The real cost of the Olympics

In late July, many around the world watched the fabulous opening ceremony of the Olympic Games in Paris. Despite taking place in the rain, the event was bright and entertaining. The closing ceremony was spectacular. One might wonder what the total cost of the Olympics is. How much money is behind all these spectacular events and the competition in general? What do athletes, like Kent’s Dina Asher-Smith and Surrey’s Toby Roberts receive for competing? And do countries really benefit financially afterwards?

The bidding cost of the Olympics

To host an Olympic Games, cities first have to spend millions of dollars to make a bid to the International Olympic Committee (IOC). Tokyo spent $150mn on its failed 2016 bid. It dedicated about half that sum to its successful one in 2020.  

Once selected, host nations and their chosen cities have between seven and eleven years to prepare for their Games. But how do they finance them?

What costs does the International Olympic Committee cover?

The first part of the financing of the Games is the budget given by the International Olympic Committee (IOC) to the Organising Committees for the Olympic and Paralympic Games (OCOG). The OCOG Budget is drawn from the IOC’s different sources of revenue, including the sale of broadcast rights for the Games.

IOC contributions are significant: £1.7bn each for Tokyo 2020 and Paris 2024 and £1.8bn for LA 2028, But they are a small proportion of the overall costs of the Games. Host countries therefore are also given the opportunity to commercialise Olympic rights in their territory, manage the ticketing of the event and benefit from the national partnership programme (TOP, literally ‘The Olympic Partner’). TOP is the highest level of Olympic sponsorship, granting exclusive, global marketing rights to a small number of partners.  

IOC financing can, however, be controversial. In 1998, a corruption scandal erupted within the IOC, which included alleged acceptance of bribes and accusations of impropriety. As a result, the IOC expelled six members of the committee and several others resigned. The IOC consequently introduced a package of reforms and established an independent IOC Ethics Commission. 

Despite this, in 2017, the head of Rio’s NOC was charged with corruption. There were also allegations of illegal payments in relation to Tokyo 2020.

The cost of the Olympics for host nations

The second part of the financing is provided by the host nation and managed through their National Olympic Committee (NOC). There must be budget allocated for construction or refurbishment of permanent competition and non-competition venues. There must also be funds allocated to security, transport and medical services. Finally, a long-term investment plan is required to ensure roads, airports and railways are ready.

The huge costs incurred by host countries are shown below:

• Sydney – $4.6bn (2000)
• Athens – $15bn (2004)
• Beijing – $42bn (2008)
• London – $14.6bn (2012) – $4.4bn came from taxpayers
• Rio de Janeiro – $20bn (2016)

But there is not only a financial cost to hosting the Games. It is the reputation of host cities and governments that is at stake too. In the run-up to the 2016 Rio Olympics, the vice president of the IOC labelled the preparations for the Games as the “worst ever”, saying that “the situation is critical” and that “they are not ready in many, many ways”.

Problems were blamed on delays caused by unwieldy relationships between city, state and the national government. What was supposed to be an opportunity for Brazil to present itself as one of the fastest growing world economies and to improve its infrastructure turned into complaints about the forced clearance of favelas and the readiness of facilities.

How much money do Olympic athletes receive?

There would be no Games without athletes. But perhaps surprisingly, the IOC does not pay athletes directly to compete in the Games. Neither does it offer them prize money.

IOC president Thomas Bach has explained that athletes may receive prize money from their NOC, their governing bodies or through sponsors for their achievements at the Olympic Games. The IOC emphasises its values-based ethics and non-acceptance of for-profit business models as reasons for this.  

Several NOCs do pay their athletes bonuses for winning medals:

Great Britain does not. Roberts would be $87,000 better-off today if he had won a gold medal for France rather than Team GB.

Some sporting governing bodies also offer prize money to athletes. Paris 2024 became the first Olympic Games in which gold medallists in track and field events received $50,000 each from World Athletics.  

Some athletes receive additional prizes. Kazakhstan gives apartments to medallists. South Korean medallists are awarded pensions. Hong Kong public transit operator MTR Corp will give lifetime free travel tickets to the city’s Olympic champions.

How valuable are Olympic medals?

For athletes who don’t receive a cash reward for a podium finish, they still receive something of value – their medal. In fact, the value of gold medals reached a peak at the Paris Olympics, with each worth around $900.

But gold medals only actually contain about 6% gold. The IOC dictates that all such medals must be composed of at least 92.5 percent silver. The silver medal contains pure silver and weighs around 550 grams, while the bronze medal weighs approximately 450 grams and contains 95% copper and 5% zinc; an alloy known as ‘red brass’.

An interesting incident took place during the Paris Olympics which highlighted potential issues with medal quality. The US Olympic skateboarder Nyjah Huston won bronze, but 10 days later posted an Instagram story, in which he complained about the quality of the medal. He said “it is looking rough” and “starting to chip off a little”, and advised the organisers of the Olympics to “step up the quality a little bit”. A spokesperson for Paris 2024 responded that it is working to “appraise the medal to understand the circumstances and cause of the damage”.

Do the costs of the Olympics ultimately benefit the host country?

We have seen that host nations spend billions of pounds to host the Games. But does the cost of the Olympics lead to long-term economic benefits? Is the ‘Olympic legacy’ real?

It is a mixed picture. The IOC claims that London 2012 created over 100,000 jobs and brings over one million visitors a year to the Olympic Park. But key legacy projects such as the promised regeneration of estates in Stratford are yet to come to fruition.

In Rio, the four main transport projects from the Olympics have not been completed, promised schools have not been built, water clean-up operations haven’t started and the city’s Olympics Museum has shut down. However, there have been some successes: a flood control project in the Maracana has commenced and a national English learning programme was widely adopted.

A report by the Council on Foreign Relations states that the jobs ‘created’ by the Olympics are often “temporary”, that most countries (with the notable exception of Barcelona) have not experienced tourism increases due to the Games and that multiple expensive facilities are abandoned across the world. Overall, it says “there is little evidence for an overall positive economic impact”. In fact, the investment required to bid for and host the Olympics over recent years has become so high that many economists consider the cost of hosting the Olympics to be “untenable”.

Will France be the first success story of Agenda 2020?

However, there is positive news. The IOC’s Agenda 2020 Strategy seeks to address issues with the bidding and funding model for the Games and highlights the importance of sustainability and a genuine sporting legacy for each host nation.

France embedded Agenda 2020 in its Olympics. It successfully re-used existing infrastructure for 95% of the Games’ venues, meaning it has cost significantly less than Rio, London or Tokyo.

There is also already evidence of Paris 2024 health and sporting initiatives working.

Whether there will be a long-term benefit is a matter for the future. And clearly, there are still questions about how NOCS and governing bodies will fund and support athletes for future Games. We need to ensure they can carry on training to compete at the highest possible level, wherever the Games are held.