You can call it the Los Angeles effect. No, not for any reason you could drum up about Hollywood, or some commentary on West Coast living. We're talking about the 1984 Olympic games in Los Angeles.
While keeping a very small budget, with costs around $546 million, the Los Angeles Olympic games brought in about $220 in immediate profit, with an estimated $3.3 billion dollars in greater economic contribution to the area after the games. Los Angeles in 1984 was the first time an Olympic game was able to turn a profit from hosting the games since 1932. Much of the reason for that was sound business planning, which re-purposed many existing stadiums for use in the Olympics rather than simply building brand new facilities for everything needed.
I suppose the later host cities never got that memo. The effect Los Angeles had on the hosting of the Olympics was a sort of money-crazed competition for other counties to host games in their cities. All of the sudden, competitive bidding to host the games became more intense, and expecting some sort of economic windfall, cities were setting billion-dollar budgets and even then exceeding them, sometimes by staggering amounts.
Before Los Angeles '84, many cities had been burdened by hosting the games. The 1976 Montreal Olympics nearly bankrupted the city, leaving them $1.5 billion in debt. Despite the success of the games themselves, there was little economic benefit in relation to the costs. The legacy of the 1976 Olympics for the locals was physically manifested with the construction of the grandiose Olympic Stadium. It carried the nickname 'The Big O' but was famously was renamed 'The Big Owe' because of the bitter taste of the economic impact the games had. It took Quebec two decades to pay off its debt, which it finally did in 2006.
That history is lost on many of the bidding host cities post Los Angeles 1984. Or perhaps they believe they can recreate the financial magic and turn an Olympic event into an economic boom. The truth is, few have recreated the success of hosting the games that L.A. had, and many succeed only in creating exorbitant expenditures. This is the compilation of such big-spenders and the aftermath of their games, with costs adjusted for inflation:
8 Seoul, South Korea 1988 -- $7.69 Billion
As with the analysis of so many Olympic events, it's hard to ascertain hard figures on the overall economic impact, or profit of the Seoul Olympics in 1988. Whether this is due to purposeful obscurity or lack of data collection depends on case to case. The Seoul games certainly fall under the more hard-to-assess category. There have been claims that Seoul has profited $300 million from the games, but without much hard evidence to support such figures it's hard to say for sure. It is true, though, that the city benefited immensely by the growth of businesses who came to the area after the Olympics. They would later become the third-strongest economy in Asia. There is one unforeseen effect the 1988 Olympic games had on South Korea: its transformation into a democracy. Yes, that's right, the Olympics changed the government of South Korea. There were widespread political demonstrations against authoritarian leader Chun Doo-Hwan in 1987 because the people didn't want his regime putting the Olympic games at risk. Immediately after Doo-Hwan's downfall the country held elections and was a democracy by the time the games were held.
7 Vancouver, Canada 2010 -- $8.33 Billion
Canada just has no luck with these events it would seem. Another economic catastrophe, Vancouver was something of a funny choice for the winter Olympics because of its reputation as a warm-weather Canadian city nestled in the southwestern corner of British Columbia. Vancouver had grand plans to create a top-notch Olympic village with city money in the form of luxury high-rises that they would later sell for profit as high-end real estate. The costs to create the village became exorbitant with about $1 billion in development costs further ruining the already tenuous credit situation of Vancouver. The real estate didn't sell in droves they way they might have hoped, which only made matters worse. This, coupled with security costs of nearly $1 billion rather than the projected $165 million, were back-breakers for the city in terms of any hope of economic success. At least the games themselves saw a record-setting 14 Canadian athletes win Gold. Maybe they can recoup some losses selling the medals on eBay.
6 London, Great Britain 2012 -- $13.98 Billion
The 2012 London games started with a budget of $4.4 Billion, which of course means nothing anymore. Despite going nearly $10 billion over the mark, the London games managed to break even from money made on Television contracts and tourism. They were dubbed "successful games" by the British Olympic Association, which speaks for itself of the fiscal dangers of hosting Olympic games. Clearly the BOA was well aware of the uneven history surrounding the economic outcomes of the Games. London was an attractive destination, a landmark city of the world with a thriving infrastructure before the games were held. Despite that, they still only managed to break even, a notion that should strike fear into the hearts of Olympic organizations in little-known host cities of the future. Great Britain managed to add 29 gold medals (36 in silver and bronze) to their total in the 2012 games, placing them third behind China and the U.S.A.
5 Barcelona, Spain 1992 -- $15.4 Billion
Another poster child for success in hosting Olympic games, Barcelona was one of the rare few that really benefited greatly from winning their bid to host. Not as much from net profit numbers like Los Angeles 1984, the main success of the 1992 Barcelona Olympics was instead the transformation of the city into a desirable European destination for decades to come. They used a large amount of the expenses to enhance the city and build a stronger infrastructure, even going so far as to build 2 miles of beachfront and creating an entirely new marina after clearing out a number of industrial complexes to make room. Unemployment was cut in half during the years leading up to the games, and despite the high cost, they still managed to net $5 million in profit from the games. The real success of these games was the popularity of Barcelona as a vacation spot after the games. It's worth noting that the 1992 Olympics was the year of the "Dream Team" in basketball, when the U.S.A. was first allowed to use NBA players and the whole world watched in adoration as superstars like Michael Jordan, Magic Johnson, and Larry Bird made basketball look like artistry in motion. This brought people in droves to Barcelona in 1992 to watch a turning point in sports history.
4 Nagano, Japan 1998 -- $17.59 Billion
The 1998 winter games were nothing short of an epic disaster financially for Japan and the city of Nagano. The Olympic Committee of Nagano had 90 volumes of financial documents burned after the games by orders of vice secretary general of the committee Sumikazu Yamaguchi. The true cost of the Nagano games was probably much more than $17.59 billion, though we will never know exact figures. It was clear the intent was to spend profusely after Nagano had won the bid to host over Salt Lake City, a heated bidding war in which Nagano lavishly spent on International Olympic Committee members when they came to visit. Because of the obfuscation of financial documents, how much the net loss was on the games is unknown, but it's estimated the Olympic debt weighs around $30,000 per family in Nagano and will take 17 years to fully pay off. Japan only won 5 gold medals, 1 silver and 4 bronze in the 1998 games.
3 Athens, Greece 2004 -- $18.22 Billion
Much like Icarus' fiery plummet from the heavens, the 2004 Athens Olympic games is a cautionary tale of the potentially disastrous economic repercussions of a being a host city. Another overblown budget, starting at $6 billion, Athens spent nearly triple that at the time. Unlike Barcelona, Athens didn't use the opportunity to revitalize the city, rebuild valuable infrastructure and increase international appeal. Instead, 21 of the 22 facilities created have become empty, sullen monuments to a destroyed economy. Many people know of the complete economic failure Greece experienced in the past decade, but not many know that the extreme costs and lack of recompense of the 2004 Olympic games strongly contributed to the country's recession. Poor management of public money used both before and after the games caused the economic collapse that costed an estimated 50,000 Euros per Greek household. The only thing good about the 2004 games for Greece is that a space monster didn't come and destroy them. Greece won 6 gold medals.
2 Beijing, China 2008 -- $42.58 Billion
What was one of the biggest concerns going into the Beijing Olympics? The air quality. Goes to show you how awful the industrial smog is in China. A terrifying thought. Luckily, favorable weather allowed for clean air, along with short-term closing of industrial plants before the games by the government. Despite the record-high (at the time) costs of the games at a shocking $42 billion, the country had no problem paying for it, their booming economy allowing them to avoid any debt. Much of the money was used to improve infrastructure. Transportation was completely refurbished, with highways, subway systems and even an airport terminal being made under the umbrella of Olympic expenses. Unlike Athens, almost all of the facilities created with the Olympic budget have gone on to serve the country well, being re-purposed for many different needs. Despite the absurd total budget of the games, Beijing 2008 is definitely a success story for host cities. Provided the country has, oh y'know, like forty billion to throw around.
1 Sochi, Russia 2014 -- $51 Billion
I suppose it's too early to say for sure, but there were considerable concerns that Sochi 2014 would go down as the most horrific failure in Olympic history, well before the games even began. Even outside of all of the unsuppressed wildfire of controversy spreading about eradication of stray dogs, mistreatment of workers and displacement of native Sochians, Many of the facilities aren't even close to finished. Did they spend $51 billion on vodka and cruises on the Black Sea? Who knows if $51 billion is even the correct figure? In 2008 Beijing claimed to have spent as much as Athens did in 2004 until it was later found they had spend over double that amount.
Let's let realism take hold of this circling-the-drain hotbed of an Olympics. In 2013, the Transparency International Corruption Perceptions Index rated Russia with a score of 28 (100 being the maximum as completely uncorrupted). Also, Sochi is a well-known favorite vacation spot for President Vladimir Putin. It's also one of the warmer cities in one of the coldest countries in the world for a Winter Olympics. Smell what I'm stepping in? This whole endeavor has been SNAFU from the get-go, and those responsible for the organization of the Sochi Olympics have undoubtedly had a field day siphoning funds from god knows what, given the vast expenses needed to create cold-weather facilities in a warm-weather climate. And the cherry on top of it all, security expenses for their 'ring of steel' are skyrocketing because of its geographical proximity to terrorist cells in nearby countries. The years following Sochi 2014 will almost certainly reveal all kinds of shocking realities about these already infamous Olympics. For now, all we can do is hold our collective breaths and try to enjoy the games.
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