Olympic Boondoggles

Podcast Transcript

Hosting the Olympics can be a huge honor for the city that lands the event. Cities from around the world have competed for the privilege.

However, some cities which have hosted the Olympics have come to regret the decisions. In fact, they paid for the privilege of hosting the event decades after the fact.

Learn more about Olympic boondoggles and the very complicated economics behind hosting the Olympic games on this episode of Everything Everywhere Daily.

The modern Olympics have changed and evolved radically since its inception.

The first modern Olympics in Athens in 1896 only had 241 athletes from 14 nations. There were 43 events in 9 sports. It was about the size of a high school track meet with more events.

By comparison, the 2020 Olympics in Tokyo had 11,656 athletes from 206 countries, and there were 339 events in 33 sports.

As the Olympics have grown, everything surrounding the games has changed, including the process for how a host city is selected, and reasons for why a city might want to host it.

The first Olympics was basically given to Athens by default. Because the goal of the modern Olympics was to revive the ancient games which were always held in Greece, Athens was the natural, and only, choice.

The 1900 Olympics were held in Paris. Again, there wasn’t really any competition for the location. The Olympics still weren’t really that big of a deal, the head of the International Olympic Committee, Pierre de Coubertin, was French, and most importantly, Paris was hosting the 1900 worlds fair.

By hosting the Olympics alongside the world’s fair, there wasn’t really that much additional expense for the city. At that time, hosting a world’s fair was far bigger and far more prestigious than hosting an Olympics.

In 1904, it was pretty much the same story in St. Louis, when it was held with the world’s fair. I went over the story of the St. Louis Olympics, and especially how the marathon was the worst ever event in Olympic history, in a previous episode.

In 1908, there was a big change in the Olympics. For the first time, there was an honest competition to host the games. Four cities, Rome London, Berlin, and Milan, all tried to get the Olympics. Eventually, Rome won out, but with an eruption of Mount Vesuvius, the Italian government had to spend money to reconstruct Naples, so they moved the Olympics to London.

1908 also marked a huge growth in the Olympics. The number of athletes more than tripled, and the number of countries went from 12 to 22.

The other thing that made this Olympics unique was that London built a stadium specifically for the Olympics. White City Stadium was opened in 1908 and remained operational until 1984.

The 1912 games were railroaded through the International Olympic Committee immediately after the London games. Stockholm ran it through with the support of the Swedish government. Moreover, they had an actual budget for the games, which was the equivalent of $115,250, or about $3.2 million in inflation-adjusted dollars.

As part of the deal, it was agreed that Berlin would host the 1916 Olympics, and at the meeting where the 1912 and 1916 hosts were decided, Pierre de Coubertin gave a speech, which he said, “the Games must be kept more purely athletic; they must be more dignified, more discreet; more in accordance with classic and artistic requirements; more intimate, and, above all, less expensive.”

That quote would prove to be highly ironic years later.

The 1916 Olympics didn’t happen because of World War I.

The 1920 games saw the most cities ever compete to become the host, which was a reflection of the increased status of the Olympics. Atlanta, Cleveland, Philadelphia, Amsterdam, Lyon, Budapest, and Havana all submitted proposals, but it was awarded to Antwerp.

The decision was made in 1918, the war hung heavily over the debate, with Belgium having received the brunt of so much of the war.

Over the next sixteen years, the Olympics became seen as a route for national recognition and pride.

The 1932 games in Los Angeles were significant because no one else actually bid to be the host city because it was in the middle of the Great Depression.

The number of athletes and countries represented decreased from 1928 because of the economy, but it was largely considered the best run games at that point. It was the first Olympics to have an Olympic village and to have an Olympic mascot.

The financials for the Los Angeles games were never released, but they did report that they made a $1 million dollar profit.

The 1936 Olympics were famously held in Berlin, and Hitler wanted to use the games to show the superiority of his system of government to the rest of the world. The Nazi government spent an estimated $30 million dollars, which was considerably more than any previous Olympic host ever spent.

After the second world war, the first several Olympics were pretty subdued affairs, at least relative to what they would later become.

When things really started to change was the 1960s. There were several factors that radically change hosting the Olympics. Television meant that more people were able to watch the competitions as they occurred, rather than just hear results after the fact. Jet aircraft meant more people could attend the game, and an improving global economy meant there was more money to go around and more money at stake.

The 1960 winter Olympics in Squwa Valley, California set a record with an $80 million dollar budget, with cost overruns.

The 1964 summer Olympics in Tokyo was budgeted for $72 million dollars but ended up costing several times more.

1968 in Mexico City had a budget of $172 million, and it too ran over substantially.

Up until this point, the Olympics were certainly getting more expensive to host, but there wasn’t any wide-scale backlash at hosting Olympic games due to cost.

Where things started getting out of hand was in 1976 in Montreal.

The original budget for the 1976 games was $207 million Canadian dollars. The final costs were over $1.4 billion dollars, or $6.5 billion inflation-adjusted US dollars.

A 720% cost overrun.

The City of Montreal had to issue debt to pay for the games which took them 30 years to pay off. The stadium was supposed to have a retractable roof, which never properly worked. It was supposed to be used for the Montreal Expos, but it was a horrible stadium that was a big reason why they ended up leaving.

1980 in Moscow was a similar story. It probably cost more than Montreal, but Soviet budgets weren’t really available for public browsing.

The 1984 Olympics in Los Angeles were significant for one overwhelming reason. It turned a $250 million dollar profit. The biggest profit since the 1932 games in Los Angeles. They pulled this off because like in 1932 they were the only city to submit a proposal so they had more room to negotiate, and because they didn’t have to really build anything. Plus, they had record television revenue and loads of marketing deals.

As the Olympics began getting more and more expensive, the demands put on host cities by the International Olympic Committee became greater and greater, which meant higher and higher costs.

Some of the host cities were able to make it work. Barcelona in 1992 spent a lot of money on hosting the Olympics, but 85% of it went towards general infrastructure improvements which didn’t have anything to do with sporting venues. It was really the beginning of Barcelona becoming a top tier global city.

Likewise, Sydney managed to make its Olympic Park area a vibrant community after the games were over.

After the 1988 games in Seoul, the number of bids from developing countries dramatically increased. The International Olympic Committee began accepting proposals from cities with the most elaborate and expensive proposals.

However, while Barcelona and Syndey were successful, there have also been cases like Athens and Rio de Janeiro. In both those cities, there were venues built specifically for the Olympics at great cost and then abandoned after being used for little more than a week.

The $109 million dollar stadium in Pyeongchang, South Korea for the 2018 Olympics was used four times.

There have dozens of photos essays online that show the dilapidated remains of the Olympic venues which weren’t built that long ago.

What about tourism? Certainly hosting the Olympics brings in a lot of money from tourism, right?

Believe it or not, at the recent Beijing and London Olympics, there were lower hotel occupancy rates during the Olympics than there were in the weeks and months before. The Olympics scared off everyone who would have otherwise visited because of the high prices and threat of crowds. So, no, there isn’t actually a tourism bonanza.

Likewise, there really are no long-term economic benefits it seems from hosting an Olympics. Greece had a severe economic crisis after their games, and likewise, not much happened in Rio de Janeiro afterward either.

The costs have also gone from high to outrageous. Beijing Olympics is estimated to have cost $44 billion dollars, and the gold medalist for Olympic budgets is the 2014 Sochi Olympics in Russia which cost $51 billion dollars.

Even London went $15 billion over budget in 2012.

The rising costs of hosting an Olympics, the increased demands from the IOC, and the small economic advantages to hosting an event, have created backlashes against cities that submit proposals. Every year since 2004, the number of cities submitting proposals to host an Olympics has gone down.

Boston, Chicago, Calgary, Krakow, Stockholm, Oslo, and Hamburg, and several other cities had citizen backlash to their proposals which resulted in them withdrawing their bids.

When it came time to select a host for the 2024 Olympics, only 2 cities had proposals, Paris and Los Angeles, and it looked like there might be no cities for 2028. So the IOC just gave Paris 2024, and Los Angeles 2028.

Likewise, they just announced Brisbane would get the summer games in 2032, again because no one else bothered to put in a bid.

The Olympics are facing a huge problem when no one wants to host the games anymore.

There have been several solutions for solving this problem.

One solution is to have permanent Olympic cities. Select one in Europe, one in Asia, and one in North America, for both the summer and winter games, and then rotate them. Then every 16 years, the games could go to a brand new city which would only have to host it once.

The reason why Los Angeles can so easily host the games is that everything is already there. They have plenty of professional and collegiate sports ventures already, dormitories on college campuses for an Olympic village, and plenty of transportation and hotel rooms.

Likewise, cities like Paris, London, Beijing, and Tokyo who have recently hosted Olympic games have everything already built.

Another solution would be to not host the games in a single city. Allow them to be spread over multiple cities in the same country or region. There is a bid for the 2030 winter games which proposes events be held in Barcelona and throughout the Pyrenese in Spain, France, and Andorra. Barcelona would just do the opening and closing ceremonies as well as some arena events like figure skating and hockey.

By splitting things up, it might be much easier for developing countries to host an Olympics.

Whatever the solution is, the International Olympic Committee will have to do something, else they run the real risk of having an Olympic games someday without a city to host it in.