[IMGCAP(1)]The Olympics are the biggest international sporting event, with athletes from more than 200 nations participating in what are generally considered the most important competition in the world.
But are they worth it to the host city and country in terms of the budget and the eventual enormous expenditures?
As the quintessential sporting event, the Olympics cause countries to fervently pursue the goal of being the chosen one. But what is the reality behind organizing the Olympic Games, and what are the pros and cons?
Among the advantages are benefits involving disparate aspects such as society, sports and work:
• Supporting national sports: At a time when sports are among the areas affected by the economic downturn that still afflicts many countries, holding a sporting event like this brings financial support to a country's sports institutions.
• Employment creation: Organizing and hosting the Olympics typically creates a high number of jobs. In Spain, for example, an estimated 80,000 jobs would have been created if Madrid had won its bid to become the chosen venue of the 2020 Olympic Games (although Tokyo was ultimately chosen instead).
• Citizens and political unions: In nearly every country that applies to host the Olympics, a consensus develops among political parties to support the Games, and there is high public support for the candidacy. An example is found in the 2020 Olympic Games, where around 80 percent of the population in Madrid and Istanbul were in favor of the Games, slightly above the level of support in Tokyo.
• Tourism: On the one hand, the infrastructure built for the Games becomes a legacy for the host city, contributing to future sporting events while benefiting the host city for a long period of increased tourism in the country. In the case of Madrid 2020’s bid, it was estimated to draw about 850,000 athletes and visitors.
• Advertising and recognition: Advertising for the 2014 Olympic Games is expected to generate a record $800 million for NBC Universal.
In contrast, the Olympics also generate considerable costs:
• Resulting deficit: While there have been cases where host cities ended the Games with a significant surplus (Los Angeles in 1984 and Barcelona in 1992), the situation is typically that the country has to take on a very high long-term debt.
• Exorbitant inflation: Prices soar in services such as transportation and hotels before, during and after the Games.
• Budgetary offsets: Most of the Olympic venues end up far exceeding their initial budgets. For example, Montreal initially budgeted $250 million for the 1976 Games, but ended with a final cost of $1.6 billion. Athens in 2004 initially budgeted $4.5 billion, but that grew into a $10.8 billion expense. Most recently, the final budget of the Beijing Games surpassed $40 billion in 2008 and in the case of London it reached $20 billion.
We know the advantages and disadvantages. There is only one question: Are the Olympics worth it?
Marta Riera López is auditor of the Auditing Authority of the Principality of Asturias in Spain.