The 1984 Olympics Marks the Last Time the Games Were Profitable
This year’s Summer Olympic Games are fraught with fear. The coronavirus outbreak is threatening the viability of hosting the event as normal. But even before this pressure to carefully manage sporting events, there is the matter of whether it’s worth it for any city to host the Olympics.
Tokyo won the bid to host the games in 2020. It was a controversial move due to the financial risks associated with hosting the games. Simply put: Cities lose money on the Olympics. They foot the bill for new facilities, promotions, and more, and the host city almost never comes out ahead.
It’s been a long time since a city wrapped the games and came away flush with revenue over it. In fact, it hasn’t happened since 1984.
Why few cities bid on the 1984 Olympics
Entrepreneur, MLB Commissioner, and Los Angeles Olympic Organizing Committee Chairman Peter Ueberroth had one goal. He would get the Olympics to LA by any means necessary. But politicians and constituents alike wanted nothing to do with his plan.
The hand-wringing was over the use of public money. Since the inaugural Olympics in the modern tradition, cities have risked losing huge sums. Then, Berlin’s huge investment as the 1936 hosts sent spending standards sky-high. LA didn’t want to add themselves to that list.
Ueberroth landed on a unique idea. Instead of the city underwriting costs, private investors would take the brunt of it instead. He set the organizing committee to getting support from as many wealthy interested parties as possible.
How the city of Los Angeles managed costs
According to the LA Times, Ueberroth coordinated dozens of separate interested parties toward the singular goal of hosting the Summer Olympics in Los Angeles. This included hammering out TV deals and leveraging endorsements.
The scope for new construction projects was limited; LA only built two completely new venues. The rest of the games took place in existing LA area structures.
A surprising benefit from tensions with the Soviet Union helped the games. Fewer athletes and international guests appeared in 1984 due to the USSR‘s boycott. The smaller scale meant LA’s smaller investment wasn’t exposed as an issue in even the largest events.
Overall costs were $546 million, reports Gizmodo, with a surplus of $232.5 million in pure profit left over.
Why future hosts didn’t learn from the 1984 Summer Olympics
Bidding was sparse in 1984, but LA’s success changed the narrative for a time. Today, things have reverted to the pre-1984 status quo. Few cities bid on the 2026 Winter Olympic Games at all, reports AP News.
The winner is actually two cities, Milan and Cortina. The thinking is that the cities can spread out the cost impact of hosting the games, explains NBC Sports. It’s a new territory for the Olympics, which faces increasing pressure to provide a tangible benefit for host cities.
The windfall from the 1984 strategy was short-lived. The 1992 Winter Olympic Games, hosted in Albertville, France, lost $62 million. The 1998 Nagano games officially lost $16 million, but official documents on full costs were destroyed.
The 2004 Summer Olympics, marked by the meteoric rise of swimmer Michael Phelps, contributed to the Greek financial crisis looming to this day, according to CNBC. The worst yet was the 2010 Olympic Games. Host city, Vancouver, lost an estimated $1 billion, which included a bailout of the disastrous Olympic Village construction project.
If the Olympics will survive in the long term, a return to the austere 1984 approach may be the only way forward.
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