The article Going for the Gold: The Economics of the Olympics by Robert A. Baade and Victor A. Matheson provides a good insight into the economic implications for hosting the Olympic Games that take place after every two years. The host cities experience both positive and negative economic implications as a result of the economic activities undertaken before, during and after the Olympic Games. The developing countries should be very keen on the decision to bid for the tender of hosting the Olympic Games because they are largely affected by the economic constraints of such events as compared to the developed countries. In countries experiencing economic constraints like Brazil, which is hosting the 2016 Summer Olympic Games at Rio, the citizens view the expenditures involved as a wasteful spending for the country.
According to my perspective about the entire issue, the costs incurred in the preparations for the Olympic Games are intense compared to the revenues gained through the few weeks of hosting the athletes and the fans. The host country is entitled to incur a lot of expenditures in preparing the general infrastructure such as transportation and housing, specific sports infrastructure and other operational costs incurred in the administration of the games which involves over 10,000 athletes (Baade & Victor, 201). The costs involved lead to an economic stretch of the host country because it is eligible for financing all these expenditures upon winning the tender for hosting the Olympic Games.
In comparison, the benefits of hosting the Olympic Games are not enough to compare with the costs especially for countries which are not economically stable. The host cities are only entitled to the short-term benefits from the tourist spending in the course of the games, the long term benefits of Olympic legacy and the spending by tourists, who come back after the games. Despite the host cities attaining higher improvements in infrastructure within the transportation and housing sectors, the threat of the facilities being underutilized in the future is real. For instance, more than 40 percent of the town’s full-service hotels in Lillehammer, Norway, which hosted the 1994 Winter Olympics have gone bankrupt (Baade & Victor, 203). This indicates that the facilities developed in preparation for hosting the Olympic Games may not be useful after the games hence it can be considered as a waste of public resources.
A detailed analysis of the short-run benefits and long-run benefits of hosting the Olympics can be conducted to try justifying whether it is economical for countries who host these games. Since the revenues generated from the games are under the control of the International Olympic Committee, the host cities are subjected to the decisions made by this committee regarding the sharing of the revenues (Baade & Victor, 206). Nevertheless, the direct revenues which are designated for the hosting cities are not sufficient enough to justify the huge costs incurred in preparing to host the games. For instance, the direct revenues earned during London and Vancouver Games was just a fractions of the total costs for hosting the events and could not in any way cover the total costs incurred. This forms the basis for disapproving the economic viability of hosting the Olympic Games in the short run.
There are numerous long-term benefits attributed to hosting the Olympic Games which are used by the governments of the host countries to try and convince their citizens. The legacy of the sporting facilities is termed as long term benefit as the facilities could be used by future generations, the infrastructural developments improve the living standards of the people, the global media coverage of the events promoted the tourism prospects in future while the Olympics promoted foreign direct investments and increased international trade in future(Baade & Victor, 211). However, according to my perspective, some of these perceived long-term benefits do not qualify to justify the economic viability of hosting Olympic Games. The alleged legacy of sporting facilities for hosting cities is a long-term burden as the countries are obliged to incur a lot of maintenance expenses for the facilities.
According to my perspective, potential solutions can be the sort to address this economic concern both in the short term and long term. The issues of costs related to the hosting of the events, poor management of the revenues, rampant corruption, and unrealized economic projections can solve in collaboration between the International Olympic Committee and the host cities. The recommendations made in Monaco in December 2014 during the International Olympic Committee’s 127th session can be implemented to provide a long-term solution to the issue of huge costs (Baade & Victor, 215). The recommendations on reduction of the bidding cost and reinforcement of the flexibility of Olympic Games management are the most significant towards resolving this stalemate. The issues of corruption can be resolved by promoting accountability and transparency among all the involved stakeholders.
The preparation costs for the host cities should be lessened through pressuring for substantial funding from the International Olympic Committee and other stakeholders in the sports industry. This will ensure that the host countries are not strained off its resources as they strive to host the Olympic Games. The host cities can also address the issue of the sports facilities being under-utilized after the games by developing strategies which will ensure that the facilities are used for alternative revenue generating activities in the future. The benefits of hosting the Olympic Games by far cannot match the costs incurred hence the proposed solutions should be implemented to correct the disparity.
Work Cited
Baade, Robert A., and Victor A. Matheson. "Going for the Gold: The Economics of the Olympics." The Journal of Economic Perspectives 30.2 (2016): 201-218.
