Opportunity or Burden? Evaluation of the Factors behind the

Decision to Host the Olympic Games

Chengen Jin

1,a,*,†

and Beakjun Jeon

2,b,†

RDFZ Chaoyang School, Beijing, China

International Division, Beijing No. 80 High School, Beijing, China

Corresponding author

†

These authors contributed equally

Keywords: Bidding for the Summer Olympics, Feasibility of Hosting the Olympics, SWOT Analysis.

Abstract: This paper analyzes the advantages, disadvantages, opportunities and threats of the Summer Olympic Games

by means of literature research and SWOT analysis. The study shows that it is necessary to ensure the feasi-

bility of bidding for the Summer Olympic Games and suggests that the host city make use of market mecha-

nism to prepare for the Olympic Games. The specific measures of preparation include: establishing a Prepar-

atory Committee for the Olympic Games, develop a functional public transport system, formulate long-term

real estate management mechanism, and improve the venue utilization and commercial development level.

Through the above measures, the host city can play to the advantages and opportunities, overcome the disad-

vantages, eliminate threats, and ultimately strive for an early success of the bid.

1 INTRODUCTION

“Higher, Faster, Stronger”, this slogan of excellence

has captured the image the world associates with the

Olympic Games. Being the crown jewel in the realm

of sports, the Olympic Games is no longer just a gath-

ering of the world’s top athletes, but an arena for the

national powers that these sportsmen represent.

Naturally, the competition for the right to host the

Olympic Games used to be as fierce as the fight for

gold among the athletes. More than eleven cities sub-

mitted applications for the 2004 Summer Olympics

(Thomas, Alana, Cuskeley, Graham, Toohey, et. al,

2019). On the surface, the advantages brought by

such a huge undertaking seem obvious. The eco-

nomic benefits include increased employment

through jobs that support the event, a rise in tourism

and hospitality services, boost in trade and subse-

quent increase in foreign investment. In addition, the

host city receives a transformative improvement in

city development through the improvement of city

infrastructure, transportation systems, and sports

venues. Besides these tangible gains, “the legacy im-

pacts” is a concept that stresses the Olympics’ long-

term effects on the host city and country. The great

event will cast such a positive light on the host city

that it will continue to attract the world and be a great

boost to the national spirit and unity (Atanu Biswas,

2021).

However, the enthusiasm to compete for hosting

the Olympic Games seems to die down in recent

years and withdrawal of initial applications to host

the game is not uncommon. Five applicant cities

withdrew their request in the bidding to host the 2022

Winter Olympics. Similarly, in the bidding to host

the 2024 Summer Olympics, Boston, Budapest,

Hamburg, and Rome withdrew from the race. Under

these circumstances, the IOC made the unusual deci-

sion to award Paris the 2024 event and Los Angeles

the 2028 Games without calling for bidders (Interna-

tional Olympic Committee, 2017).

What has caused this sudden lost in interest? A

number of factors combine to put a strain on the de-

cision to become a potential host city. To name a few,

the rising cost, the future maintenance of facilities,

the demand on organizing staff, not to mention the

complications brought by the global COVID-19 pan-

demic (AtanuBiswas, 2021).

In light of this recent dip in enthusiasm in hosting

the Olympics, this paper first utilizes the SWOT

analysis method to discuss the strengths, weaknesses,

opportunities and threats of hosting the Olympic

Games. Then we move on to the specific measures

720

Jin, C. and Jeon, B.

Opportunity or Burden? Evaluation of the Factors behind the Decision to Host the Olympic Games.

DOI: 10.5220/0011238000003440

In Proceedings of the International Conference on Big Data Economy and Digital Management (BDEDM 2022), pages 720-724

ISBN: 978-989-758-593-7

and suggestions for making the decision of bidding

for the Olympic Games.

2 BACKGROUND

The Olympic Games is, without a thread of doubt,

the most significant and influential international

multi-sport event in the world. So, it is natural that

they are also the most widely researched subject in

the sports management field. The specific topics of

research include but are not limited to: their manage-

ment, the organizational work associated with their

planning and celebration, the impact they make, both

in the community where they are staged and also

more globally; and the legacy they leave behind in

these communities. (Atanu Biswas, 2021)

According to Toohey and Veal, (2007) most re-

search from the perspectives of humanities and social

science focus on the history (arguably the first area

of Olympic scholarly enquiry), economics, philoso-

phy, politics and sociology of the Olympic Games.

For example, analysis of the economic impact of the

Games are now being used by many cities to deter-

mine the feasibility of bidding for Games. Examples

of sociological research on the Olympics would be

the study of “the relationship between the media and

the Games, the place of women in the Olympic

Movement, as well as many other areas within criti-

cal and cultural studies frameworks”. Examining the

legacy impact of the Games has concentrated on his-

torical, economic, sociological, urban studies, man-

agement and political analysis (Toohey, Veal, 2007).

Another discipline that has shown an increase in

academic interest in studying the Olympic Games is

sport management. Sports management is a rela-

tively young, yet vibrant research discipline. The

links between academia and Olympic managers is

“important for the former to have real world rele-

vance and the latter to advance practice” (Toohey,

Veal, 2007).

3 RESEARCH METHOD

SWOT analysis comes from management, which

puts various development conditions of an enterprise

into four factors, namely Strengths, weaknesses, Op-

portunities and Threats. Four strategies, SO, ST, WO

and WT, are composed by pairwise combination to

find the best development strategy. SWOT analysis

was first proposed by Andrew, a professor of Har-

vard Business School, in his book Corporate Strategy

Concept published in 1971. In SWOT analysis, S

stands for Strengths and weaknesses; W is the Weak-

ness or Weakness of the enterprise; O represents op-

portunities in the external environment. T stands for

Threats posed by the external environment. SWOT

analysis is to analyze and explain the internal and ex-

ternal conditions of an enterprise, find the strengths,

weaknesses, opportunities and Threats of the organi-

zation, and then formulate corporate strategies and

development countermeasures. Since its inception,

SWOT method has been increasingly applied in man-

agement and sociology and is an important analytical

tool to solve various development strategy problems

(Wu, 2017).

4 RESULTS

4.1 Benefits

As for the strengths of the Olympics, there are sev-

eral. First, the economic benefits. The economic im-

pact of the Olympics is two sided—there are obvious

economic benefits and equally astounding costs.

Let’s first take a look at the benefits. We can separate

the benefits into the direct revenue boost and relevant

positive impact on the economy. The direct financial

gains mainly come from the sources of television

broadcast revenue, domestic and international spon-

sorships, ticket sales and licensing. According to the

2014 IOC official report, the total revenue of hosting

an Olympic Games has increased from 5.45 billion

(2005-2008) to 8.05 billion (2009-2012), with televi-

sion broadcast and sponsorships being the two major

contributing factors (Atanu Biswas, 2021).

Besides the direct revenue, the hosting of the

games can also bring about positive impact on rele-

vant industries and aspects of economy. Take the Rio

case for example. According to the IOC (Atanu

Biswas, 2021), the 2016 Olympics generated a ton of

jobs-16,000 people altogether were employed for the

construction of the infrastructure or were offered jobs

in these venues. At the same time, the tourism indus-

try saw a spur in the amount of revenue earned. Dur-

ing the 12 months of 2016, Brazil saw 6.6 million

tourists come and go, which was a 4.8% increase

from the prior year. This slight spike resulted a total

revenue of 6.3 billion US dollars, a 6.2% increase

from before. Third, it benefitted small shops and

businesses in general due to the rise in income.

SEBRAE (Brazil’s small business association) and

Brazil’s Olympic compete collaborated to try and

benefit Brazil’s SMEs. They projected the total rev-

enue would be around a total of 300 million, but the

Opportunity or Burden? Evaluation of the Factors behind the Decision to Host the Olympic Games

721

result actually exceeded the projections and the num-

ber was a satisfactory 390 million. On a macroeco-

nomic scale, the base of the social pyramid in Rio

mostly benefited from the increase in labour income

during the pre-Olympic period. The income of the

poorest 5% grew 29.3% against 19.96% of the richest

5% (Niall McCarthy, 2021).

The second strength of hosting the Olympics is

the increased infrastructure development that may be

needed and required by countries with a weaker

economy. Streets and bridges are refurbished or, like

mass-transit lines and public buildings, constructed

anew. Projects that have lingered on the drawing

board for decades are prioritized and expedited. Only

some 17 percent of expenditures for the 1992 Barce-

lona Games went exclusively toward sports; 83 per-

cent was aimed at urban improvement. London’s

largely depressed East End was revitalized by con-

struction for the 2012 Games, Barcelona’s waterfront

was reinvigorated, Seoul’s Han River got a major

cleanup for the 1988 Games, and citizens of Vancou-

ver and its visitors love the transit. This is a benefit

that is evident and has a great impact on the citizens

and their daily lives. This increased infrastructure in-

vestment will not only enhance the lives of the peo-

ple, it is also evident that these measures will in-

crease employment in the country and will prove

beneficial to the economy. The key to the benefits of

these projects is what their long-term utility is and

whom they benefit (Scott Bauer, 2021).

The third is the intangible benefits. Sources sug-

gest that hosting the Olympics may have benefits that

surpass simply numbers and money, media presence

could benefit the tourism of the country and the ven-

ues that were constructed during the preparation for

the games could be used for other purposes in the fu-

ture. The games could have long-term benefits such

as human capitol, urban regeneration, and reputation.

It is a common fact that all cities that have hosted the

Olympics are put on the maps globally. This brings

attention to the city that grants it fame that will be

beneficial to the image of the city (THE ASAHI

SHIMBUN, 2021).

4.2 Impact on the Development of the

Sports Industry

There are many positive impacts that hosting the

Olympics can have on the development of a coun-

try’s sports industry.

First, the direct boost of the sports industry of the

host city. Because of the winter Olympics in 2022,

the government in China has been promoting sports

such as skiing, skating and etc. The government will

try to offer more chances for athletes competing in

these areas. These measures will greatly promote the

chance of development for these athletes and will

create opportunities for investors to create commer-

cial events due to increased publicity. And will pro-

mote certain sports that aren’t well known initially.

Second, improvement in skilled athletes. Due to

the need of maintaining reputation as the host coun-

try, the country will need to do well in the own games

that they have hosted. This will include extensive

support to athletes that are competing and increased

attention and better care of the athletes will surely

motivate the athletes to surpass opponents on their

road to glory. This will result could be that in the

country having a better competitiveness in these

events (Try Ananto Wicaksono, 2020).

4.3 Challenges

● The obstacles of coordination mechanism.

In order to make the hosting of the Olympics

cheaper, the IOC has recently announced measures

to allow the co-hosting of the Games by two cities or

even two countries. However, this will also cause

foreseeable challenges. During the preparation and

bidding process of the Olympic Games, differences

in the economic systems, administrative systems, le-

gal systems, finance systems, currency issuing sys-

tems, economic development plans, civil rights, life

styles, ideologies and so on will require the organiz-

ing committees to set up a special coordination

agency to meet up the special challenges brought

about by the unique arrangement of cohosting the

Games.

● Pressure on the city’s infrastructure.

The sudden influx of a large number of coaches

and athletes during the Games and the increase in

traffic will bring extra pressure to hosting cities, es-

pecially those densely-populated metropolitans al-

ready plagued by congested traffic. Beijing insti-

tuted the alternative day driving policy during the

2008 Games (cars with license plate number ending

in an odd number can drive on dates with an odd

number and vice versa) and that helped to ease the

pressure of traffic during the Games. However, it

caused inconvenience for the local residents and

could lead to public animosity towards future large-

scale sports events. In addition, this measure might

not be feasible in all host cities. Therefore, how to

balance the needs of the local residents and the de-

mand for the Games is a challenge the hosting com-

mittee must seriously consider.

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● Inflated cost of living caused by high real

estate price

According to the experience of previous Olympic

Games, the real estate price will rise sharply in the

host city. In particular, the price of land and real es-

tate near the Olympic venues will be connected to the

"Olympic concept" and their price will rise even

more outrageously. Therefore, the high cost brought

by the raised housing prices will bring great eco-

nomic pressure to the local residents. What’s more,

the “bubble” created by the temporary sports event

might burst and lead to great financial loss for locals

who have made the decision to invest in real estate

(Zhou, 2017).

4.4 Threats

● High investment and risk of outliving expenses

The Olympic Games take place every four years,

but it takes years to prepare for the Games.

The cost of hosting the Games is huge, and ex-

penses including the construction of venues, security

expenses, opening and closing ceremonies, medal

production, etiquette services, catering and accom-

modation, etc., all require detailed financial budget-

ing. What’s worse, due to various reasons, over-

budget spending has been an inevitable trend in the

past. Many countries withdrew from the Olympic

Games because of the overwhelming burden. Ham-

burg in Germany, Rome in Italy and Budapest in

Hungary all withdrew their bids for the 2024 Games

for financial reasons, leaving Only Paris and Los An-

geles to bid for the games. In 2008, China success-

fully hosted the Olympic Games while the total coast

was estimated to be over $ 40 billion. The subsequent

Games, London 2012 and Rio 2016, were criticized

for their lack of funding. The Hosting of the Olympic

Games involves investments in many aspects. How

to budget and manage the funds is a huge challenge

for the organizers. It is becoming more and more a

topic whether the huge investment of the Olympic

Games can bring good profits or even break even

(Niall McCarthy, 2021). On many occasions in his-

tory, the Olympic Games had to bear huge losses be-

cause the income could not cover the expenditure.

For example, Montreal in Canada even took 30 years

to pay off the debts incurred when it hosted the

Olympic Games (Zhou, 2017).

● Utilization of venues after the games

After large-scale sports events, some stadiums

lack reasonable planning and maintenance, or are

poorly designed and have remote sites. It is a com-

mon phenomenon in all countries around the world

that after the Olympic Games the utilization rate is

not high or the venues are even abandoned. How to

make better use of the venues built with huge costs

has always been the focus of the research of insiders.

Some of the less popular events, such as cycling ven-

ues, rowing and slalom, were often abandoned after-

wards because of lack of commercial development or

poor management. Because of the particularity of

space for some less popular sports, it is difficult to

develop them into other commercial projects, result-

ing in huge capital losses and waste of social re-

sources. For example, Venues constructed for the

Athens 2004 Games famously remain unused and

have fallen into disrepair. Today, Beijing’s magnifi-

cent Bird’s Nest stadium hosts football (soccer)

games, but its schedule is open enough that, for a fee,

one can ride a Segway around it (baidu.com). There-

fore, the consideration of the long-term use of the

Games’ venues needs to take place during the plan-

ning stages to avoid huge waste.

● Competition from other bidding cities

Although in recent years, the cost of hosting the

Olympic Games is getting higher and higher, many

cities have even withdrawn the bid for the Olympic

Game, the Olympic Games are still the biggest, most

influential, most commercially and culturally valua-

ble sporting event in the world, and there are still a

large number of cities actively competing for the bid

for various purposes. Due to the fierce competition,

the bidding process itself is a costly affair. The

Olympic Committee of the host city will have to un-

dergo the complicated process of organizing and pre-

paring for the bid with the high risk of losing the bid

in the end and therefore lose all the money invested

in the bidding.

● Risks of real estate speculation

Historical experience shows that the process of

preparing for the Olympic Games will inevitably lead

to the rise of land and housing prices. The construc-

tion of Olympic venues, especially around the main

venue of the opening and closing ceremonies, will

cause the land and housing prices to soar. Home

prices doubled or tripled in the run-up to the 1992

Barcelona Olympics and tripled in Sydney in 2000.

If the bid for the Olympic Games is successful, a

large number of speculators and investors will flock

to the city, which will push up the housing price and

cause the real estate bubble, which will in turn bring

serious negative impact on the real economy, and

will also lead to the decline of local people's quality

of life and higher living burden (Zhou, 2017).

Opportunity or Burden? Evaluation of the Factors behind the Decision to Host the Olympic Games

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5 CONCLUSIONS

In recent years, with the continuous development of

society, economy and culture, the Summer Olympics

has also been enjoying a golden period of develop-

ment. But opportunities and risks both abound in the

decision to host such a large-scale international

sporting event. The reasons for the phenomenon of

hosting the Olympics being in and out of fashion are

clearly stated in this study. For cities contemplating

putting their hat in the ring to play host for the Olym-

pic Games, they should seriously consider the answer

to the question: Is hosting the Olympics a privilege

or a burden? This seems more imminent in light of

the still raging pandemic

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