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Have Any Past Olympics Made a Profit?

Andrew Lisa
·5 min read
Li Xin/AP/Shutterstock
Li Xin/AP/Shutterstock

The 2020 Tokyo Olympics weren’t held until 2021 thanks to a painfully long and expensive pandemic-related delay. The postponement alone cost at least $3 billion and the economy of Japan missed out on almost $1.3 billion overall thanks to empty stands, bans on foreigners and tourism dollars never spent, according to Reuters and the Nomura Research Institute.

But it isn’t fair to blame the virus alone for the fiscal failure.

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There’s overwhelming evidence that the Olympics has been a money pit for host cities for decades, with blown budgets and undersized economic impacts being par for the course.

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But has any city ever profited from hosting the biggest athletic event in the world? As it turns out, one city struck gold — and there’s never been another winner since.

Not a Single Olympics Has Stayed on Budget in the Last 60 Years

Since the first modern games were held in 1896, the scale, grandiosity and cost of the Olympics have skyrocketed, mostly starting in the second half of the 20th century, according to the Council on Foreign Relations (CFR).

The modern Olympics requires host cities to spend billions of dollars to prepare for the games. It can cost nine figures just to compile and present a bid, only to have it rejected by the International Olympic Committee (IOC).

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According to research from Oxford University, every single Olympics since 1960 has gone over budget. Adjusted for inflation, the average overlay is 172%, more than any other category of megaprojects, including those that are notorious for going over budget like bridges, dams and roads.

Here are just a few of the more egregious busted Olympic budgets from recent years, according to the CFR:

  • 2012 Summer Games: London budgets $5 billion but spends $18 billion.

  • 2014 Winter Games: Sochi, Russia, budgets $10.3 billion but spends more than $51 billion.

  • 2016 Summer Games: Rio de Janeiro budgets $14 billion but spends $20 billion.

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It Now Costs So Much To Host That Breaking Even Is Next to Impossible

It’s not just budgeting. In the modern era, it’s become almost impossible to earn enough revenue to cover the extraordinary costs of hosting the games. In the post-9/11 era, security alone is enough to exclude the vast majority of cities.

For the 2008 Beijing Olympics, the city spent $40 billion to earn $3.6 billion. In 2012, London spent $18 billion to generate just $5.2 billion in revenue — and the host cities don’t even get to keep all of what they earn. The IOC takes more than half of all TV revenue, which is the biggest piece of the pie.

As the 2020 Tokyo Games spilled over into 2021, reports began to emerge about the dubious math behind the purported economic benefit of hosting the Olympics. Hosting committees routinely pitch the thousands of jobs that the games bring to town, but according to the CFR, those jobs are mostly temporary and often go to people who are already employed. Tourism, the benefits of which are often overstated by Olympic committees, tends to decline in host cities in the years after the games. Improvements to infrastructure are often negated by the high cost of maintaining that infrastructure in the years to come, particularly when it was purpose-built for an obscure sport and is rarely used after.

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One Success Story Might Be the 2002 Salt Lake City Olympics

In the last 60 years, no Olympics has ever stayed on budget and almost none have turned a profit. One silver lining came at the start of the millennium in Utah with the Winter Olympics in Salt Lake City.

A local CBS affiliate reported that the 2002 Winter Games cost $2.52 billion, or $3.91 billion adjusted for inflation. The city ran over budget by 24% — a calamity for most industries. But with the Olympics, missing the mark by less than a quarter is to be celebrated. In fact, it was the No. 2 lowest cost overrun since 1960, second only to Vancouver in 2010, according to the AP.

It was, by most accounts, a well-run event both on the athletic fields and in the accounting office. The L.A. Times reported that Salt Lake City ended up with a surplus of $56 million, which is almost unheard of in the modern era — almost.

The Salt Lake City math is disputed, however, and some studies suggest that the city enjoyed no financial gain at all or even took a loss.

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The Real Winner Was Los Angeles in 1984

The raging financial success of the 1984 Summer Games in Los Angeles launched an Olympic era defined by hyper-competitive and highly expensive bidding wars among host city hopefuls. In 1988, two cities submitted bids, according to The Economist. By 2004, it was up to 12.

Los Angeles’ success, however, can be directly traced to the failure of the previous Olympics. According to the CFR, Montreal in 1976 came to embody the sucker host city, which kept its end of the Olympic bargain only to get stuck with a big mess and an even bigger bill.

The city’s taxpayers spent the next three decades paying off a $1.5 billion tab from construction delays and stadium budget overruns, all of which put a multibillion-dollar price tag on an event that was originally slated to cost $124 million.

The fiasco highlighted the fiscal risks of hosting the games, and three years later in 1979, when it was time to bid for the 1984 Summer Games, not a single city threw its hat in the ring — except for one.

As the lone bidder, Los Angeles was the only game in town, a position that gave the city unprecedented bargaining power with the IOC to negotiate extraordinarily favorable terms.

Los Angeles concluded the 1984 Summer Games with a $215 million operating surplus, according to the CFR, making the City of Angels the only city in the world that has ever profited from hosting the Olympic Games in the modern era.

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This article originally appeared on GOBankingRates.com: Have Any Past Olympics Made a Profit?