The Economic Effects of the Olympics free essay sample

The Olympic Games is a sporting event that attracts worldwide attention. People travel from different parts of the world to participate in the Games, or to watch and support. Countries that are hosting the Games have to prepare to welcome this great number of visitors. They also have to set up all the equipments that would be needed. Hosting the Olympics is an expensive project, and it always leaves an effect on the host country. These effects may or may not be associated to the Games, and there are positive and negative effects. The area most affected by the event is the economics of the hosting country, as well as that of participating countries. The government and environment are other strongly affected areas. Determining whether the effects are advantageous or disadvantageous depends on the perspective of the viewer. Throughout the history of the Olympics, each hosting country has experienced a different effect. We will write a custom essay sample on The Economic Effects of the Olympics or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Regardless of some disasters linked to hosting the Games, countries still continue to desire to be hosts. Hosting the Olympics, in other words, is throwing the world’s largest party—and paying for it. As amusing as this may sound on the surface, financially, it does not sound especially attractive. However, there are different reasons to why a country would want to host the Olympics. Nowadays hosting the Games is like a business investment. It is a country’s way of putting itself â€Å"out there. † Some cities use the Olympics as a way to push through fast new infrastructure projects, such as airports and subways. It is an opportunity for them to be lifted from a backwards state of economy into â€Å"a new city of the future. † Barcelona in 1992 is an example of a city that was able to successfully take advantage of this event. For most political leaders, hosting the Olympics is about creating a legacy that will be remembered for generations. For others it is a way to promote transportation systems, decrease the rate of unemployment in their country, and lead economic trends. The Beijing games were intended to show off China’s spending and organisational power. On the other hand, the London Games was a means of bringing to life a poor part of the capital, East London, speedily. Tokyo hopes to boost Japans economy in the 2020 games. Whatever a country’s reasons may be, they have to give a lot in order to get. The government of the host countries invests in the Games expecting to â€Å"make money back. † However, not all the funds come from the country’s government. The International Olympic Committee (IOC) contributes funds to the hosting country. The primary source of revenue comes from the biddings. IOC sets up distribution of tickets, and most importantly, they take bids on where the Games will be hosted. There are other organizations such as NBC who help fund. In 2008, they paid $2. 2 billion for the distribution of the water games of 2010 in Vancouver, and to the Summer Games of 2012 in London. When they fund, they expect to make their money back—and they do, all the time. Another way the games are funded is through donations. Those in high class who are passionate about a certain sport might choose to provide the facilities needed for the game. Money from advertisers also contributes to help fund the games. When a country hosts the Olympic Games, there is always loss is one area, and gain in another. Some of the effects are immediate and ephemeral, while others come gradually, but last longer. Something might be an advantage to a group and a disadvantage to another group at the same time. The effects cannot be strictly classified as positive or negative. The Olympics is a powerful marketing tool. It creates a lot of business opportunities. The brand name â€Å"Olympic Games† attracts outward and inward investors. The Logo is used for souvenirs, sports equipments, clothing, and other creative things. Media exposure promotes the city as somewhere suitable for world class sport event, conventions and leisure travel. Spectators, visitors, sponsors, broadcasters, Olympic families, athletes and officials who come into the country boost the tourism business. There are new job opportunities in hotels, malls, restaurants, and entertainment areas. The country receives direct income from selling tickets. Through building the â€Å"Olympic Village,† and other locations, there is a boost in the construction department because new construction projects are created. The infrastructure of the country upgrades, and the facilities and constructions promote the city as world class. Also by having those facilities in place, the country has a greater chance of hosting other world-class sporting events. In addition, the Olympics generates national and international recognition for the country that is hosting. It creates a more competitive economic attitude, which has long-term positive effects. There is relatively permanent increase in trade. According to Rose and Mark Spiegel (Vice President at the Federal Reserve Bank of San Francisco), there is about thirty percent increase in hosting countries. However, Spiegel mentioned that there is also remarkable progress seen in countries with â€Å"unsuccessful† bids. The Games promotes the host country’s image as a whole. As long as the city was a successful host, its reputation increases, and this is a long-term advantage. The stock market loves the Olympics. It benefits most from the hidden profits in the world’s most celebrated sporting events. Host countries receive exposure, and therefore their markets profit from that. The events create a lot of opportunities, and some of these opportunities even have no connection to the Olympics. Host countries generally experience rise on their markets similar to the performance of American markets. There are exceptions though, for example the 2000 Games in Sydney, Australia, and the Beijing Games of 2008. Stock markets react favourably to Summer Olympic Games because it lasts longer and is bigger than the Winter Games. The negative effects in hosting the Olympic Games are mostly seen in the budgets. The host country spends large sums of money, and usually the event costs more that it returns directly. The bidding process alone can overweigh the costs. The gain seen in one sector is in the expense of another. Resources are spent on equipping high class facilities, and on greening the country. Although this might be advantageous in upgrading the country, the accelerated development often disrupts long-term city planning. Tourism might help offset the costs, but this is not guaranteed. To some, hosting the Olympics is financial recklessness because countries spend hundreds of millions of dollars on sports venues; money that could be used on much-needed infrastructure. To support their agreement, many of the venues are useless after the Games. It is true that former Olympic cites become popular and world-centred, however they start collecting dust once the games are over. China’s Eagle Nest is memorable, and a place for tourism, but mostly it is an enormous structure that China does not know what to do with. Athens’s Olympic Park is not like a ghost town. Some of Greece’s costly stadiums now look run-down, and have few visitors. Los Angeles is one developed host city that did not spend too much on infrastructure because they used some already existing venues. Unlike some host cities, London has a plan to transform its Olympic Village into apartments. Hosting the Olympics can attract negative attention. Some countries have had to deal with people coming into the country illegally. Because there are so many guests coming in at the same time, it is hard to control what and who comes in and out. Security is also an issue. Usually security is tight where the games are centred. However, this security is sometimes provided while other places are deprived of it. Controlling illegal drinking, drugs, fight, and youth wildness are problems the host country has to deal with too. In some host countries, there have been protests against the government for its â€Å"waste. † Politicians can be left looking ridiculous. The 1968 Olympics in Mexico is much remembered for the mass of students who protested against the government ten days before the Games. This was a problem because in the seven years between the bidding and the event, the Politicians who led the bidding were no longer in power. The Olympics is a high-risk game. So, when a leader decides to bid to be host, following leaders will have to follow through and deal with whatever problem arises. Someone else will have to take the credit—or the blame. Participating countries have to pay their athletes. They also have to transport them and supporters, but that is not enough to put a dent in their economy. Every year the media tells us what athlete to fall in love with. A participating country can be positively affected if it is well represented by its athletes. If a country is constantly receiving medals, it stands out and attention is drawn to it. When a country is getting positive attention, its economy is sure to benefit from it in some way. In conclusion, it is not easy to throw the world’s largest party. It has significant lasting effects it has on the host country or city. The government of different hosting countries have reasons to why they want to host. They fund the Games expecting a return to their city. Exposure and media attention benefits both host countries and participating countries. For this reason, I think that the next Games should be hosted in a less developed country, such as Cameroon (or any country with the same level of development). The world knows that Cameroon is not able to fund the Games on its own, so IOC should support them. Ideally, this would be a better way to use resources for much-needed infrastructure. On the other hand, it would also be a good idea to host the event where it has already been done before. That way, the facilities can be used again. It would be better than having lots of useless game cites all over the world.