Surprising Economic Boost: The Impact of Hosting Gigantic Sports Events

June 18, 2024

For host countries, sports events represent an enticing opportunity.
The promise of increased visitor influx, infrastructure investments, and heightened global visibility is certainly captivating.
The demand for goods and services and job opportunities grow, while hotels, restaurants, transportation, and retail experience a prosperous period, and sponsorships and television rights generate income.
However, the reality is often more complex.
What is the real economic impact of these major sports events?

The Lesson of Athens 2004

The Athens 2004 Olympics quickly turned from a fairytale into failure, making them the most emblematic example.

The lavish event cost more than the budgeted 15 billion euros, roughly 4% of the national income.

Authorities allocated 1.2 billion euros for security alone for the first post-9/11 Olympics; additionally, they built new stadiums, airports, and metro lines.

Greece’s deficit in 2004 reached 6.1%, double the European limit, and debt soared to a record 110.6% for the Eurozone at the time.

The British newspaper Daily Mail reported that officials abandoned 21 of the 22 newly built Olympic sites just three weeks after the Games ended.

Today, neglect has left the Olympic village, the most significant project with a 240 million euro investment, to decay.

Athens 2004 marked the beginning of the end for Greece’s finances, a financial black hole from which it would never recover, culminating in the 2009 default.

The Example of London 2012

Many of the venues used for the 2012 London Olympics already existed, such as Wimbledon, the O2 Arena, and Wembley.

Others were adapted from modified city areas, like Hyde Park and Horse Guards Parade, while others were built with a long-term usage plan, such as the London Stadium, now the national athletics stadium and home of West Ham United.

As stated by then-Mayor Ken Livingstone, the goal of the 9 billion pound investment was to unlock the government funds necessary for transforming the East End area.

Organizers held the event not for the Games themselves but to achieve a future outcome for the city and its population.

Thanks also to the support of local federations in promoting sports disciplines, a result of the great British sports tradition, the goal was almost entirely achieved.

The redevelopment of Stratford, the heart of the Olympic project, gave back to London a largely renewed but heavily privatized part of the city.

Present and Future of Sports Events

Germany, host of the 2024 European Football Championship, has placed a strong emphasis on sustainability and social inclusion.

The involved cities have invested both in long-term infrastructure and in renovating existing stadiums, taking a significant step towards a more sustainable event model.

Calculations by the Ifo Institute, Germany’s leading economic research center, indicate that 600,000 tourists and 1.5 million additional overnight stays are expected during the event compared to the 2006 World Cup.

The European Championship will generate 1 billion euros for Germany, about 0.1% of GDP in the second quarter of the year.

Similarly, Los Angeles is preparing for the 2028 Olympics with a strategy aimed at maximizing economic benefits and minimizing risks.

The Californian city has also chosen to rely on existing infrastructure and limit the construction of new facilities, reducing costs and the likelihood of ending up with unused structures after the event.

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