
Hosting the Olympic Games is often seen as a significant opportunity for countries and cities to showcase themselves and their capabilities on the world stage. Despite the rising costs associated with hosting the event, the potential economic benefits cannot be overlooked.Â
No African city has ever hosted an Olympic Games and many believe that Cape Town is the front running contender to be the first. Cape Town last bid to host The Games in 2004, ultimately hosing out to Athens. However, rumours abound that the city might be considering putting in a bid to host the 2040 Games.Â
Hosting the Olympic Games requires the host city to first plan and prepare a bid and once accepted to then construct new facilities, create housing and transport infrastructure, pay for the operational costs of hosting (e.g. police, utilities, food, etc.) and then repay any debts incurred. However, there are also benefits to be had, such as increased employment, revenue shares from television and sponsorship deals, increased tourism, improved facilities, and more housing available post-Games. Whether good or bad, hosting the Olympic Games undoubtably leaves a lasting impact on the host city.Â
What is the cost of hosting the Olympic Games?
Firstly, cities invest between $50 – 100 million alone in evaluating, preparing, and submitting a bid to the International Olympic Committee (IOC). If/when a city wins the bid to host they have a decade to prepare for the event. This will include not only creating or upgrading highly specialised sports facilities but also improvements to infrastructure more generally, such as housing and transportation. For example, the IOC requires a host city to have a minimum of 40,000 available hotel rooms. Meanwhile infrastructure upgrades to transportation networks can cost anything from $5 to 50 billion+. Then there is also the cost of security and maintenance to consider. Despite having the best laid plans, a study by Oxford University found that all Olympics have cost overruns with 78% of Games having overrun by c. 50%, while 57% of Olympics have cost overruns of 100%.
What are the main advantages of hosting the Olympics?
Supporters of the Olympics contend that hosting The Games can significantly enhance a city’s global profile and drive economic benefits through tourism and infrastructure investments. Infrastructure developed for The Games often include improvements in transportation, housing, and sports facilities, which could have long-term benefits for the host city.Â
One of the primary economic benefits of hosting the Olympics is the short and long-term boost in tourism. This boost comes both from the influx of athletes, officials, and spectators during The Games, but also from the global media coverage raising the profile of the host city allowing it to attract future tourists and investors.Â
A further critical potential advantage is the long-term economic impact of hosting The Games. While the initial investment can be substantial, the benefits can extend beyond the closing ceremony. Improved infrastructure, increased tourism, and enhanced global visibility can contribute to sustained economic growth. The skills and experience gained by the local labour force and businesses can also have a lasting positive effect on the local economy, making room for new business opportunities.Â

What is the main disadvantage of hosting the Olympics?
The cost of hosting the Olympics have skyrocketed over the years which has sparked considerable controversy over the financial burden placed on host countries. While some might argue that the cost of hosting would be offset be the revenue generated, a growing number of economist argue that the economic benefits are often exaggerated. Many host countries end up with substantial debts and ongoing maintenance liabilities once The Games have left. For example, the 2008 Beijing Olympics has a budget of $45 billion but generated only $3.6 billion in revenues.Â
What happens to cities after they host the Olympics?
Hosting The Games is a massive undertaking for any city, often requiring the construction of new stadiums, venues, and other large infrastructure projects. After the Olympics end, many permanent venues for the event continue to see use, however, some aren’t so lucky. Most permanent Olympic venues usually see one of three fates: still in use, dismantled/destroyed, or abandoned.Â

Once The Games end, many venues go on to host events in the Paralympic Games and after that some venues are used again for sporting events, concerts, and other events. Some also fall into disrepair after the Olympics end. A 2022 report by the IOC found that 85% of venues, stadiums and structures used for The Games are still in use. This is a heartening statistic for real estate developers and hosting cities alike.Â
The key being that host cities should try and not build permanent facilities that would have no use after the event finishes. This is something that the next Olympic hosts, Los Angeles, have taken into consideration. According to the LA28 Plan no new permanent venues will be built to host The Games – a fist in Olympic history.Â
Is it worth it for a city to host the Olympics?
While the IOC espouses hosting The Games as a sure winner for any host city, a 2016 paper suggest that the benefits might be overestimated and the costs underestimated. The paper argues that the actual benefits depend on the existing conditions in the host city. For example, the extent of job creation depends on whether the host city is at or below full employments and that building Olympic facilities might simply divert construction labour for building houses, commercial, and infrastructure projects rather than creating brand new opportunities.Â
Furthermore, when economic benefits do materialize, they don’t necessarily benefit the host city and its taxpayers that bear the cost for the event. For example, hotel prices typically skyrocket during The Games, but that increases local revenue only if the hotels are locally owned. Extra profits for hotels within international chains (e.g. Hilton and Marriott) will not be staying in the host city. Also, infrastructure built for The Games such as stadiums and arenas can become white elephants often leaving cities with decaying monoliths or exorbitant maintenance costs.
Why then, taking all of these risks into consideration, do cities continue to compete for the right to host the Olympics? Why would the City of Cape Town decide to submit a bid? Often the view is that the decision to bid for The Games is a political one. This could be true, given that The Games undisputedly raise the international profile of the host city, and by extension the host nation. However, this is not the only benefit.Â
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