Why no one wants to host the Olympics

In September 2017, the International Olympic Committee (IOC) awarded the 2024 and 2028 Olympic Games to Paris and Los Angeles, respectively, due to dwindling interest from cities to host the event. Historically, hosting the Olympics was seen as a prestigious opportunity, but escalating costs, political risks, and unmet promises of long-term benefits have made cities wary. The 1984 Los Angeles Games, which were financially successful by using existing venues, inspired later cities to bid, but also led to unsustainable spending. The IOC has since implemented reforms to reduce costs, and there's growing discussion about establishing a permanent host city to mitigate financial and environmental impacts.

• Historical Context and Recent Trends:
  • In the past, there was a high demand from cities to host the Olympics.
  • For the 2004 Olympics, 12 cities applied; for 2008, 10 cities applied.
  • Interest has significantly waned over the years: 9 cities applied for 2012, 7 for 2016, and only 2 for 2024.
  • The International Olympic Committee (IOC) took unprecedented steps by awarding the 2024 games to Paris and the 2028 games to Los Angeles simultaneously.

"The IOC was so concerned that nobody would bid to host the games in 2028, that it simultaneously awarded the games 2024 to Paris and 2028 to Los Angeles."

• The IOC's decision highlights the declining interest in hosting the Olympics, prompting them to secure future hosts preemptively.

• Political and Security Risks:
  • Past Olympics have faced significant political and security challenges.
  • The 1968 Mexico City Olympics saw violent local political protests.
  • The 1972 Munich Olympics were marred by a terrorist attack that killed 11 Israeli athletes.

"Local political protests had turned violent during the 1968 games in Mexico City, and terrorists killed 11 Israeli athletes at the '72 Munich Games."

• These events demonstrated the potential dangers and political risks associated with hosting the Olympics, deterring future bids.

• Financial Risks:

  • Financial mismanagement and corruption have led to massive budget overruns in past Olympics.
  • The 1976 Montreal Olympics spent over 13 times their budget due to construction problems and corruption.

"When construction problems and corruption led Montreal to spend more than 13 times their budget, they began to view it as financially risky too."

• The financial debacle of the Montreal Olympics served as a cautionary tale for other cities, highlighting the economic risks.

• Cost-Effective Hosting:
  • Faced with no bidders for the 1984 Olympics, Los Angeles offered to host under the condition of minimal spending.
  • LA utilized existing venues like the LA Coliseum, the Forum, and UCLA facilities, avoiding the need for new construction.
  • Athletes were housed in college dormitories to save costs.

"Los Angeles did not want to spend a lot of money. To do that, it offered to use venues it already had instead of build new ones."

• This approach allowed LA to host the Olympics without the financial burden typically associated with the event.

• Success of the 1984 Games:

  • The 1984 LA Olympics were successful both operationally and financially.
  • This success demonstrated that a cost-effective model for hosting the Olympics was feasible.

"The '84 LA games were a success in almost every way, but especially financially."

• The financial success of the LA Olympics provided a new model for future hosts, emphasizing the use of existing infrastructure and cost control.

• Shift in Hosting Strategy:
  • The declining interest in hosting the Olympics has led to a shift in how cities approach their bids.
  • Future hosts are likely to adopt more cost-effective and risk-averse strategies, similar to the model used by Los Angeles in 1984.

"The Olympics are the most prestigious sports event in the world. Why doesn't anyone wanna host it anymore?"

• This question encapsulates the central dilemma faced by the IOC and potential host cities, driven by the historical challenges and evolving strategies discussed.

• 1984 LA Olympics as a Model:
  • LA hosted the 1984 Olympics for around $1 billion (2015 dollars).
  • LA made a profit from the games.
  • This should have been the model for future host cities.

"LA did such a good job hosting the 1984 Olympics that it reinspired cities to want to host again."

• LA's successful hosting led to more cities wanting to host the Olympics.

• Increasing Bids and IOC Leverage:

  • The number of cities bidding increased from 6 in 1992 and 1996, to 11 in 2004.
  • The IOC gained more leverage over bidding cities.

"For the 1992 games, six cities submitted bids, then six again for '96, eight for 2000, then a whopping 11 for 2004."

• As more cities competed, the IOC began demanding more from the host cities.

• Addition of New Sports:
  • Between 1992 and 2020, the IOC added dozens of new sports.
  • This required more venues and housing for athletes.

"Between 1992 and 2020, the IOC added dozens of new sports to the games. This required more venues and housing for more athletes, which host cities were primarily responsible for paying for."

• The addition of new sports increased the financial burden on host cities.

• Pressure to Build New Venues:

  • Cities felt pressure to make their bids more attractive by building new venues.
  • Sydney, Athens, and Beijing built numerous new venues and housing for athletes.

"As the competition intensified, cities felt increasing pressure to make their bids more attractive, the most effective way to do that was to build new venues. Sydney built 15 new venues plus housing for 10,000 athletes. Athens built 22 new venues, and Beijing built 12."

• The construction of new venues significantly increased the cost of hosting the Olympics.

• Skyrocketing Costs:
  • The cost of hosting the Olympics increased dramatically over the last 30 years.
  • Recent games have cost between $10 and $25 billion.

"This chart shows how the cost of the games skyrocketed over the last 30 years, reaching between 10 and $25 billion in the last decade."

• Hosting the Olympics has become extremely expensive.

• Hidden Costs:

  • The reported costs often do not include expenses for public transportation or development projects.
  • Actual costs can be much higher than reported.

"I wanna add one big caveat to this chart though, it only includes sports-related costs to the games. It doesn't include things like new public transportation or development projects that most all these cities spent money on for the Olympics."

• The real financial burden on host cities is often underestimated.

• Examples of Cost Overruns:

  • Beijing's 2008 Summer Games cost around $45 billion.
  • Russia's 2014 Winter Games cost around $51 billion.
  • Tokyo's 2020 Summer Games cost around $35 billion.

"If we include some of those costs, these bars are actually way higher. So for example, some estimate that Beijing spend more like 45 billion for their 2008 Summer Games. Russia spent more like 51 in 2014, and Tokyo's bill is more like 35 billion."

• These examples illustrate how cities often go way over their initial budgets.

• Incentives to Underestimate Costs:

  • The bidding process incentivizes cities to keep their initial cost estimates artificially low.

"No matter what number you use though, all of these cities went way over their initial budget, which the bidding process incentivizes them to keep artificially low."

• Cities are encouraged to underestimate costs to win the bid, leading to significant financial overruns.

• Revenue vs. Costs: The revenue from ticket sales, TV contracts, and sponsorships only covers a fraction of the costs, leaving taxpayers to shoulder the rest.

  "The revenue cities generate from ticket sales, TV contracts, and sponsorships only cover a fraction of these costs, meaning these governments, and really their taxpayers, are on the hook for the rest."

  • The financial burden primarily falls on taxpayers due to insufficient revenue from direct sources.

• Short-term vs. Long-term Economic Benefits: Host cities often lose money in the short term but are told the investment will pay off in the future.

  "Host cities have known for decades that they'll likely lose money in the short term. Instead, many have been told that hosting the Olympics is an investment that will pay off in the future."

  • There is a promise of future economic benefits despite immediate financial losses.

• IOC's Definition of Legacy: The International Olympic Committee (IOC) promotes the idea of a lasting legacy that benefits the city long after the games.

  "This is the IOC's webpage where they list the benefits of hosting the games, and they use this word legacy a lot. And by legacy, they mean things that will continue to benefit your city long after the Olympics are over."

  • The IOC emphasizes long-term benefits as part of the justification for hosting.

• Examples of Legacy Projects:

  • Sports Facilities: Investment in stadiums with plans for future use by local teams.

    "Beijing justified spending around $460 million on this new 90,000 seat stadium by planning for a local pro soccer team to use it after the Olympics."

    • Infrastructure investments are made with future local use in mind.
  • Infrastructure Improvements: New transportation links such as railways and subways.

    "Russia spent 8.7 billion on a new rail and highway link into Sochi for its Winter Games, and Rio de Janeiro spent 4 billion on a new subway line connecting a beach community to its Olympic center."

    • Large-scale infrastructure projects are undertaken with the aim of long-term utility.

• Tourism: Studies show mixed or negative impacts on tourism after the games.

  "A 2004 study found that after experiencing a bump in tourism leading up to their respective games, Atlanta, Sydney, and Seoul all saw it fall afterwards."

  • Initial tourism boosts often do not sustain post-Games.

  "A 2010 study found little evidence of any benefit to tourism of hosting an Olympic Games and considerable evidence of damage."

  • Long-term tourism benefits are often negligible or even detrimental.

• City Image: Hosting can harm a city's image due to various negative factors.

  "If the weather is particularly too warm or if it's too cold. If there are security incidents, if there are bad stories about the traffic, that some cities are able to maybe help their image, but other cities are hurting their image."

  • Unfavorable conditions or events during the games can damage the city's reputation.

• Misaligned Infrastructure Investments: Investments often do not meet the actual needs of the city.

  "Russia's rail project is now considered an epic failure. And Andrew argues that while Rio's subway line benefits some residents, what the city really needed was a line serving the lower-income neighborhoods inland. But that's not where the Olympics were."

  • Infrastructure projects may not align with the city's most pressing needs.

• IOC Requirements: Cities must adapt to IOC demands, often leading to impractical developments.

  "The typical case was that the IOC comes along. They say, 'We need these 30 venues. We want you to put them in way so the transportation is facilitated and other conveniences are allowed.' And so what the city would have to do is contort itself in order to accommodate the IOC."

  • Host cities often have to make significant and sometimes impractical changes to meet IOC specifications.

• Underutilized Facilities: Many facilities built for the Olympics end up being underutilized, becoming financial burdens.

  "Empty stadiums are a particularly visible sign of this mismatch. That Beijing stadium had about 80,000 more seats than what the local soccer team could fill, so it backed out. Now the stadium sits mostly empty costing the city some $10 million a year to maintain."

  • Large, expensive facilities often do not find sustainable post-Games uses, leading to ongoing maintenance costs without corresponding revenue.

• Definition and Impact:
  • "White elephants" are venues left over from the Olympics that are underutilized or abandoned.
  • Example: 12 out of 27 venues in Rio de Janeiro had not held an event a year after the Olympics.

"These are venues left over from the Athens 2004 games, and ESPN found that 12 out of 27 venues in Rio de Janeiro had not held an event a year after it hosted the Olympics."

• Public Perception:
  • Residents often view these white elephants as evidence that hosting the Olympics is a waste of money.

"For many residents, white elephants are evidence that hosting the games is a waste of money."

• Public Backlash:
  • By 2015, there was significant public opposition to hosting the Olympics, leading to cities withdrawing their bids.
  • Examples: Protests in Boston and Hamburg, a new mayor in Rome shutting down its bid, and a petition in Budapest.

"By 2015, city residents were ready to do something about it. The IOC had six cities bidding for the 2024 games until protests forced Boston and Hamburg to drop out. A new mayor in Rome fulfilled a promise to shut down its bid. Then more than 260,000 people signed a petition that led Budapest to drop out as well."

• IOC's Lack of Leverage:
  • With fewer cities bidding, the IOC had less leverage in negotiations.

"It left the IOC with just two bidders, and once again, little leverage."

• Cost-Reduction Measures:
  • The IOC introduced reforms to reduce the cost of hosting the Olympics.
  • Measures include using existing and temporary venues and allowing partnerships with other cities.

"The IOC has since passed reforms that it says reduce the cost of hosting largely by requiring hosts to use existing and temporary venues, like LA did back in 1984, and allowing them to partner with other cities."

• Current and Future Hosts:
  • Paris and LA are expected to stay on budget for their upcoming Olympics, which could influence future bidding.

"As of now, Paris doesn't look like it'll blow its budget, and LA's Organizing Committee is saying that the city can, again, pull off an on-budget Olympics."

• Change in Bidding Process:
  • The IOC now negotiates privately with cities instead of taking open bids.
  • Examples: Milan and Cortina for the 2026 Winter Games, Brisbane for the 2032 Summer Games.

"The IOC has also stopped taking bids and instead negotiates with cities privately. It picked Milan and Cortina, Italy over Stockholm for the 2026 Winter Games, and it gave Brisbane, Australia the 2032 Summer Games."

• Permanent Hosting Locations:
  • Some suggest establishing a permanent site for the Olympics to avoid white elephants and reduce costs.
  • Greece and LA are potential candidates.

"I think it's perfectly plausible to think about building the Olympic Shangri-La with its 35 or 40 venues for the Summer Games, smaller number for the Winter Games, in one place."

"Some believe Greece, the historical home of the Olympics, would make a good permanent host. Others have mentioned LA since it has so many venues and has done so well in the past."

• Pros and Cons:
  • Pros: Eliminates white elephant projects, saves cities from debt, reduces environmental footprint.
  • Cons: Could reduce the excitement of hosting the Olympics in different cities.

"A permanent spot would eliminate white elephant projects, save cities from going into debt and reduce the games' environmental footprint, but it could also reduce much of the excitement around each new Olympics."

• Future Considerations:
  • The direction of future Olympics may depend on the success of upcoming games.

"Depending on how the next few Olympics go, it might be the only direction left."

• Search Party's Milestone:
  • Celebrating the one-year anniversary of the Search Party with over 380,000 subscribers and 15 videos published.

"All right, thanks everyone so much for watching episode 15. That's also our one year anniversary of Search Party. We have over 380,000 subscribers. We've published 15 videos, a ton of shorts."

• Upcoming Content:
  • Future stories will include another Olympic story, geopolitics, MMA, and sports betting.

"Keep an eye out for our next few stories. We've got a really good pipeline coming. We've got one more Olympic story, and then we're back to geopolitics on a really exciting story that's got a really cool visual hook that I think you guys will like. And then we're doing a story on MMA and then sports betting, so keep an eye out for those."