The Paris Olympics is turning into a financial disaster: Time for a change?
A permanent Olympic site? Not so fast.
The Olympic torch isn't lit yet but already it's being reported that Paris is taking a financial beating. It's missing income projections and predicting an overall loss once the Games leave town despite having already sold the most tickets ever for an Olympic staging. Hotel and airline bookings are down; officials speculate tourists are staying away thinking that the popular destination will be overcrowded and overpriced. Air France is expecting a loss of almost $197 million for the quarter.
According to The Telegraph:
"…hotel bookings are disappointing. There are some peak days around the opening ceremony, but over the entire Olympics period occupancy is now below the 81.4pc level the city saw in July 2023, according to a report from Insee, France’s official statistics agency. Prices are steadily falling as well, with the expectations of the sky-high cost of a room fading as the event approaches, and rates steadily falling to fill empty ones. In plain language, Paris’s hotels are having a worse summer than usual."
But any tourist who does show up in Paris, whether for the Games or not, will be faced with much higher prices for just about everything. Compared to just a year ago, hotels and Airbnb's are both up over 50%, public transport more than 90%, and museum entry is up over 30%. Paris always was an expensive destination, during the Games it's doubling down.
The cost for staging the Games is estimated to be somewhere around $7.6 billion. Good sense says that if you're going to spend that much money then there has to be a reason, a return on investment, if you will. Personally, I have a hard time understanding what that return would be, certainly nothing in hard terms. Maybe in softer terms like raising the city's profile, or economic stimulus? But Paris is already the most visited city in the world. Does it really need the Olympic Games to raise its profile?
Economic stimulus has always been one reason for spending public money on expensive infrastructure or spectacular events. And hosting used to be something cities wanted to do, even though the economic model is based on a persistent myth. Sort of like the, "If you build it, they will come" reasoning that's used in U.S. cities everytime a new stadium is pitched. They build it, but nobody really comes. The claims of local economic stimulus have been debunked repeatedly, but they are still made anytime a professional team needs a new home.
Economic stimulus is also part of every modern Olympic bid, but the process itself has entered troubled waters. The number of bidders is shrinking. Each staging might start out with a small list of cities who want into the 'Olympic family' as it's often called, but potential hosts eventually drop out due to rising costs or political pressure at home. Cities that are awarded the Games will sooner or later find themselves at the bottom of an avalanche of fiduciary abuse.
On a smaller scale, the 2026 Commonwealth Games is still without a host after Victoria backed out in 2023. The Australian city claimed it was becoming too expensive after projected costs passed the $4.6 billion mark. A new host has not yet been named with less than two years to go.
Other multi-sport fixtures like the Asian and Pan American Games used to have a number of enthusiastic bidders. Hosting now though is beginning to feel more and more like an obligation felt by some of the stronger economies.
The SEA Games is a good example of this. Of the 11 countries that compete in the Southeast Asian Games some decline their 'turn' in the rotation either because of lack of infrastructure or because of a struggling economy. Hosting now tends to fall to countries that already have most of the facilities in place and whose economy can sustain a major expenditure.
Is it time for a permanent site?
Rising cost and public displeasure strengthen the idea that a permanent site for the Games should be chosen. Greece is usually suggested as the place for this; instead of all the galavanting around the world, why not just base the Games in their ancient home? Facilities could be built, maintained, and refurbished or replaced as needed. The local economy could structure itself around the quadrennial event, and the area could use the Olympic site as a draw for other kinds of development. In a perfect world this could all work to reduce cost and provide a permanent host site.
Is this really a good idea though?
What about the impact on attendance with a permanent site? Would spectators make the trek to Greece more than once? How many times does one visit Greece, or wherever, in their lifetime? A permanent site would shift the motivation of spectators from attending a spectacle that features sport competition to one featuring competition alone. How long could this be sustained? The Olympics is not just about the sports. Without the Olympic razzmatazz the Games would be just another sporting event. Popular? Sure, but not the same thing.
A permanent site would also change the way the Games are currently funded. One of the stipulations in the Games contract is that the IOC does not pay for anything related to hosting the event; the cost falls on the organizing committee, which, depending on the country, can mean local, national, or private funding. LA28, the organizing committee for the upcoming Los Angeles Games, is shooting for a privately funded event. History will show if they're able to pull this off, but to give an idea of the scope of the job, LA28 Chair, Casey Wasserman, said this in a recent interview:
“We have these funny stats that we like to talk about, the operational equivalent of seven Super Bowls a day for 30 days. I like to tell people, because our sport program is 36 sports, so we will have essentially what is 72 world championships – men’s and women’s – in 17 days."
Would Greece be interested in hosting all the time? Part of the Olympic allure is the globe trotting nature of the event, and a permanent site would be a permanent site. The commercial and tourism aspects of a permanent host would eventually grow thin and it wouldn't be too long before the Olympics became a poorly attended sporting event.
It's unlikely that the IOC will find itself in the same predicament as the Commonwealth Games Federation anytime soon. Brisbane was chosen as the host for 2032 and India is entertaining a bid for 2036. But the number of potential hosts is beginning to dwindle and cost, security, and disruption are the main reasons cities are shying away.
But a permanent site is farfetched. Strip away the notion that the Games are just about the sport and the novelty and spectacle surrounding the event become obvious. The circus is in town for a few weeks and with it comes the whole world. Whether you're involved or not it adds a certain amount of excitement to the daily mix of life in the host city. With a permanent site this would disappear, it would just be about the sport and global interest would soon collapse.
The Games are big, perhaps too big in terms of both money and infrastructure. It's economic fantasy though to think the Olympic Games will make money or break even. There will be fewer and fewer takers for the challenge as the economic myth behind the Games evaporates.