Why India shouldn't host the Olympics—a costly affair with no returns

The sporting extravaganza is expected to see a wave of athletes, tourists and security personnel descend on the French capital. Parisians, however, are troubled by what the various restrictions will mean for their usual lives, with some polls finding that nearly half the city’s residents are contemplating leaving for the duration of the games.

Preparations for the opening ceremony, to be held on the river Seine, have already required President Emmanuel Macron to step in earlier this year in February to prevent the temporary removal of second-hand booksellers from the banks of the river.

Maybe, these are last-minute issues that crop up ahead of any large event; Tony Estanguet, head of the organising committee and a three-time French gold medalist, has said the “disruptions" will be worth it.

Also Read: Why India must bid for the 2036 Olympics

In October 2023, Prime Minister Narendra Modi formally declared India's interest in organising the 2036 Olympics at the 141st International Olympic Committee (IOC) Session at the Jio World Centre in Mumbai.

But is hosting the Olympics actually worth it?

This is a question the Indian government must answer if it truly wants to play host to the 2036 summer games.

Faster, higher, stronger, costlier

The Olympics are a notoriously expensive event, with the Summer Olympics costing more than $8 billion on average, according to the Oxford Olympics Study 2024.

Putting up mega sporting events is so expensive that the past is littered with host nations’ sufferings: The 1976 Olympics left Montreal with a hole larger than CAD$1.5 billion—a debt it took more than 30 years to repay. More recently, some have argued that Greece’s debt crisis can be partially explained by the 2004 Athens games.

It is no surprise then that some recent event bidders are having second-thoughts. The future of the 2026 Commonwealth Games, for example, is up in the air after the Australian state of Victoria backed out in July 2023 due to rising costs. News from Down Under has also cast doubts over Brisbane’s ability to hold the 2032 Summer Olympics, with the Queensland state government reportedly having discussed in March 2024 the cost of backing out as hosts.

The London, Rio and Tokyo Summer Olympics together cost more than $50 billion in 2022 price terms, the aforementioned University of Oxford paper study said, exceeding the budgeted amount “by 185% in real terms—not including road, rail, airport, hotel and other infrastructure, which often cost more than the games themselves".

Also Read: Mint Explainer: Can India afford the Olympics?

India is no stranger to project cost overruns. At the end of 2023, the 580 'mega' central sector projects (which cost more than ₹1,000 crore) had exceeded their original cost by 25% to ₹25.84 trillion. This might seem impressive compared to the overruns associated with the Olympics.

However, that says more about the games rather than India and likely has to do with the severe underestimation of costs at the time of bidding.

What is perhaps most concerning is that the true cost of hosting the Olympics is never really clear. The Oxford Olympics Study 2016, for instance, found that it could not find reliable data on the initial and final costs for more than a third of Olympic Games held since 1960.

"For some games, hiding costs and cost overruns seems to have been more important, for whatever reason," the study noted.

Funding the games

Credit where it’s due: The IOC has read the room and looked to make the games more sustainable.

The Agenda 2020+5, for instance, notes that the 2024 and 2028 summer games and the 2026 winter Olympics will “truly embrace and reflect this new strategic direction", which includes no new permanent venues, events taking place outside the host city, and the games in general being based “first and foremost on long-term sustainability, including from an economic standpoint" with respect to the candidates to host them.

The Paris games do reflect this, with 95% of the events set to take place in existing or temporary venues. Despite this, the games are set to cost over $9 billion—far higher than initially estimated.

To be sure, the French government is not footing the entire bill. In fact, much of the money for organisation and construction is coming from the private sector. But can this play out in India? Remember, the Indian government is having to needle companies to increase capital expenditure for their own sake; whether it has been successful in doing so depends on who you ask. Whatever the case may be, can the Indian private sector be expected to invest billions of dollars in helping host the Olympics, returns from which may not directly accrue to them?

The economic returns

Whether or not the hosts can recoup the costs of putting up the games, they can always take solace in the long-term benefits. Or can they?

According to a study by the University of Limoges’s Centre de droit et d'économie du sport (CDES), the economic benefit to the Paris region from the games is expected to be in the range of roughly €6.7 billion-11.1 billion over a 17-year period stretching from 2018 to 2034. While this seems fairly impressive, it is important to put numbers in perspective.

At €11.1 billion, the upper-end of this estimate amounts to an annual gain of around €650 million—or a tiny 0.03% of France’s gross domestic product (GDP) in 2023.

Damningly, France’s official statistics agency, the National Institute of Statistics and Economic Studies, said on 17 July 2024 that there is “no consensus…whether the organisation of major sporting events has a positive impact on the host country's economic activity".

India doesn’t need the Olympics

Even if the Olympics cost a lot, require the private sector to more than just chip in, and don’t result in improved growth, surely the new infrastructure will prove beneficial to the country? One only has to look at Rio de Janeiro to see the answer is 'probably not’. 

Held two years after Brazil hosted the FIFA World Cup, the 2016 Olympics were supposed to be a display of the South American nation’s arrival on the world stage. Instead, it left behind a trail of corruption scandals, crumbling stadiums, and exacerbated an economic crisis.

Also Read: Corporates open purses for IOA, athletes ahead of Paris Olympics

For a country such as India, even a multi-city games would require a tremendous amount of new infrastructure to be built. And while new hotel rooms and improved public transport can be a post-games legacy, the post-2010 Commonwealth Games experience has shown that specialist and niche sporting venues are quickly abandoned. As economist Andrew Zimbalist, author of Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup, has previously asked: “Why does a city need to spend $20 billion to reap maybe $2 billion of useful infrastructure?"

The question that really needs to be answered is why India wants to host the Olympic games, because it cannot be for economic reasons.

According to economists Robert A. Baade and Victor A. Matheson, economic considerations are not at the forefront when it comes to bidding to host the Olympics. Instead, the “desire to host the games may be driven by the egos of a country’s leaders or as a demonstration of a country’s political and economic power".

India is currently spending ₹2.4 trillion every year on providing free foodgrain to 800 million of its citizens until the end of 2028. Considering it can take that much money to host the Olympics, it is worth asking if the country really needs such a spectacle.