The costs of hosting the Olympics in Paris have skyrocketed while the profits remain uncertain. The International Olympic Committee (IOC) and its supporters consider that hosting can raise a city’s global profile and generate economic benefits through tourism and investments in infrastructure. However, the realized figures in cities that hosted previous Olympics, such as Tokyo in 2020, show the opposite.
It is true is that many cities invest millions of dollars in evaluating, preparing, and submitting a bid to the IOC. The cost of planning and organizing events falls between $50 million and $100 million. Tokyo spent as much as $150 million on its failed 2016 bid and about half that much for its successful 2020 bid. Other cities, such as Toronto, decided it could not afford the $60 million it would have needed for a 2024 bid.
With Paris set to host the Olympic Games in 2024, the city is at a crossroads of opportunity and peril. While the event promises to focus the world’s attention on the City of Light and boost tourism and related industries, achieving maximum financial gain comes with challenges such as ticket fraud and poor guest experiences. This article examines the dynamics of Paris Olympic Games 2024 that lend it to make profit in Olympics history – from games mechanics, fraud prevention and tourism related revenues.
A golden ticket: The right to host the Olympic Games has long been viewed as a potential bonanza for economic growth. Organizers say it is expected to bring an additional 3,000 athletes and officials with at least two accompanying spectators per athlete helping the local economy. As many as 10,500 athletes and 4,400 para-athletes (as well millions of visitors) are expected to descend on Paris. This will lead to a large increase in the need for accommodation, transportation, dining and entertainment, providing a huge economic boost to the city and its surroundings, where option exists both legally or even grayer areas.
Once Paris has been chosen to host, it took a decade to prepare for the influx of athletes and tourists. The Summer Olympic Games are far larger, attracting hundreds of thousands of foreign tourists to watch over ten thousand athletes compete in about three hundred events. The largest investments are in creating or upgrading of sports facilities such as cycling tracks and ski-jumping arenas and the Olympic Village.
One significant risk that could hinder the profitability and smooth running of Paris’ Olympic Games is fraud. In particular, ticket fraud poses a real threat. The digital platform is used for official ticket sales for the games, which increase opportunities for fake tickets and scams to occur. For that reason, the Paris 2024 Organizing Committee has emphasized on several occasions that tickets should only be bought through authorized channels to avoid fraud.
France authorities have implemented very strict measures against fraudulent activities. Consumer protection is supported by public awareness campaigns and legal frameworks. However, individuals still have a duty to remain vigilant and informed about their activities.. Ensuring that ticket sales remain untainted is important not only for consumers’ wellbeing but also for maintaining financial sustainability of the Games.
The Paris Olympics Games 2024 are worth organizing as they will enable the city to showcase its cultural and sporting heritages globally. This increased visibility can enhance the city’s standing as a top tourist destination thus driving long-term gains past the occasion itself.
An independent study from the International Olympic Committee estimated the Games could bring in as much as $12 billion and as little as $7.3 billion from 2018 through 2034, including tourism and construction. This rough estimation is under a huge question mark as there is no published transparent study from the IOC demonstrating the realized added value Cash Flows resulting from Paris Olympic Games,
At SSBM Geneva, we conducted a deep analysis and found that the Olympics’ impact on tourism is mixed, given the security, crowding, and higher prices.
As the costs of hosting have skyrocketed (estimated cost of Paris Olympics is at 8,7 billion of USD which includes operational and construction costs but without wider capital costs, such as investments in urban and transportation infrastructure, which can be substantial), revenues cover only a fraction of expenditures.
Impact studies carried out or commissioned by host governments before the games often argue that hosting the event will provide a major economic lift by creating jobs, drawing tourists, and boosting overall economic output. However, research carried out after the games shows that these purported benefits are dubious.
For example, the Beijing’s 2008 Summer Olympics generated $3.6 billion in revenue, compared with over $40 billion in costs, and Tokyo’s delayed Summer Games generated $5.8 billion in revenue and $13 billion in costs. Many people do not know that much of the revenue doesn’t go to the host—the IOC keeps more than half of all television revenue, typically the single largest chunk of money generated by the games.
In context of Olympic Games tourism serves as a double-edged sword both a boon and challenge. One side of this coin is that tourists who come in numbers yield huge revenues for the local economy. Hotels, restaurants, and local attractions are expected to see a surge in business. The “Hospitality Paris 2024” program offers packages that combine tickets with premium experiences, including accommodation, dining, and cultural activities, further boosting tourism-related income.
On the other hand, managing the influx of people strains local infrastructure and resources. Paris must ensure its transport networks, security arrangements, and public services can cope with the increased demand. Proper planning and investment are necessary to avoid possible bottlenecks and ensure positive experience for tourists as well as residents.
One of the problems are the so-called white elephants, or expensive facilities that, because of their size or specialized nature, have limited post-Olympics use. Such infra projects generate huge costs for years to come. Many examples confirm that: Sydney’s Olympic stadium costs the city $30 million a year to maintain, Beijing’s famous “Bird’s Nest” stadium cost $460 million to build and requires $10 million a year to maintain, most of the facilities built for the 2004 Athens Olympics, whose costs contributed to the Greek debt crisis, are now mostly unused. The worst case is in Montreal where the Olympic stadium, known as the Big O, is frequently stylized as the Big Owe for its massive costs; in 2024, Quebec’s government said it would spend $870 million to replace the rarely used stadium’s roof for the third time.
Many economists say that the implicit costs must also be considered when analysing profits and losses resulting from the Olympics. These include the opportunity costs of public spending that could have been allocated to other priorities. Servicing the debt that is left over after hosting the games can burden public budgets for decades. An illustrative example is the Montreal case. It took them until 2006 to pay off the last of its debt from the 1976 Games, while Greece’s billions in Olympics debt contributed significantly to the country’s bankruptcy. Finally, the debt and maintenance costs of the Sochi 2014 Winter Games will cost Russian taxpayers nearly $1 billion per year for the foreseeable future.
The profitability of the Paris Olympic Games 2024 depends on finding a delicate balance between exploiting economic opportunities to their maximum extent while keeping risks at bay. Regarding tourism and related industries that may include substantial revenues, the games have the potential to be financially successful. However, this prospect will only be actualized if such challenges as ticket fraud are appropriately addressed.
Paris is investing heavily in infrastructure development and provision of public services so that visitors do not encounter any difficulties during the Olympics. These measures further underscore the city’s commitment towards protecting both the integrity of the event and its financial sustainability through official channels for ticket purchasing; they demonstrate how serious the city is on combating all forms of counterfeiting or deceit.
Paris budgeted about $8 billion for the 2024 Olympics when it won its bid in 2017. The city has since increased its budget by several billion dollars. Costs are split relatively evenly between operating expenses and new infrastructure, according to an S&P Global Ratings analysis.
An example of an expenditure that coincides with the Games is the cleanup of the Seine River, which runs through Paris, for a whopping $1.5 billion. Swimming in that river has been banned since 1923 for safety reasons. The cleaning will allow some long-distance athletes to compete in the triathlon and marathon swimming events in the river.
Organizers say the decision to rely almost entirely on existing venues, such as those built for the annual French Open and the 2016 European Football Championship, has held down costs. The games will also be spread out to stadiums in other French cities, including Lyon, Marseille, and Nice. From available statistics Paris city has spent $4.5 billion on infrastructure, including $1.6 billion for its Olympic Village.
As Paris prepares for hosting Olympic Games 2024, it faces daunting challenges despite rosy profit prospects. The economic benefits derived from tourism and global exposure must be carefully balanced against the risks of fraud and the logistical demands of hosting such a large-scale event. With strategic planning and vigilant execution, Paris has the potential to not only host a memorable and successful Olympic Games but also to achieve lasting economic gains.
At SSBM Geneva we believe that the Olympic Games need reforms to make them more affordable for hosts. Many have pointed out that the IOC bidding process encourages wasteful spending by favoring potential hosts who present the most ambitious plans. This so-called winner’s curse means that over-inflated bids—often pushed by local construction and hospitality interests—consistently overshoot the actual value of hosting. We also believe at SSBM Geneva that the IOC should share the fast-growing revenue generated by the games, which would help the host cities avoid financial problems or potential future bankruptcy. In response, the IOC, under President Thomas Bach, has promoted reforms to the process known as the Olympic Agenda 2020. These recommendations include reducing the cost of bidding, allowing hosts more flexibility in using already-existing sports facilities, encouraging bidders to develop a sustainability strategy, and increasing outside auditing and other transparency measures.
A good indicator of long terms expected Cash Flows resulting from Olympic games in Paris is the is the country’s GDP. The French stock exchange index (CAC) should also show some positive or negative signs of the expected additional cash flows resulting from profits in some of the impacted industries such as tourism, construction and related services.
Even if one of the key messages of OIC for accepting the summer Olympic games in Paris was to promote sport, it is undeniable that the international sporting events bridge societal divides and bring people together across borders. These events also encourage children to take up sports.
However, as professor in Financial management at SSBM Geneva I must conclude and highlight the fact that even the profitability is not there for Paris on short et middle term basis, with high uncertainties for long term profitability, what is certain is that IOC will earn most of the expected revenues through commercial and marketing deals.
Paris realized cca $8,7bn in Investments which will probably not be reimbursed with Cash Flows resulting from such investments in next few generations of population. Olympic Games are expensive, and French public finances are not in the best state as the country’s budget deficit hit 5.5% last year, far beyond the European Union limit of 3%.
However, for the host country France and city of Paris, the Olympic Games have always been about pride and honor and publicity, more than it was ever about making money and profits as many countries and financial experts, like myself, would be looking for before engagement of any such huge investments.