Costs and Benefits of the Olympics

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Readers Question: Evaluate the arguments for and against the view that major sports events are good for the economy? (15)

Major sports events such as the World Cup and the Olympics are often seen as a potential source of economic regeneration. Yet, many are worried about the economic costs of hosting a major sporting event that only lasts for three weeks. These are some of the economic benefits and potential costs of the Olympics and other major sporting events.

Economic Benefits of the Olympics

1. Encourages Investment in Transport and Infrastructure.

Major sporting events usually require upgrades to transport and communication links. This investment leaves a lasting legacy for the whole economy. Better transport links reduce congestion and help to improve efficiency for local business. It can help increase the productive capacity of the economy (shifting aggregate supply to the right). For example, for the London Olympics in 2012 we have seen new rail links created in East London, and improvements to existing underground and overground train services (London Olympic rail networks)

2. Influx of Foreign Visitors.

A major sporting event like the Olympics can attract 10,000s of people for the duration of the games. These foreign tourists bring a boost to the local economy. In particular the local tourist trade, shops / hotels will benefit from the surge in visitor numbers. However, it is worth noting that these visitor numbers tend to be temporary. The major sporting event only lasts for a few weeks; potentially there could be many empty hotel beds in the future. On the other hand people argue a major sporting event can lead to a long term growth in visitor numbers. e.g. China felt the Beijing Olympics created a feeling that China could be a popular tourist destination. Barcelona saw higher visitor numbers continue after the Barcelona Olympics of 1992.

3. Job Creation

Typically, major sporting events require investment in building stadium and hotels. This creates jobs for the local economy for up to 4 years before the event. These extra jobs help create a positive multiplier effect amongst the local economy. It is hoped that the London Olympics will help regenerate the east end of London. Some argue this temporary job boost can prove more permanent, if the economic regeneration continues after the games.

4. Higher Economic Growth

It is estimated that the ‘Olympics Effect’ leads to a boost in economic growth due to the higher investment and foreign visitors. This leads to higher tax revenues for the government

Costs of Events like the Olympics

1. Expense

The cost of hosting a major sporting event has increased significantly in recent years. It includes, not only, all the investment but also the heightened security. It is hard to meet these costs through sponsorship and ticket sales alone. Therefore, it can lead to higher taxes for the local population.

2. Will the infrastructure be used in the future?

The Olympics requires a lot of investment, which may not necessarily be used in the future. Many custom built sporting events may not be used in the future.

3. Disruption during the event

It is feared that during the Olympics there will be a disruption to local businesses not effected. For example increased security features make it more difficult to continue normal business.


  • It depends how much investment is required in the first place. e.g. do all stadiums need to be built? can the stadiums and facilities be effectively used after the games?
  • Can firms keep to initial cost estimates? (e.g. New Wembley was much more expensive than first predicted)
  • Some sectors of the economy benefit much more

Further Reading

34 Responses to Costs and Benefits of the Olympics

  1. James Walton January 12, 2010 at 7:40 pm #

    By the way this helped me with my research paper at the University of Kansas in Lawerance, KS

  2. Carolyn Thomas February 16, 2010 at 6:07 pm #

    Here in Canada, where the obscenely expensive 2010 party called the Winter Games is in full swing, it’s clear that this is all about money and partying (with athletic achievement a much-ballyhooed but less important factor – that’s why each sport has its own world championship).

    And Vancouverites will continue to pay for these Games long after the drunken fans have returned home after 17 days. According to economist Dr. Jeffrey Owen at Indiana State University, it’s a myth that hosting an Olympics event makes good business sense, despite what all those economic impact studies predict.

    “To date, there has not been a single study of an Olympics or other large-scale sporting event that has found empirical evidence of significant economic impacts.”

    More on this at: ‘Why the Olympics Are Bad Business’ at

  3. samirah March 21, 2010 at 11:40 am #

    this website is really good

  4. loans April 15, 2010 at 2:19 pm #

    good points

  5. Nokubonga August 6, 2010 at 2:39 pm #

    These are really true…Here in South Africa, I’ve seen lots of positives about hosting a major sporting event but also negatives. Its much like business though, If you are willing to gamble (take a risk), you might find yourself reaping really good fruits in future (in terms of investments-fdi)

  6. Kim September 1, 2010 at 9:33 am #

    Thank you, this has helped with an essay I am writing. I have been researching into how businesses will benefit from the London 2012 Olympics, and speculating on how those who advertise specific Olympic Services may suffer after the games have finished. If you look at, you can see all of the sectors which expect to benefit in some way – there are of course the obvious ones such as hotels and transport, but also attractions who will gain extra visitors on days when visitors are not attending an Olympics event and need something to do. Also businesses such as estate agents for those interested in renting a property close to the Olympics. Thanks again for the information, much appreciated!

  7. rewrwerrew November 17, 2010 at 11:18 am #

    i agree severely

  8. Jack Edenborough February 8, 2011 at 3:15 pm #

    This website was very helpful for our business presentation. R.I.P James Walton

  9. showman February 20, 2011 at 7:00 pm #


  10. showman February 20, 2011 at 7:02 pm #

    thanks from al – islamyia school you help my thank you

  11. veronika tan July 7, 2011 at 10:14 pm #

    I am writing to you to ask permission if i am able to use one of your images for my school coursework.
    Can you please reply in 5 working days. (send email)
    Thank you so much.

    Veronika Tan

  12. Ismay Byrne October 13, 2011 at 10:47 am #

    Please could I use your picture of the Olympic rings for my GCSE CiDA work. Thank you.

  13. Bradley Wade January 30, 2012 at 10:24 am #

    Thank you so much, this has helped me get my A* in A-level economics. Short and brief which is essentail for my criteria. cheers.

  14. abdi February 21, 2013 at 9:50 am #

    talk about london sports can anybody help to write these please


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