The Olympics: a Never Ending Economic Downward Spiral

Children of the Mangueira favela of Rio de Janeiro watch the opening ceremony fireworks of the 2016 Summer Olympics. Courtesy of Tércio Teixeira, Human Rights Watch, August 5, 2016.

By Katharina Schneebauer

February 6, 2019

July 24th, 2020, 8 PM. This date will be marked by fireworks lighting up the night sky above Tokyo, Japan, signalizing the start of the most important two weeks this year for sports fans. 3.6 billion viewers will watch the opening ceremony of the 2020 Olympic Summer Games on TV, broadcast live from the newly finished Olympic Stadium of Tokyo. The spectacle is estimated to attract about 10 million tourists and generate $5.9 billion in revenue, with an additional $3.3 billion of sponsorship sales. 

Ever since the first Olympics in 1896, there has been a controversy over the financial consequences for the host countries. This year, they could result in Japan paying more than $26 billion, contrary to an original forecast of $7.3 billion, according to the Board of Audit Japan. As Tokyo embarks upon their escapade of hosting the 2020 Summer Olympics, it is vital to take into account how the expenditures for the games negatively affect the hosting country. 

Governments always spend a tremendous amount of money on the Olympic Games, yet they should rather spend it on healthcare or education. It is universally agreed on that the aim of a democratic state is to maximize social welfare by ensuring the individual has their basic needs. Olympic Games are usually hosted in democratic nations, so they should not interfere in a nation’s democratical values. But if the government spends billions of dollars on the Olympics, the impoverished citizens are neglected. Felipe Paiva, living in one of Rio’s favelas, when asked if the poor were helped through the great sums of money spent on the Olympics, replied, “The investment is not for us, it’s for the foreigners.” If the state used those billions to help people like Mr. Paiva out of poverty instead, it would embody the values of a true democratic state. 

The 2016 Summer Olympics in Rio de Janeiro are an example of the outrageous sums of money invested into these games. The original estimate was a total price of $3 billion, yet the final cost was $13 billion. To host the games, the city had to cut back on healthcare, education, and police spendings. The 2012 London Olympics cost roughly $18 billion with only $5.8 billion revenue, while Beijing’s 2008 Summer Games generated $3.6 billion of income, compared to $40 billion in costs. Also the Sochi 2014 Winter Games only made a $53 million profit but cost a prodigious $50 billion, making them the most expensive games ever. The games are obviously over budgeted and this is in desperate need of change.

Additionally, the facilities built are immensely unsustainable, especially in developing countries. Many stadiums get abandoned after barely two weeks of utilization. The Rio Aquatics Stadium was in dilapidation merely six months after August 2016. Others are simply not eco friendly, such as Rio’s Olympic golf course, which was built on a nature reserve. Now the city cannot afford to maintain it.

One might argue that the Olympic Games bring tourism to the host country. For two weeks, the host city is in focus all around the world. Especially the Summer Games, the largest sporting event together with the World Cup, attract attention.

However, people commonly disregard that the cost of the games will never be compensated by tourists. Facilities that are built during the Olympics are in disrepair soon after. Once the games are over, the tourism will not continue flourishing, and governments can never get back what they lost.

The Olympic Games are always a risk for the host city, and with the Tokyo Summer Olympics coming up, yet another city is in peril of losing billions of dollars. An investment in education and health care would be much more profitable for the city’s residents. The Games should be an enjoyable time that brings people together, but not such an extreme economic downfall for the hosting country. 

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