It is not economically viable to host the Olympics. Or is it?Published by: 27.07.2021 15:22:39
Yesterday's ceremony was arranged a year late and unfortunately not many spectators attended due to the anti-COVID-19 ordinance. The Olympics, which most people in Japan would like to postpone or cancel again, will be unusual to say the least.The amount of money Tokyo has shelled out to host this sporting event is breathtaking. At the same time, we're seeing the problems the Olympics are causing for cities that have hosted them in the past. Tokyo originally said the Olympics would cost about $7.3 billion, but a 2019 government audit put the cost at an additional $28 million.
According to an analysis by the University of Oxford, every Olympics since 1960 has gone over the budget, with the first ones raised by inflation by 172 percent.According to figures compiled by the Council on Foreign Relations, Rio de Janeiro was supposed to have a $14 billion budget for the 2016 Summer Games, which unfortunately didn't happen. and so the budget has climbed to $20 billion. Sochi, Russia, budgeted $10.3 billion for the 2014 Winter Olympics, but they actually came in at over $51 billion. And London, host of the Games in 2012, estimated the cost at $5 billion, but ended up charging $18 billion.
Few experts have studied the business of the Olympics more than Andrew Zimbalist, a professor at Smith College who has published three books on the economics of the Olympics. His research has led him to raise questions about the value of the Olympics to a city - and influenced some cities to back away from hosting the games. He believes Tokyo has spent even more on the Olympics than a government audit estimated in 2019, and has said the games cost at least $35 billion.
How do Olympic cities spend billions of dollars?
The amount is determined by the organizing committee, which sets aside a sum to run the games for 17 days. In addition to the aforementioned 17 days, other expenses, such as temporary accommodation, have begun to increase in recent years. The amount they are using for Tokyo, amounts to $15 billion. It doesn't include the cost of building the national stadium, the Olympic and media village. It doesn't include the transportation, communications or hospitality infrastructure costs required for the Games to begin.Where will the other investments go?
The security budget will be around $2 billion. Then there's transportation for the 205 Olympic teams that are coming to Tokyo. All flights to Tokyo are paid for by the International Olympic Committee.
Why are the Olympic Games still being held, even though the economics of the event are so unfavourable?
The main answer is that you have executives in the construction industry who decide that it would be a wonderful thing to host the Olympics. They get contracts for billions of dollars. Of course they should have an economic study done first to see if the event is profitable for the city, but that won't always happen. Consulting firms make unrealistic assumptions that play into the hands of the people involved.
How do we solve this?
If, say, Deloitte came out with a study saying, "This is a crazy idea. Your city should never do this." At that point, the city could be saved."Do you think broadcast rights will gain or lose value in the future?
Well, what if we start betting on the Olympics? The Supreme Court decision striking down the Professional and Amateur Sports Protection Act is certainly a sign that sports betting will hit all sports leagues. It could be a big revenue-generating item for broadcast rights fees.
The next Olympics will be in Beijing this winter. Is that reasonable?
They're making some really crazy, crazy moves in Beijing. They've picked two sites, 100 and 150 km north of Beijing, to host the skiing events. Both of these areas are dry - near the Gobi Desert. They have to invest tens of billions of dollars in a water system because they will have to use artificial snowmaking. None of this will appear in the Olympic budget. It is extremely stupid to spend this money on promoting skiing in northern China when it is not a very popular sport. They admitted that they spent $44 billion on the 2008 Summer Games.
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