The Modi government has launched various noteworthy programs to promote yoga, fitness, health, and sports, which have received great praise. While these attempts to improve India’s worldwide position are commendable, I do not share the government’s enthusiasm about seeking to host the Olympics in 2036.
Hosting the Olympics has always been a source of great national pride, as well as an opportunity to showcase one’s country to the rest of the world. Many countries would actively strive to win the bid. However, the global scene has changed, and the economics of hosting the Olympics have grown increasingly unprofitable and unsustainable. There are various reasons why India should reevaluate its goals.
At its core, organizing the Olympics should aim to balance revenue and costs. However, revenue is typically insufficient, while costs soar as countries overspend—often by a large margin. As a result, most host countries incur significant debts, which are eventually borne by taxpayers.
In their 2016 paper “Going for the Gold: The Economics of the Olympics,” economists Robert A Baade and Victor A Matheson looked at the expenses and revenues associated with hosting the Olympics.
They classified costs into three categories: sports infrastructure for competition venues, general infrastructure such as transportation and housing, and operational expenses, which included administration, security, and ceremonies.
On the financial front, the hosts are looking at tourism, expenditure during the games, and the long-term benefits of a “Olympic legacy,” such as enhanced municipal infrastructure, increased trade, foreign investment, and sustained tourism. The intangible benefits include the “feel-good effect” and national pride. However, the truth is frequently less favorable.
The International Olympic Committee (IOC) requires a host city to have at least 40,000 hotel rooms for spectators and an Olympic Village that can accommodate 15,000 athletes and officials.
The evaluation committee also assesses transportation, infrastructure, and connectivity. Many host countries develop large facilities solely for the Games and struggle to recoup their investments.
From 1896 to 1998, more than 90% of Olympic hosts were from Western Europe, the United States, Canada, Australia, and Japan. Only recently have underdeveloped countries been bidding to host.
In recent history, 1984 Los Angeles stands out as the only completely lucrative host, owing partly to the city’s existing extensive sports facilities and its extraordinarily favorable terms with the International Olympic Committee. For example, Los Angeles accounted for approximately 75% of broadcast income, while the IOC received only 25%.
Today, the ratio is nearly reversed, with the IOC claiming the lion’s share. Even with favorable terms, large-scale events have historically failed to be profitable. For example, the 2012 London Olympics cost $14.6 billion, of which $4.4 billion came from taxpayers.
Revenue from ticket sales and foreign investment frequently falls short of projections, and the predicted economic multiplier effects of increased spending on hotels, transportation, and restaurants are rarely realized.
Furthermore, the Olympics have traditionally been targets of terrorism, with events such as the Munich massacre in 1972 and the Atlanta bombing in 1996 leaving long shadows over the Games. We wish such attacks never happened again, but they have raised security expenditures to unprecedented levels.
Most economists think that hosting the 2004 Olympics sparked Greece’s financial crisis, with many claiming that the event bankrupted the country. Rio de Janeiro’s 2016 Olympic Games were also a financial disaster. It took Montreal 30 years to repay its debt from the 1976 Games. The Salt Lake City Winter Olympics in 2002 generated barely 10% of the 70,000 employment expected, with the majority going to those who were already working.
India has its own cautionary tale with the Commonwealth Games (CWG). The corruption scandals from the 2010 CWG are currently being litigated. The Comptroller and Auditor General of India discovered that the real costs were 16 times more than the first estimate. Promises of a multiplier effect on tourism and expanded sporting events were never fulfilled, and the financial losses were eventually paid by the public.
When the losses became clear, then-Chief Minister Sheila Dikshit issued a public appeal for funding, stating, “We need money for the Commonwealth Games. “I am confident that people will cooperate with the government.” Cooperation was a euphemism for a tax increase on the general public, which raised the prices of necessary items such as diesel, tea, coffee, oil, ghee, household equipment, and CNG fuel. The BJP, then in opposition, has slammed the decision as a “loot in the name of CWG”.
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Even if we assume that India could hold the Olympics without corruption, the experience of previous host countries indicates that it would most likely be a loss-making endeavor. Furthermore, hosting the Olympics is not a top priority for our country, given that we only win a few medals.
Furthermore, with a perilous geopolitical situation unfolding in our region, we should prioritize bolstering internal security and fixing our decaying city infrastructure.
Instead of pursuing the costly and dangerous goal of hosting the Olympics, where most previous hosts have failed, India should focus on developing smaller sports facilities around the country to foster a strong sports culture at the grassroots level.
Before we consider hosting the Games, let us set a realistic aim of winning at least 20 Olympic medals and representing our country well. It is smarter to chose realism and pragmatism over the vanity of hosting an international event for which we have yet to win anything important.
