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  • Zahra Schenck

Reimagining the Olympics: A Call to Reconsider Economic, Environmental, and Social Impacts

The Olympics Aquatic Stadium in Rio de Janeiro, Brazil 6 months after the conclusion of the 2016 Summer Olympics.

The competition for hosting the Olympic games can rival the intensity seen among the athletes themselves. But, although it was once considered the greatest of honors for a nation, the pursuit of hosting the Olympics has undergone a dramatic shift. Initially, six cities vied for the opportunity to host the 2024 Summer Olympics, but concerns over costs and event organization prompted four cities to withdraw their bids. Consequently, Los Angeles and Paris were the sole contenders, marking a historic moment when the International Olympic Committee decided to simultaneously award Paris the 2024 Games and Los Angeles the 2028 Games. This decision clearly signals a reduced demand for hosting the Olympics. The prestige of hosting an Olympics might not outweigh the significant opportunity costs the host city incurs. Plus, the substantial explicit costs, covering general infrastructure, sports facilities, and operational expenses, may not justify the effort. Considering these expenses alongside the environmental and social costs, cities are now reconsidering their decisions about hosting the Games.

Until 1976, host cities used public funds to cover the entire cost of the games. While financing has since shifted toward more private sources and no longer relies solely on taxpayers, host cities still bear the burden of covering the expenses themselves. Although the International Olympic Committee does provide aid, the primary share of costs ultimately rests on the host cities. Historically, this practice has favored predominantly wealthy countries as hosts. However, even these nations are now reconsidering whether the costs of hosting outweigh the benefits.

In economic terms, opportunity cost refers to the value of the next best alternative forgone when a decision is made. When a city commits to hosting the Olympics, it commits substantial financial and infrastructural resources to the event. The opportunity cost arises from considering what else the city or country could have achieved or invested in if those resources were directed elsewhere instead of hosting the Games. Due to the costly nature of the Olympics, the government in charge must increase taxes and also reallocate resources to the Olympic cause. This means that instead of continuing to make improvements to infrastructure or to social programs, or whatever is considered the next best alternative, governments use this money for the Olympics. This is not necessarily a bad thing, but one must evaluate whether the lasting impact of hosting the Olympic Games outweighs the social benefits that could have been.

If a city or country chooses to overlook the opportunity costs and proceeds with hosting the Games, they encounter three major cost categories associated with the Olympics. The primary category involves general infrastructure, encompassing visitor amenities like transportation and housing, with a requirement of at least 40,000 hotel rooms for spectators. Notably, numerous cities fall short of this requirement. For instance, Rio de Janeiro, the host of the 2016 Summer Olympics, had to construct over 15,000 new hotel rooms. Additionally, within this category lies the construction of the Olympic Village, accommodating 15,000 athletes and officials.Another significant cost category involves sports infrastructure, necessitating the development of venues and stadiums. While some host cities possess existing stadiums, many venues demand special construction, such as dedicated track and field facilities. Furthermore, operational costs are a substantial component, encompassing general admission, the opening and closing ceremonies, and security. This accounts for a large portion of the costs. To illustrate, the 2004 Summer Olympics in Athens allocated a staggering $1.6 billion solely for security measures.

Considering these expenses, the Olympic Games are rarely profitable. Specifically, among the 14 Summer Olympics held from 1964 to 2018, only 3 have proven to be profitable. Similarly, within that time frame, merely 2 out of the 15 Winter Olympics have yielded profits. This reality dissuades many cities from hosting, as the perceived glory of hosting does not compensate for the financial losses incurred.

A revenue versus cost breakdown for the Summer and Winter Olympics spanning from 1964 to 2018.

In addition to the economic impact, the Olympics have profound and distressing environmental and social consequences that are often interlinked. A poignant case study is Rio de Janeiro. Prior to hosting the Olympics, Rio grappled with severe environmental challenges encompassing water supply, air quality, waste management, and deforestation. The proposal for hosting the Olympics pledged to address these issues, vowing to clean 80 percent of the sewage and waste flowing into the Guanabara Bay watershed, home to over 9 million people. However, at the start of the Games, less than 45 percent of the water entering the Bay had been treated. Moreover, the commitment to establish 8 new water treatment sites remained unfulfilled, with only 1 operational at the Games’ outset. This failure to uphold the promises made to host the Olympics reflects a lack of genuine concern for the well-being of the cities’ inhabitants where the Games are held.

Leading up to the start of the Rio de Janeiro Olympics, Guanabara Bay still had pollution and sewage waste in the waters.

Rio also serves as an example of how the Olympics disrupts the social framework of its host city. While the International Olympic Committee enjoyed money in their pockets, the people cleaning the athlete’s villages in Rio earned 1 dollar and 83 cents per hour. Accounts have stated that the construction workers of the stadiums were under slave-like conditions. The Games in Rio resulted in more than 60,000 people being evicted in all of the city to build infrastructure. Many families living in favelas, or the slums, had to fight to keep their houses, with some in the Vila Autodromo having their houses destroyed or almost destroyed. Around 80 percent of the families living in the Vila Autodromo agreed to move in exchange for financial compensation. However, this financial compensation was often not enough to buy a similar house in the same neighborhood, and many had their houses demolished before even receiving compensation.

A demolished house at the forefront of the Vila Autodromo favela in Rio de Janeiro with construction for the Rio 2016 Olympic Park in the background.

Despite the excitement surrounding Olympic fervor and national pride, host cities inevitably grapple with economic, environmental, and social challenges after the Games. Looking forward to the 2028 Olympics in Los Angeles, a city already facing homelessness and gentrification, there’s concern that this event could worsen these existing crises. The disparities in compensation, the displacement of thousands, and unfulfilled promises highlight the underlying issues that often tarnish the legacy of Olympic hosting. As we look ahead, it is crucial for us to acknowledge the negative impacts the Olympics will have on host communities and prioritize addressing these challenges.


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