The Business (and Societal) Case for Anchoring the Olympics
With the 2024 Olympic Games kicking off this week in Paris this week, let’s take a look at the state of the international games and ask the $10 billion question: Is it time for a change?
The International Olympic Committee (IOC) is in crisis mode — and they should be.
In July 2017, the IOC was set to announce the host of the 2024 Olympics. At this point, only two cities were bidding, a sharp decline from the dozen bids just two decades prior. Fearing that they would have no bids for the 2028 games, the IOC decided to award the 2024 and 2028 Games simultaneously, to the two bidding cities of Paris and Los Angeles respectively. Four years later, Brisbane, Australia was the only city to place a bid to host the 2032 Games.
So how did we get here?
Ballooning costs and budget overruns have made hosting the games a political and economic nightmare. The 2020 Tokyo Olympics cost $12.6 billion over budget. Spikes in terrorist and criminal activity have made hosting the games a public safety risk. The 2014 Sochi Olympics had several bombings in the months leading up to the games and the 2016 games in Rio de Janeiro saw athletes being kidnapped and robbed at gunpoint. Hosting the games also draws unwanted attention to the city’s social problems. For weeks, Parisians have taken the streets to voice their displeasure with how the games have displaced the homeless and wasted economic resources, leading to what can only be described as a poop protest.
Despite this, the Olympics remains of the most watched events in the world. In fact, experts estimate that one-third of all people on earth will tune in to the games this summer. Yet the IOC is running dangerously close to sinking this ship. So let’s take a brief look at what’s led the Olympics to this point, and explore the business and societal cases for anchoring the games in one location.
The History and Evolution of the Olympics
The Olympic Games date back to 776 BC in Olympia, Greece. The event, meant to honor the Greek gods and unify the often fractious Greek city-states, was held every four years in a tradition known as the Olympiad. The games continued for centuries until they were suppressed by Roman Emperor Theodosius I in 393 AD as part of his efforts to promote Christianity and eliminate pagan practices within the Roman Empire.
In 1896, the Olympic Games were revived by Pierre de Coubertin, with Athens as the first host city. That year, King George I of Greece proclaimed that Athens should be a permanent location for the games due to Greece being the birthplace of the ancient Olympics. However, it was ultimately decided that the games would rotate among major cities worldwide, showcasing global cultures and spreading the spirit of the Olympics to new communities. This traveling Olympics model began with the 1900 Paris Games and has continued to this day, with the summer Olympics having been hosted in 23 cities and 20 countries.
It was really only four decades before the Olympics began to feel the effects of significant technological, financial, and social changes. The 1936 Berlin Olympics (yes, the same one with Jesse Owens and Adolph Hitler) were the first to be broadcast on television, and two decades later, the 1960 Rome Olympics were the first to be broadcast live globally.
Travel times significantly declined over the last century as well. Transatlantic travel in the early 1900s was around 5 days by steamship. By 1950, this was down to 15 hours by plane, and today it is around half of that by jet airliner.
And as interest (and money) in sports grew globally, so too did the number of events that would be featured in the games. From 43 events in the first modern Olympics, the 2020 Tokyo Olympics featured 339 events across 33 sports.
The Business Case for a Permanent Olympics Location
Such changes had a significant impact on the games and made the need to rotate the host location less important. Widespread digital adoption and the ability to broadcast the games globally meant that new audiences could be reached without moving the games around. Faster means of travel also meant that it was easier for spectators from around the globe to travel to the site of the games.
These changes also had the effect of constraining who could participate in the games. Increasing the number of sports has limited prospective host cities to those with the facilities and infrastructure to support the wide range of activities. Widespread interest in sports has also driven up ticket prices and excluded local communities from participating in the events.
It’s clear that what was once an innovative model to expand the games to new communities has become outdated and unstable.
It’s time for the IOC to create a permanent Olympics location. For one, a permanent location would significantly enhance the product of the games. State-of-the-art broadcasting facilities would ensure high-quality coverage of the events and remove variation that comes from rotating to new locations. Earlier this month, COPA America, the international soccer tournament for South American teams, was played in U.S. football arenas. Because the venues were not used to this type of event, fans were left with a comedically high and disorienting camera view.
Another advantage of a permanent site is in how it would allow the IOC to innovate and experiment with new games. Multi-purpose arenas, modular stadiums, and adaptable facilities can be constructed and reconstructed to host new sports as they are introduced. In the 2022 Qatar World Cup, Stadium 974 was constructed using shipping containers and other modular building blocks. It design allows it to be modified for other sporting events, like Rugby and Volleyball.
Hosting the Olympics in a single, permanent location would also significantly reduce the cost of the games for the IOC and provide much more predictability in budgeting and financial planning. In Formula 1, certain races like the Monaco Grand Prix have become permanent fixtures on the calendar, leading the organizers to benefit from long-term investments in infrastructure that result in more stable financials.
Finally, a permanent Olympic site would reduce the safety exposure of the event. Substantial investments can be made in state-of-the-art security infrastructure for both the IOC and the host city. Long-term consistency in safety protocols can further ensure safety for athletes, spectators, and staff. During this year’s COPA America, temporary and hastily implemented measures at Hard Rock Stadium in Miami created a security nightmare with fans breaking through protective barriers and past stadium personnel.
The Societal Case for a Permanent Olympics Location
Not only does a permanent site make sense from the IOC’s business perspective, but it also does from a societal perspective. The environmental toll of constructing and deconstructing Olympic facilities every four years is significant. The 2014 Winter Olympics in Sochi, Russia were notoriously harmful for deforestation and habitat disruption.
A permanent site would also provide continuous economic benefits to the host city and region. Instead of short-term economic booms followed by questionable impacts, a permanent location would generate stable employment opportunities, tourism, and investment.
Also consider how a permanent home can promote accessibility and affordability for spectators. By creating and maintaining the Olympic infrastructure, the IOC can ensure that the events are accessible to all, regardless of disability. And by centralizing the planning and logistics, the IOC can actively manage ticket pricing and accommodation options to ensure broad access to spectators.
So where should the games should be hosted?
Athens, Greece is the optimal location. For one, Athens is the birthplace of the Olympics, a historically significant location for hosting the event.
Located at the crossroads of Europe, Asia, and Africa, Athens is also geographically central and accessible to the global community. It is one of a handful of countries that can be reached from any continent with an average flight time of under 20 hours.
Athens geographically boasts a diverse natural terrain for the wide (and growing) array of Olympic sports. It has coastal areas ideal for sailing and swimming, mountainous regions suitable for cycling and athletics, and expansive flatlands perfect for equestrian events and other outdoor sports. The city already has an Olympic Complex from the 2004 games which can be quickly revitalized. And the climate of the country is benign and favorable for the outdoor events.
As a country, Greece relies heavily on tourism already and has the infrastructure to handle the surge in demand for labor and services during the Olympics. Greece has maintained a stable political environment after the 2008 debt crisis, which is crucial for the lasting continuation of the games.
A permanent Olympic site, particularly in a historically significant location like Athens, also reinforces the Olympic ideals of peace, unity, and global cooperation. Amidst a turbulent and uncertain geopolitical environment, the importance of these values cannot be understated.