The International Olympic Committee (IOC) suggests numerous, powerful economic benefits are generated by the hosting of the Olympic and Paralympic Games.

“It enables a region and country to develop; the knowledge and skills of their workforce and volunteers, career opportunities, the tourism and events industry, the business sector, their global profile and diplomatic relations,” the IOC says.

The economic benefit or otherwise for particular cities and regions will vary enormously depending on populations, market conditions, market scale, potential to capitalise on opportunities and other local context.

The IOC has projected the economic benefits of upcoming Olympic and Paralympic Games as:

• Paris 2024 Summer Games – US$12.2 billion
• Milano Cortina 2026 Winter Games – US$3.2 billion
• Los Angeles 2028 Summer Games – US$18.3 billion
• Brisbane 2032 Summer Games – US$13.4 billion

So, where does the revenue come from?

Where Olympic revenue is raised

John Greig FCA is the lead client service partner Asia Pacific for the Brisbane 2032 Olympic and Paralympic Games.

“Generally speaking, the way most people think about the value of an Olympic or Paralympic Games is in relation to the direct and indirect economic benefits, as well as the social benefits,” Greig says.

“So, you talk about the value-add in economic terms of things like tourism, trade and foreign investment, attracting new business and the indirect flow-on effect that goes right through the economy of a host city or region.

“Then you start to think about social benefits, like lasting legacy impacts such as health benefits from increased participation in sport, diversity and inclusion, sustainability and so on. London 2012 is often mentioned in terms of the successful regeneration of parts of inner London, in that regard.”

Revenue to the organising committee tends to be derived via three main streams, Greig says: funding from the IOC, revenue from sponsorships, as well as revenue from ticket sales and merchandise sales.

“Partnerships or sponsorships come down to where we are in the economic cycle and whether business is booming,” Greig says.

“LA28 is significantly funded by business and has little or no government funding. Brisbane 2032, on the other hand, sees the infrastructure and venues funded by an intergovernmental agreement between the Queensland Government and the federal government.”

The ability to attract revenue by organising committees from sponsorships is vital in both models. Businesses willing to pay a premium to promote their brand, products or services during the Olympic and Paralympic Games bring significant value to organising committees.

“Depending on where the economy is at, it can make the challenge of securing sponsorships quite difficult for organising committees,” Greig says.

Olympic finance: winners and losers

A University of Oxford study called Regression to the Tail: Why the Olympics Blow Up, published in 2020, says average sports-related costs of hosting an Olympic Games are currently US$12 billion, with non-sports-related costs “several times that”.

“Every Olympics since 1960 has run over budget, at an average of 172% in real terms, the highest overrun on record for any type of megaproject,” the researchers report.

Sometimes, that overrun can be earned back. Sometimes it cripples an economy.

Greece, for instance, experienced enormous challenges.

“Cost overrun and associated debt from the Athens 2004 Games weakened the Greek economy and contributed to the country’s deep financial and economic crises, which began in 2007 and was dubbed the ‘forever crisis’ by The Financial Times, because it seemed to never end,” the report says.

“Similarly, in June 2016 – less than two months before the Rio 2016 opening ceremony – Rio de Janeiro’s governor declared a state of emergency to secure additional funding for the Games. When Rio decided to bid for the Olympics, the Brazilian economy was doing well. Now, almost a decade later, costs were escalating and the country was in its worst economic crisis since the 1930s, with negative growth and a lack of funds to cover costs.”

The costs

Here are the extreme highs and lows in terms of sports-related Olympic Games costs from 1960 to 2016, according to the Regression to the Tail report. All costs are in real terms, not including inflation:

• Most costly Summer Games: London 2012 – US$15 billion
• Most costly Winter Games (and most costly Games ever): Sochi 2014 – US$21.9 billion
• Least costly Summer Games: Tokyo 1964 – US$282 million
• Least costly Winter Games: Innsbruck 1964 – US$22 million
• No reliable data available: 11 out of 30 Games
• Average cost Summer Games 1960–2016: US$6 billion
• Average cost Winter Games 1960–2016: US$3.1 billion
• Average cost all Games 1960–2016: US$4.5 billion
• Highest cost per event Summer Games: London 2012 – US$49.5 million
• Highest cost per event Winter Games: Sochi 2014 – US$223.4 million