Sports Economy Olympic Games

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This economic crisis has also an impact on security. As the state get some difficulties to pay police officers, they have been obliged to reduce their number, and traffickers are taking advantage of this.

Brazil’s economy is currently going a little better from a severe and prolonged recession. With a GDP growth rate negative (- 3.85%) in 2016, there are now way better, 0.5% in the first part of 2017. Some of the reasons for the slump in the country’s economy were political uncertainty, lower consumer and business confidence, and low investment. But the reasons for the recovery are not due to the Olympic Games. The Olympics represented a Boost for the tourism, the development of facilities or the creation of jobs. But this effect is really ephemeral.

The reasons for this contraction in output are more due to: Investments continuously contracted, leading to decreased competitiveness and tighter financial conditions; Consumption tapered due to deteriorating labor market conditions and tightening credit.

Incomes for hosting the Olympic Games :

Cities that want to host the Olympics often point out the potential incomes that they could do. The incomes due to the tv Broadcast or the sponsorship are the main incomes. 45% of the incomes are due to sponsorship, 47% TV broadcast, 5% ticket office and 3% licenses.

It is incontestable that hosting the Olympic Games permit to develop sports facilities or public transit but their conversion after the event is more difficult than what we think. We have seen the example of Rio. But, in Pekin the olympic stadium which is about 91,000 seats cannot compensate for its maintenance costs. The stadium, which cost $480 millions to build takes about $11 millions each year to maintain. Same thing for Grenoble, in France, (1968 Olympic Games) or Grece (2004 Olympic Games) most of their sports facilities are now deserted.

An other type of income, is the local economy : jobs and wages. Studies show that the impact of the Olympics are very low and moreover really ephemeral. Cities hosting the Olympics gain temporary jobs due to infrastructure improvements as we see with the example of Rio.

A study on the Salt-lake city Olympic Games demonstrate that this event permitted a real improvement for the hotel trade and the restoration field. Simultaneously, it had a negative effect on every other type of business. All these losses cannot compensate what was gain in the hotel trade and restoration field.

In term of tourism, hosting the Olympic Games permit to benefit from a huge media coverage. Moreover there is a flood of many sports lover who comes from all around the world. We call it «Sports tourism», This tourism is very limited and ephemeral. Moreover sports tourists substitute the tourists who does not want to come during the period of the Olympic Games because of the crowd. As an example, in London 2014, this leads to an increase of the tourism in Olympic areas but a decrease of the tourism in downtown London. As a result, incomes generated by the Olympic Games do not compensate losses in every other touristic field.

The last area which is supposed to take advantage of hosting the Olympic Games is the international trade. Studies find strong evidence of a large positive effect (some 30 percent higher) of the Olympics on exports. As i said, hosting the Olympics permit to benefit from a huge media coverage, so it can permit to create value for all traditional products of the country. After this event companies see their exports increase, it is called “The Olympic trade effect”.

As a conclusion, on an economic point, it appears that the impact of hosting the Olympic Game is generally negative non-existent or only positive for a short-period. The economic impact of hosting the Olympics tends to be less positive than anticipated. Because most cities have ended up falling massively in debt after hosting the games, cities without the necessary infrastructure may be better off not submitting bids