By Jessica Greschner, Marketing Manager
With amazing – if rain-darkened – views, new stadiums, and a plethora of memorable performances, London made the most of its 2012 Summer Olympics. The city was
immersed in the Olympic spirit that equally engaged worldwide audiences. The magnificence of the event was emphasized by state-of-the-art venues, cutting-edge security, advanced infrastructure, and – of course – athletic excellence. But from a financial perspective, such Olympic magic must have been costly. Economically, could London have profited from its elaborate Olympic experience?
The official cost of the games remains a popular subject of debate. It seems unlikely that an exact amount will ever be revealed to the public; however, sources such as Bloomberg have concluded that the UK government spent approximately $17.5 billion US on the London 2012 Olympics—triple the original budget. But this sum is unsurprising considering the $43 million US and $950 million US purportedly spent on the opening ceremony and security budget, respectively, in addition to expenses related to venues, transportation, and athlete accommodations. As the level of spending increased, so did the proportion paid by taxpayers. The London 2012 Olympics was primarily funded by taxpayers throughout the UK, and austerity programs were introduced to reduce spending in other public sectors.
Concerns accompanying the escalating Olympic budget were allayed by a predicted spending influx throughout London. Tourists were expected to inundate the city. Projections of London 2012 included packed hotels, sold-out tickets, and affluent crowds stretching into the horizon. Partially as a result of such anticipation, prices skyrocketed; an Olympic experience was consequently unattainable for many fans. In addition to increasing costs, tourists and Londoners alike were deterred by traffic warnings and the associated chaos. In fact, the BBC claimed that revenues at many London tourist attractions were approximately 30% lower than standard seasonal averages.
London isn’t the first city to incur losses after playing host to the Olympic Games. Other hosting cities that subsequently experienced economic hardships include Montreal in 1976, Barcelona in 1992, and Athens in 2004. According to BBC sources, Montreal remained in debt for over 25 years following the city’s 1976 Summer Olympics.
With high prices and poor turnout, hosting the Olympics may seem more inconvenient than triumphant. For London and many previous host cities, one could conclude that monetary profit was simply not a motivating factor. London representatives were reticent regarding expected profits or losses, but they frequently commented on the importance of investing in a legacy and historical pride. The Olympic Games symbolize inspiration, the power of sport, and the unique ability to unite people from all over the world: this is exactly what the London 2012 Olympics accomplished. Investments in the Olympic Games are not intended to produce profits, but rather to incite the harmonious and electric spirit that the games represent; and that, as Visa would say, is priceless.