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The structural deficit of the Olympics and the World Cup: Comparing costs against revenues over time


Müller, Martin; Gogishvili, David; Wolfe, Sven Daniel (2022). The structural deficit of the Olympics and the World Cup: Comparing costs against revenues over time. Environment and Planning A: Economy and Space, 54(6):1200-1218.

Abstract

The Olympic Games and the Football World Cups are among the most expensive projects in the world. While available theoretical explanations suggest that the revenues of mega-events are overestimated and the costs underestimated, there is no comprehensive empirical study on whether costs exceed revenues. Based on a custom-built database from public sources, this article compares the revenues and costs of the Olympic Games and World Cups between 1964 and 2018 ( N = 43), together totalling close to USD 70 billion in revenues and more than USD 120 billion in costs. It finds that costs exceeded revenues in most cases: more than four out of five Olympics and World Cups ran a deficit. The average return-on-investment for an event was negative (– 38%), with mean costs of USD 2.8 billion exceeding mean revenues of USD 1.7 billion per event. The 1976 Summer Olympics in Montréal, the 2014 Winter Olympics in Sochi and the 2002 World Cup in Japan/South Korea recorded the highest absolute deficits. The Summer Olympics 1984 in Los Angeles, the Winter Olympics 2010 in Vancouver and the 2018 World Cup in Russia are among the few events that posted a surplus. The article concludes that the Olympic Games and the Football World Cup suffer from a structural deficit and could not exist without external subsidies. This finding urges a re-evaluation of these events as loss-making ventures that lack financial sustainability.

Abstract

The Olympic Games and the Football World Cups are among the most expensive projects in the world. While available theoretical explanations suggest that the revenues of mega-events are overestimated and the costs underestimated, there is no comprehensive empirical study on whether costs exceed revenues. Based on a custom-built database from public sources, this article compares the revenues and costs of the Olympic Games and World Cups between 1964 and 2018 ( N = 43), together totalling close to USD 70 billion in revenues and more than USD 120 billion in costs. It finds that costs exceeded revenues in most cases: more than four out of five Olympics and World Cups ran a deficit. The average return-on-investment for an event was negative (– 38%), with mean costs of USD 2.8 billion exceeding mean revenues of USD 1.7 billion per event. The 1976 Summer Olympics in Montréal, the 2014 Winter Olympics in Sochi and the 2002 World Cup in Japan/South Korea recorded the highest absolute deficits. The Summer Olympics 1984 in Los Angeles, the Winter Olympics 2010 in Vancouver and the 2018 World Cup in Russia are among the few events that posted a surplus. The article concludes that the Olympic Games and the Football World Cup suffer from a structural deficit and could not exist without external subsidies. This finding urges a re-evaluation of these events as loss-making ventures that lack financial sustainability.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:07 Faculty of Science > Institute of Geography
Dewey Decimal Classification:910 Geography & travel
Scopus Subject Areas:Social Sciences & Humanities > Geography, Planning and Development
Physical Sciences > Environmental Science (miscellaneous)
Uncontrolled Keywords:Environmental Science (miscellaneous), Geography, Planning and Development
Language:English
Date:1 September 2022
Deposited On:15 Feb 2023 15:56
Last Modified:24 Jun 2024 03:53
Publisher:Sage Publications
ISSN:1472-3409
OA Status:Hybrid
Publisher DOI:https://doi.org/10.1177/0308518x221098741
  • Content: Published Version
  • Language: English
  • Licence: Creative Commons: Attribution 4.0 International (CC BY 4.0)