The Olympic Economics

The Olympic Economics

When London won the bid in 2005, the predicted cost of the Summer Olympics was £2.37billion. That estimate has now climbed to more than £12billion and could go to up to £24billion by the time the Olympics start. The National Audit Office warned of the risk of the government exceeding its Olympics budget of £9.3billion. This figure includes the build of venues and the £600million police and security budget. The government has allocated an extra £41million from this budget to LOCOG to pay for the opening ceremony, which is set to cost £81million in total. LOCOG has also allocated £271million to pay for venue security. Another £765million was spent on the cost of land used for venues. Legacy programs are also set to hit £826million, while the Olympic Park Legacy Company is set to cost £300million. Even though they won’t be able to determine if they turn in a profit until after the Olympics, they claim they can make a profit from ticket sales, merchandising, and sponsors. 8 million tickets are for sale to see the Olympics, but only 82% of tickets are projected to be sold. To turn in a profit they would have to depend heavily on merchandising and sponsorships as ticket sales won’t be enough to cover the £24billion. During the bidding process, the city hoping to host the Olympics promises to spend money to make it successful and also promise that they would turn in a profit from it. The estimated cost never ends up being the final cost, sometimes the city ends up in a long term debt due to the excess amount of money spend to host the Olympics. This occurred in the last Olympics held in Beijing 2008. The Olympics in Beijing 2008 were the most expensive in history costing $40 billion and turning in a loss instead of a profit.