Have you been enjoying Michael Phelps, Simone Biles, and the other American athletes as they compete in the summer Olympics? As you cheer on these Olympians, you may also want to cheer the fact that these games are being held in Brazil and not in the United States. While there may be prestige in hosting the Olympics, cities that do so generally pay a hefty price.
It may sound strange to be glad that such an important international event is not being held in the U.S. But the history of how host cities have fared financially in the wake of the Olympics shows that, indeed, one of the best things that can happen to a city is not to host these games.
In 2009, Chicago was doing all it could to attract this year’s Olympics to the city. As Chicago Tribune columnist David Haugh recently concluded, the day the International Olympic Committee removed Chicago from the competition, “It was the day the IOC saved Chicago from itself.”
"Finding a way to pay for the Olympics would have been hard to accept in a city that barely can pay its teachers. Chicago's bid came in at $4.8 billion, an unrealistically low number. Rio already has gone at least $100 million above its $14.4 billion estimate. London, host of the 2012 Games, budgeted $4 billion but spent $14 billion. According to tax returns, Chicago's unsuccessful bid cost $70.6 million and we can feel fortunate the sea of debt went no deeper."
Whole nations may even suffer from hosting the games. In Greece, the massive expense of the 2004 Olympics played a role in pushing that nation towards fiscal crisis: “Hosting the event cost almost €9 billion ($11 billion at today’s exchange rate), making the 2004 Games the most expensive ever at that point. Greek taxpayers were on the hook for €7 billion, which did not include the cost of extra projects such as a new airport and metro system.”
As Eric Boehm of Reason magazine notes, “Of the 17 Summer Olympics held since the end of the Second World War, only the 1984 event in Los Angeles turned a profit.”
Of course, cities host the Olympics for many reasons. They may want to see a financial boost, but they also like the prestige that comes with the eyes of the world focused on them. However, the facts are pretty clear: for all the things that the Olympics may offer a host city, they generally turn out to bring financial problems in their wake. Do you think the trade-off is worth it?