7 Ways Hosting the Olympics Impacts a City

The hosting process usually begins some 11 years before the Games are held as cities within various countries vie to become national candidates. Civic and political leaders play their part, but these efforts are primarily driven by business concerns that stand to profit most: construction companies and unions, architectural firms, banks, and hotels. Two years of cost estimates, high-end marketing campaigns, and schmoozing narrow the field to the national candidate. Nine years out, national applicants make their bid to the International Olympic Committee for an entry fee of $150,000. Three to five cities are chosen as finalists, with the opportunity to pony up $500,000 and put together slicker, more-elaborate proposals. Before Chicago was done making its unsuccessful finalist bid for the 2016 Olympics, it had enlisted U.S. Pres. Barack Obama as lobbyist in chief and spent $100 million–$150 million.

Hosting the Olympics is an enormous, high-risk undertaking. Unlike most other megaprojects, Olympic facilities have a rock-solid completion date that must be met. Dams, courthouses, and highways can be completed late; Olympic facilities can’t. Neither athletes nor competitors like wet concrete. As a result, finishing construction has often involved extra crews working around the clock, which means cost running over. A study by researchers at the University of Oxford found that the cost of Olympic Games overrun with 100 percent consistency. According to the same study, the cost of the 2004 Athens Olympic Games ran over by 60 percent; the Albertville, France, 1992 Olympic Winter Games ran over 135 percent; and the Lake Placid, New York, 1932 Olympic Winter Games ran over by 320 percent.

Okay, so the budget for hosting the Games usually gets busted, but then there’s a big payoff, right? Yes and no. Tourists will come to see the competition, stay in hotels, eat in restaurants, and buy stuff. On the other hand, some tourists interested in a city’s other attractions but put off by crowds will stay away during the Games. It depends a lot on how much a of tourist magnet a city is to begin with. During the 2012 London Games, attendance at the city’s famous theatres declined, and hotel bookings in Beijing dropped during that city’s Olympic summer in 2008. But for Barcelona the 1992 Games served to relaunch the city as a destination. Other cities are put on the map by the Games. How long they stay there is the trick.

Hosting the Olympics increasingly has been an impetus for addressing some of a host city’s pressing needs, especially in terms of infrastructure. Streets and bridges are refurbished or, like mass-transit lines and public buildings, constructed anew. Projects that have lingered on the drawing board for decades are prioritized and expedited. Only some 17 percent of expenditures for the 1992 Barcelona Games went exclusively toward sports; 83 percent was aimed at urban improvement. The key to the benefits of these projects is what their long-term utility is and whom they benefit. Venues constructed for the Athens 2004 Games famously remain unused and have fallen into disrepair. Today, Beijing’s magnificent Bird’s Nest stadium hosts football (soccer) games, but its schedule is open enough that, for a fee, one can ride a Segway around it. These facilities are, in the parlance of Olympic punditry, “limping white elephants.” Many Brazilians complain that the new transit built for the 2016 Rio de Janeiro Games services only high-income neighborhoods. Conversely, London’s largely depressed East End was revitalized by construction for the 2012 Games, Barcelona’s waterfront was reinvigorated, Seoul’s Han River got a major cleanup for the 1988 Games, and citizens of Vancouver and its visitors love the transit line built from downtown to the airport for the 2010 Winter Games.

Lately, determining a Games’ success or failure comes down to its “legacy,” the measuring-stick concept developed by the surprisingly large body of academics concerned with the Olympics. Most of them agree that legacy involves a Games’ long-term planned and unplanned, positive and negative political, economic, social, cultural, infrastructural, and environmental impacts on a city. The sought-after positive legacy outcomes include urban renewal, increased tourism and employment, enhanced city image and reputation, improved public welfare, and a renewed sense of community. Among the negative outcomes measured are ongoing debt from construction, infrastructure that becomes unnecessary after the Games, increased rent, and unjust displacement of citizens.

Atop the list of cities with winning Olympic legacies is Los Angeles, whose pragmatic low-frills approach to hosting the 1984 Games was grounded in using existing facilities, including the majestic Coliseum built by the city to host the 1932 Games. In the process, the 1984 L.A. Games turned a tidy $200 million-plus profit and inspired the aspirations of other cities. The 2000 Sydney Games have been celebrated by many pundits as the best-organized Olympics in modern history, with a legacy of an improved environment, useful new transportation, real-estate development, and world-class infrastructure. Most notably, a thriving suburb has grown up around the Olympic Park district, the venues of which continue to host rugby, cricket, soccer, and Australian rules football games, concerts, and numerous international sporting events. As already noted, Barcelona also made out, revitalizing its international image along with its waterfront. While Beijing spent some $40 billion for the 2008 Games and Sochi spent about $50 million for the 2014 Winter Games, London fared much better than either as it staged its third Olympics in 2012 (having also hosted in 1908 and 1948) for about $20 million. In addition to putting on a great show, revitalizing the East End, and polishing its international image, London avoided elephantine obsolescence for its Olympic stadium by designing it so that its seating capacity can be adjusted down to 25,000 when desired.

Among the cities that were most “boondoggled” by hosting the Olympics was Montreal, the site of the 1976 Games. Although its flamboyant longtime mayor Jean Drapeau famously boasted that “the Olympics can no more lose money than a man can have a baby," the Montreal Games swamped the city in debt until 2006. A projected cost of $360 million ballooned to $1.6 billion when the final beans were counted, partly owing to mismanagement by Drapeau (who had proposed funding the Games with the sale of commemorative coins) and labor disputes. Not only did Athens take a hit from the 2004 Games, but some observers have pointed to the city’s less-than-stellar performance as a catalyst for the country’s financial and economic collapse in 2008–09. The overrun on the final bill for the Athens Games worked out to a cost to Greek taxpayers of about €50,000 per household. (And we’ve already touched on Athens’s proliferation of white elephant venues.) The Sochi 2014 Winter Games were a public-relations disaster for Vladimir Putin’s Russia. Despite their $50 billion price tag, the highest to date, Sochi was still awash in unfinished hotel rooms when the world started to arrive. Packs of dogs reportedly roamed the Olympic Village, and one of the giant Olympic rings failed to light at a crucial moment during the opening ceremony (hardly enhancing the reputation of Russian technology). But the most-damning aspect of Sochi’s legacy was its association with homophobia as a result of a Russian law that banned ”propaganda” that espoused “nontraditional sexual relations," not to mention the claim by Sochi’s mayor that the city had no gay residents. The threat of terrorism also haunted the Sochi Games, and the lack of its occurrence may have been Sochi's most-positive outcome.