After a successful bid in 1997, citizens of Greece were pleased to find the Olympics returning home in 2004 after 98 years (actually 108 years because the 1906 Olympics weren't official). However, much to their surprise, hosting the 2004 Olympics has sucked $10-12 billion (in U.S. dollars) out of the Greek economy. That’s more than five percent of the country’s annual gross domestic product! When Greece bid on the games, it was before security was being beefed up around the world as a direct result of the 9/11 terrorist attack. It’s estimated that $1.5 billion is being spent on security alone.
Security costs include the posting of 40,000 troops along the northern border prevent illegal entry. The new security system is so sophisticated that it can photograph people’s faces, intercept phone calls and deduce cell phone numbers almost anywhere in the city.
Television rights, corporate sponsorships and ticket sales help the hosting country bear the burden of the costs, but $12 billion is a lot to come up with. NBC is paying about $800 million for broadcast rights to the Olympics in the U.S. NBC expects to net a record $1 billion in ad sales for its Olympic coverage. Indonesia's major networks decided a $1.35 million price tag was too much, though they are willing to dish out $10 million to air the 2006 FIFA World Cup.
Ticket sales for the 2004 Olympics have been disappointing, partly due to late construction and partly due to a lack of interest in attending the games among the Greek citizens. Just two weeks before the start of the Olympics, about 3.1 million of 5.3 million tickets remain unsold.
What remains to be seen is if hosting the 2004 Olympics was worth it. Greek politicians are adamant that late ticket sales and long-term tourist dollars will pay for the costs over time, but many are skeptical. Since the Los Angeles Olympics in 1984, every hosting country has either broken even or made a profit on running the two-week event, but the costs are getting out of control. Breaking even on the Olympics this time around would be a tremendous accomplishment.
What about the value of the new stadiums? Four years after the Sydney Olympics, under-used venues are costing taxpayers $32 million (in U.S. dollars) a year to keep afloat, and the government expects that some venues will need at least another decade to break even.
If you think the Greeks overcommitted, the Chinese have budgeted $23 billion for the 2008 Olympic games – seven times more than the Sydney games, and 32 times what Los Angeles spent for the 1984 Games!
I’m glad I’m not paying for the 2004 Olympics - because understanding the mathematical reason for hosting the games is "Greek to me."
