Hosting the Olympics: The world's most expensive participation trophy

Last week, I was interviewed by the Writethrough. In it, I share my thoughts on the authority of data, facts vs. feelings, and the goal of Not-Ship. I was also asked: "What do you see as the future of visual journalism?" To which I responded: "I have no idea!" They left that part out.

💙 Amanda

The Milano Cortina Olympics, happening now across Northern Italy, cost more than expected. Which, honestly, really should have been expected.

That's because every single Olympics goes over budget. (At least, every one with available data — nearly 70% of all Games since 1960.)

The researchers behind that finding, Alexander Budzier and Bent Flyvbjerg, put it plainly: "A budget is typically established at a reasonable maximum value to be spent on a capital investment. However, in the Games the budget is more like a fictitious minimum that was never sufficient."

Every Olympics has been over budget — some more than others

Overrun percentages for Summer and Winter Games from 1960 to 2024.

In the Overbudget Olympics, the 1976 Summer Games in Montreal get the gold. Ballooning costs were largely due to delays and the construction of a new stadium.

In reality, such large projects often go over budget. Still, the Olympics stand out.

"All Games, without exception, have cost overrun. For no other type of megaproject is this the case," explain Budzier and Flyvbjerg in their paper. "For other capital investment types, typically 10-60 percent of investments come in on or under budget. For the Olympics, it is zero percent."

The Olympics go over budget more than other types of megaproject

Mean cost overrun for capital projects.

Olympic cost overruns are getting worse, too. After declining pre-2008, they've risen again since 2010.

Spending over budget wouldn't be so bad if host governments were making that money back in ticket sales, broadcasting rights and sponsorships.

Are they? Nope. The Olympics rarely earn enough to cover costs.

Briefly, here's how the International Olympic Committee (IOC), the Organising Committee, and the host government spend and make money.

The Olympic money flow

Cost and revenue categories for Olympic committees and the host government.

Broadcasting rights, sponsorships and ticket sales make up more than 90% of revenue at the Olympics, while the highest cost for the host city is often infrastructure. For instance, about 85% of the 2014 Sochi Games' budget went to building non-sports infrastructure, and over half of the 2008 Beijing budget was spent on rail, roads and airports.

When researchers compared the costs and revenues of past Games, they concluded that, in nearly every case, the Olympics are loss-making ventures.

Olympic Games cost more than they make

The costs and revenues of Olympic Games in 2018 dollars, 1964 to 2018.

These spending estimates are almost definitely too low. For one, the analysis didn't include indirect costs—things like airport extensions or updates to public transport. Such values are hard to work out and, more importantly, it's unclear how many would have happened with or without the games.

But even with conservative spending estimates, the record is bleak: In half a century, only a handful of Games have avoided a deficit.

Between 1964 and 2018, five Olympics have had a surplus

Surplus or deficit for Olympic Games, in 2018 dollars.

These excesses aren't a big deal for the International Olympic Committee, because host governments must guarantee to cover all cost overruns.

So when the Games end, countries and cities can be left with years, even decades, of debt. Montreal faced a $1.5 billion deficit from its 1976 Summer Games, which took three decades to pay off. The 2014 Sochi Winter Games continue to cost Russian taxpayers nearly $1 billion per year. After Rio hosted the 2016 Games, it required a bailout from the federal government. And the 2004 Olympics in Athens played a role in Greece's bankruptcy.

For host cities, the hope is that these astronomical costs will be offset by broader economic benefits. They argue time and again that the event will create jobs, lure tourists, and deliver an overall economic boost to the region. However, there's little evidence that this ever happens.

"The overwhelming conclusion is that in most cases the Olympics are a money-losing proposition for host cities; they result in positive net benefits only under very specific and unusual circumstances," write Robert A. Baade and Victor A. Matheson in their multi-decade study of Olympic economics. "It is far easier for the athletes to achieve gold than it is for the hosts."

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YOUR TURN

Not-Ship isn't supposed to be a one-way broadcast. Hit reply, tag me on LinkedIn or Bluesky, push back, add context. Sometimes your takes are so sharp that I ask to feature them here.

Case in point: I recently wrote about third places—those hangouts outside home and work where regulars gather. The main data I used didn't capture churches, so I left them out. A few readers noticed, and Les Klassen Hamm's email was particularly good.

"For some (perhaps a minority) churches stand out as one of the few places in modern society where:

People of differing opinions meet together regularly, which is one of the great strengths of that neighbourhood pub!
People of different ages, including children, meet together, and talk to each other. You could argue malls and sporting events span generations, but not in any meaningful way with legitimate cross-generational dialogue.

With so much baggage and painful history, standard 'church' may have too much to overcome to be a meaningful third place. But a small part of me sees little slices of hope for exactly that—somewhat regular, real world physical encounters with people who have a common point of meeting, but bring a wide diversity of opinion across ranges of age, wealth, and power."

Thanks for sharing your thoughts, Les! 💙

FROM ELSEWHERE

Here's what I found interesting, important or delightful this week:

When will Hank Green die? This is a smart, entertaining crash course in understanding statistics by the YouTube legend himself.

Relax. It's only the climate crisis. Described as a mental health app for the climate emergency, OilWell is a genius blend of art, satire and activism. Get ready for "Category 5 relaxation" as you do your "endless growth affirmations."

A screenshot of the OilWell app website. — Screenshot: OilWell website

A new media ecosystem. The Independent Journalism Atlas launched a database of independent reporters. Use it to find creator journalists (like me!) working outside traditional newsrooms.