When we watch the Olympics, we care about the competition, the national pride, and the gold. Underneath all of that is money. The cost of the Olympic games for the host city is often lost on us viewers, because, unlike the Olympic Committee, we don’t care whether or not they turned a profit on renting the apartments in the Olympic Village. But here’s the thing: How financially successful the Olympics are for the host city could determine that city’s future for the next decade, or longer.
When Athens hosted the Summer Olympics in 2004, it was about celebrating the return of the Olympics to Greece no matter the cost. However, it ended up creating a multi-billion dollar debt, one that aided in creating the current Greek financial crisis. Conversely, when L.A. ran one of the most financially successful games in 1984, it reignited a waning interest in hosting the Olympics, and restored a sense of pride in being the host city.
So, while Michael Phelps is taking a breather, pay attention to those ads for GM and Nike—they could be more important than you think.
(For certain Olympic games, such as Atlanta and Beijing, the gains and/or losses were reported shortly after the events ended, and have not changed much since, if at all. For others, such as the Athens and Barcelona games, the losses worsened over time, resulting in a more damaging economic impact.)