For a long time, the economic model of the Olympics appeared relatively straightforward: short-term costs in exchange for long-term economic and reputational gains. Over the past twenty years, reality has diverged significantly from this promise. Costs have steadily increased, while returns have become more uncertain.
The numbers speak for themselves. The total cost of the 2004 Athens Olympics exceeded $15 billion, contributing significantly to Greece’s subsequent debt crisis. The 2016 Rio Games cost approximately $13 billion, while many of the facilities now remain underutilized. The Tokyo 2020 Olympics, postponed due to the pandemic, ultimately exceeded $30 billion, with much of the expected tourism revenue lost due to the absence of spectators.
At the same time, the structure of direct revenues is narrow and concentrated. More than 70 percent of the International Olympic Committee’s revenue comes from global broadcasting rights, with a further significant portion derived from sponsorships. However, these revenues largely do not accrue to the host city but are redistributed within the international organizational structure. As a result, the host city often bears the majority of the costs while receiving only limited direct financial return.
This structural asymmetry is one of the key reasons why the number of bidding cities has declined sharply. In the early 2000s, as many as 10 to 12 cities competed to host the Games. In recent years, there are often only one or two serious candidates. Several Western cities, including Boston, Hamburg, and Budapest, withdrew from the bidding process due to political or public opposition. Public sentiment has become increasingly skeptical about whether the Olympics deliver real economic benefits.
The issue is not only the absolute level of costs but their unpredictability. Research from Oxford indicates that Olympic projects experience average cost overruns exceeding 150 percent, significantly higher than most other large infrastructure investments. Even carefully planned projects regularly end with substantial budget overruns.
Another key element of economic return is legacy, the long-term impact. In theory, the Olympics bring infrastructure, tourism, and global visibility. In practice, results are mixed. London 2012 is often cited as a positive example, where development in East London contributed to urban renewal. In many other cases, however, investments failed to align with local economic needs and became “white elephants,” expensive and underutilized facilities.
The current economic environment amplifies these challenges. Higher interest rates increase the cost of public financing, while inflation drives up construction expenses. An Olympic project today is not only more expensive but also riskier than a decade ago.
As a result, the Olympics are evolving. The open, competitive bidding system is giving way to a more restricted model, often supported by strong state involvement. Recent hosts, such as Beijing and Paris, relied on centralized control and existing infrastructure to reduce risk. This also means that the Olympics are becoming less accessible to smaller or fiscally constrained countries.
The economic model of the Olympics has reached a turning point. The question is no longer whether hosting brings prestige, but at what cost and for whom.