There was a time when major world cities lined up, absolutely clamored to host the Olympic Games. A winning bid meant bragging rights, international prestige, and one more reason for a city to feel good about itself, culturally and economically. In those days, even a losing bid was a step up the international ladder. Being considered in the small number of finalists was a big deal. But those days may be over.
Last week CNN reported that Rome, Italy became the latest city to re-think its bid for the 2024 Games, before pulling its name out of the proverbial hat altogether. And, again, Rome is only the latest. Hamburg, Germany voluntarily dropped out of the running for 2024, and two other cities – Krakow and Stockholm – opted to nix the idea of hosting the 2022 Winter Olympics. That “honor” went to Beijing.
The major complaint? Cost.
Now, that’s not to say the Olympic Games have ever been cheap for a city to host. It’s definitely a high-priced affair to accommodate all the athletes, associates, and media – not to mention the fans – who flock to the Games each time around.
So, really, this isn’t about cost. This is about return on investment. And the investment – in both time and money – is considerable. First, there’s the planning. You need a theme, but that’s just the tip of the iceberg. There are infrastructure concerns, building costs, transportation issues to solve, and public services to consider. Security alone, according to CNN, could cost billions.
And the kicker? Most of the cost is funneled through civic agencies to taxpayers … people who, in reality, see very little real economic reward.
In the past, city leaders talk at length about tourism dollars, construction jobs, and other short-term economic boosts. But, at this point, too many people have run the numbers. And therein lies the problem. Despite all the pomp and circumstance, the international attention, and the acclaim that comes from hosting the event, the Olympic Games rarely actually payoff.
Worse, the games can leave a city perpetually in the red. Montreal, for example, spent about 30 years paying off the cost of the 1976 Summer Games. Sure, many cities fare much better, but few really come out in the black after the Games. Can a city sell the value of the Olympics? Certainly, but it would help for that city to already have a foundational infrastructure in place. Event venues are a huge expense, and cities like Los Angeles, which already had that done, have a big head start.
From there, the sales pitch has to be stellar … and focused on the intangibles … if city leaders hope to sell the tax hit to their citizens.
David Milberg is a financial expert in NYC with nearly 3 decades of experience in the finance industry. He is a long-time owner of Milberg Factors, a factoring and finance company with locations in New York, California, and North Carolina.