which takes into account income of 3.56 billion euros generated through tourism, 3 billion from construction and 4.58 billion in economic activity from organizing the event.”
This isn’t money returned for staging the Olympics, but it undoubtedly stimulates the economy. The range is a best-case scenario though.
Sponsorship is one critical way to directly offset cost. The organizing committee steadfastly maintains it will reach its goal of $1.34 billion USD in sponsorship revenue, in fact, it reported it had reached 99% of its target two months prior.
“Nearly 80 companies are part of the domestic sponsorship program, which counts the likes of hotel chain Accor, luxury goods giant LVMH and telco Orange among seven premium partners, some of which are reported to be paying more than 100 million euros for their deals,” writes sportspromedia.com.
NBC Sports, the long-time exclusive media rights holder of the Olympics in the US, had locked in $1.2 billion USD in advertising commitments three months prior to the start, according to Sportico. Broadcasters from countries around the world pay massive rights fees, while the sports themselves are produced for broadcast by Olympic Broadcast Services, which provides feeds to the international broadcasters.
An interesting note for NBC’s production of the games – all live events will be streamed for the first time on Peacock, which now has over 31 million subscribers according to Sportico. In Canada, all Olympics events are streamed on CBC platforms.
The money to establish the Paris Games has been spent, and now it’s up to the millions of visitors to Paris to spend their own. Assessing the value of the overall return is complicated. France might not wind up with the gold medal for most profitable OIympiad of all time, but it aims to compete.
Follow: @dgontheroad
