The Economics and Marketing of the Olympic Games from Bid Phase to Aftermath

Abstract

In all phases of a city’s planning for obtaining and conducting the Olympics, economic considerations are of paramount importance. During the bid phase before the Games have been awarded, organisers in each bid city tend often to wildly underestimate costs and overestimate potential benefits in order to generate and maintain public support. At the same time, bids submitted to the International Olympic Committee (IOC) have to be sufficiently robust to convince IOC members that the projected costs are sufficient to carry out the Games preparations and operations. During the preparation phase, successful cities have to juggle inevitably rising costs and negative public perceptions of the same. Some of the costs are the consequence of predicted changes in labour or materials combined with unexpected movements in market forces. Not least, the original low-ball cost estimates become particularly problematic during this period as it becomes apparent to even the corporate media that the projections are seriously out of synch with reality. It is during this phase that the economic realities of hosting the Olympic Games become clearest to the public that will actually pay the bulk of the costs. These include not only the cost ‘creep’ where the public is bombarded with a virtually endless litany of additional costs, but also the growing realisation that so-called opportunity costs will be part of the final tally. Finally, during the run-up to the Games, the actual operating phases, and the post-Games euphoria, public perceptions will have largely shifted away from economic concerns: Games supporters now bask in the afterglow irrespective of the total costs while critics are burned out and cynical.