Organizing the Olympics has always been considered a great prestige: a city and a country at the center of the world for over two weeks, in front of millions, if not billions, of spectators and with global media coverage. But when you dig beneath the surface of the spectacle and ceremonies, a much more complex reality emerges: the Olympic Games are among the riskiest and most expensive projects a city or state can undertake. In recent decades, many academic studies have tried to analyze the tangible and intangible economic costs and benefits of the “Olympic dream”, and what emerges is a recurring pattern that has occurred in almost all cases over the last 50 years.
The first element that clearly emerges from the most robust analyzes is that the Olympics are the only type of large project that always exceeds, by a lot, the initial budget foreseen at the assignment stage. There is talk of a budget overrun of around 200% for the summer Olympics, and 130% for the winter ones. In all cases, from 1960 to today, the initial budget has not been respected. In technical terms, Olympic costs follow a type pattern “regression to the tail”similar to that of large catastrophes such as earthquakes or pandemics: this means that one edition of the Olympics can go over the budget by a lot, and unpredictably much more than others.
There are several structural reasons why the Olympics are so difficult to manage economically. First, starting estimates are often built on optimistic or underestimated numbers to increase the chances of winning the application. In the language of research it is defined “Blank Check Syndrome”: the budget is never a real limit, but rather a minimum promise that inevitably ends up being exceeded. Secondly, the Olympics have a fixed opening date: they cannot be moved. The IOC negotiates the program and supports the organization of the event but does not contribute financially to most of the real costs, such as those related to infrastructure, leaving the burden to the public coffers of the host country. This makes it impossible to reduce spending when costs tend to increase, and impossible to delay work to try to contain costs.
Then there are huge costs that are almost never considered initially or not included in official calculations, such as costs related to debt and accumulated interest or maintenance of works. We are talking about often enormous figures which make the real expenditure much higher than the declared one.
Historical cases between economics lessons and legacy
The most cited example of how Not the Games should be organized is that of the 1976 Montreal Summer Olympics. The final cost was 720% higher than the initial estimates, with a debt paid by public finances for decades. Citizens still remember the famous phrase of Mayor Jean Drapeau: “It is more likely that a man will give birth…”, referring, during the awarding phase, to the probability that the Olympics would cause a debt for the city. The result was a huge debt and an incomplete stadium for the inauguration, renamed from “The Big O”, due to its circular shape, to “The Big Owe”, i.e. “the great debt”.
A few years after the Canadian economic tragedy, which put the International Olympic Committee in serious crisis and led very few cities to apply to host subsequent Games, one of the most virtuous cases on an economic level arrived: that of Los Angeles 1984. Few new investments, massive use of existing facilities and a private financing model, without affecting public finances, which led the Games to close with a real profit of around 200 million dollars. The Californian city was already equipped with sports, hotel and transportation infrastructure, and adopted a very conservative approach that was difficult to replicate.
The 1992 Barcelona Olympics once again increased organizational costs, but are often cited as an example of a positive legacy: the urban transformation of the beachfront and the modernization of infrastructure led to a long-term tourism boost, which led the Spanish city to become one of the most visited tourist destinations in Europe.
Then there are cases in which the Olympics have been exploited by the host country as a tool for propaganda and power rather than as an event with a measurable economic return, without worrying about the huge expenses for the public coffers. The most famous and recent cases are those of Beijing, with the 2008 Summer and 2022 Winter Olympics, and of Sochi, in Russia, with the 2014 Winter Games. In these cases the real figures are complicated to obtain, but the estimates speak of 51 billion dollars for Sochi 2014 and 45 billion of Chinese investments for Beijing 2008, figures that are out of reach for any country that then has to account to its electorate of these investments.
Milano Cortina 2026: virtuous case or economic disaster?
When Italy was awarded the 2026 Winter Games in 2019, the global context was very different from the current one. There was not yet the Covid pandemic, the wars in Ukraine and the Middle East, the energy crisis, record inflation and rising interest rates. Just by considering these factors, it is easy to understand how the initial budget presented during the assignment phase is almost impossible to respect.
The “Milan Cortina project” was born under the sign of sobriety: use of existing systems, strong territorial distribution, few new permanent buildings. But precisely this geographical fragmentation also entails logistical complexities, high coordination costs and questions about the real future use of the infrastructures. We therefore find ourselves at a crucial test: if it manages to contain costs and leave a sustainable legacy, the Italian Olympics could become a model. Otherwise, it will further strengthen skepticism towards major sporting events.
What tangible benefits really exist?
The scientific literature agrees on some potential benefits, but under very precise conditions: regarding long-term infrastructure, investments in transport, airports and public services can leave a useful legacy if designed before the Olympic commitment and not just for the Games. This is a subtle but fundamental difference compared to building ad hoc sports facilities.
Then there is the global visibility that cities can obtain by improving their international perception, but the effect is not automatic and is difficult to calculate in the long term, as well as being influenced by many external factors. Apart from the more unique example of Barcelona, London did not obtain major benefits from the 2012 Games, as it is already a widely established tourist destination on a global level. In 2006, it was not easy for Turin to present itself as a tourist destination for visitors from abroad, in a country like Italy which offers many opportunities. In 1994 the small Norwegian city of Lillehammer, which hosted the Winter Games, was unable to derive major benefits in the long term, as it was a municipality with less than 30 thousand inhabitants.
Is it worth hosting the Olympics?
Despite the latest reforms wanted by the IOC such as the current “Agenda 2020+5” to reduce costs and encourage the use of existing structures, the trend towards increasing costs for organizing the Games does not yet seem willing to stop. Tangible benefits such as the creation of new infrastructure and tourism growth exist, but they rarely manage to match or exceed the initial investment, mainly due to systematic overruns of the initial budget.
From a purely economic point of view, therefore, in almost all cases it is not worth hosting the Olympics. What organizers often cling to to justify huge public investments are the intangible benefits, such as the perception of the country abroad, the national pride in hosting such an important event, the urban transformation of the places that host the Olympic events. However, these benefits are not always guaranteed and are complicated to quantify. Milano Cortina 2026 must be evaluated in this historical context of risk, considering the cost overruns (to date still unforeseeable) and the difficulties in predicting real benefits, considering a long-term vision of the urban, economic and social legacies of the many cities involved in the great event.
