On the occasion of the start of the 2024 Olympic Games in Paris, the Boston Consulting Group (BCG) has presented seven golden rules for successfully hosting the Olympic Games, which take into account the economic and social impact, as well as the experiences and heroic efforts of host countries in the preparation and organization of the Games.
In recent decades, the high costs of bidding for and organizing the Olympic Games have attracted significant public attention, prompting Paris to adopt a sustainable budget and organization model for the 2024 Olympic Games.
BCG experts analyzed previous Olympic Games to identify rules for successful hosting.
Set realistic expectations. The primary and most common argument for hosting the Olympic Games is the expected economic impact, which arises from the investments needed for preparations and the growth of tourism during and after the event. The Summer Games typically result in an increase in GDP per capita of 3-4 percent.
However, it is crucial to set public expectations in line with the local economic situation, using objective principles of cost-benefit analysis. Potential employment growth depends on the characteristics of the economy: if there is near full employment, the country will likely need to import labor. If temporary foreign workers are involved in infrastructure construction, as seen during the preparations for the London 2012 Olympic Games, their earnings may not benefit the local economy.
However, where there is a surplus of labor, unemployment rates are likely to fall, as was the case in Barcelona, where the unemployment rate dropped from 18.4 percent to 9.6 percent in the years leading up to the 1992 Olympic Games.
Expect cost overruns and manage dynamically. Cost overruns are common at the Olympic Games: in the last 20 years, budget overruns have ranged from 50 to 350 percent. This is due to the fixed date of the event, which puts pressure on the budget and increases prices, as well as the long implementation period, which increases the likelihood of unexpected events. For example, the 2016 Olympic Games in Rio de Janeiro faced a cost overrun of 350 percent due to the political and economic crisis in Brazil, while the 2020 Olympic Games in Tokyo recorded a cost increase of 130 percent due to the COVID-19 pandemic.
To mitigate such risks, the organization of the London 2012 Games doubled its initial budget and strictly controlled costs, demonstrating the importance of realistic planning and dynamic project management.
Involve the private sector. Hosting the Olympic Games is a significant undertaking not only financially but also logistically. Over-reliance on government participation can pose a significant risk, which is why organizers are increasingly involving the private sector in financing and preparing the Games. For example, the 2024 Olympic Games in Paris heavily rely on private investments, with major corporations like Icade, Nexity, and Eiffage investing 13 billion euros to build the Olympic Village. This approach ensures risk sharing and brings innovative solutions.
The absence of the private sector in earlier Olympic Games has often been nearly disastrous. For instance, the 1976 Olympic Games in Montreal ended with enormous debts for the host city. In contrast, the 2020 Olympic Games in Tokyo utilized partnerships with tech giants like Alibaba and Intel, improving operational efficiency with the help of cloud technologies and 5G networks.
Use what you have and what you build in a creative way. The public and organizers often worry about whether sports facilities will continue to be used after the Games. Economic sustainability increases if most facilities are pre-existing or can be repurposed for other uses after the Olympic Games. For example, the 1992 Olympic Games in Barcelona transformed entire neighborhoods, while the 2028 Olympic Games in Los Angeles are planned to exclusively use existing facilities.
