If you have ever watched Olympic events then you know how flashy they can get. A lot of money is invested in Olympic ceremonies and perhaps even more in making sure that the stadiums used for the event are up to the necessary standards. But have you ever wondered where the money to fund the entire event comes from? Is it the host countries that fund the event?
The truth about the Olympic events is that countries submit their bids to host the event. This is because the Olympics present huge opportunities for the host country to benefit financially. Counties that have hosted Olympic events in the past have spent billions to host such events. For example, Brazil reportedly spent $13.1 billion on the 2016 Olympics and China spent $45 billion to host the 2008 Olympics.
The governments of the country that wins the bid to host the Olympics usually create a budget and release funds that will be used to facilitate the success of the event. For example, some of the money is used to build the infrastructure including the stadiums to be used for the Olympics events or to make sure that existing stadiums are up to the required standard. The funding for hosting the Olympics is thus funded by the taxpayers.
Funding from the International Olympic Committee
The International Olympic Committee (IOC) is the international body that is responsible for organizing Olympic events. The committee is also responsible for awarding Olympic-related licenses such as the licenses to air the games. It thus collects a lot of funds from the licenses and also from private sponsors involved in the event. Some of this money is used to provide financial support, especially to the hosting company.
The IOC disburses 90 percent of all the funds that it collects to contribute to the success of the Olympic events. It keeps 10 percent of the proceeds.
Are the Olympics really lucrative for the host country?
It depends on various factors. Countries that already have the existing infrastructure do not need to invest much. Hosting the event provides business opportunities for the locals. For example, hotel owners and restaurants earn big bucks for hosting the event. There are also other beneficiaries and this is great for a company’s GDP. However, some countries like Brazil have accumulated huge debt after hosting Olympic events and spending too much especially in ensuring that the infrastructure was up to the necessary standards.