The 2012 Olympics will soon hit London, but how much are the Olympics actually going to cost? The last time London hosted the Olympics was in 1948. At the time, the U.K. was struggling in the aftermath of World War II, and money was so tight that participants brought their own towels. Food was shipped in from abroad, and the athletes slept in army barracks and college dormitories. The Prime Minister at the time, Clement Attlee, said that owing to the post-war financial situation the U.K. should not have to shoulder the burden of the Olympics. Therefore, the 760,000 pound budget was paid by sponsors. Now, 64 years later and preparing to host the Olympics again, the U.K. is firmly in the grip of an economic recession. It does not seem that similar austerity measures have been implemented this time around. What will the Olympics cost the U.K. this summer? Is the U.K. getting a good deal compared to previous Olympic Games?
Low Estimates
Back in 2005, the original bid made by the London 2012 Committee stated that the Games would cost a total of 2.4 billion pounds (US$3.7 billion). This figure was later revised to 3.3 billion pounds (US$5.1 billion). The Mayor of London at the time, Ken Livingstone, has been accused of suppressing true estimates of the costs in order to win public support and backing for the bid. Forbes suggests that American sport is no stranger to this idea of offering a low estimate in what it calls " stadium game." This is where city leaders and sports team bosses overstate the benefits while understating the costs of building new sports facilities.
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Final figures
BBC news has reported that London 2012 is set to set to come in under its 9.3 billion pound (US$14.5 billion) budget, with almost 500 million pounds of the contingency funding left. This 9.3 billion pound budget was set in 2007, at almost four times the original estimate. The reasons that have been offered for the drastic rise in costs are: overlooked VAT costs, increased security costs and an expanded regeneration brief.
In Poll Position
If the London Olympics cost this much, they still won't be the most expensive in Olympic history. The most expensive Olympics in history were the 2008 Olympics in Beijing. Costing a staggering US$40 billion, the Games could have been a financial nightmare for China. Amazingly, China was not left with debt after the event. Most of this US$40 billion was invested in permanent infrastructure that has been used since.
For Athens, the city that hosted the Games four years prior, the economic impact was vast. The 2004 Olympics, which at the time were the most expensive to date, cost US$15 billion. The huge costs were attributed to being the first summer Olympics after 9/11, which saw security and infrastructure costs rise considerably.
Montreal hosted the Olympics back in 1976 and has only recently cleared the debt that its Games caused. Although the cost was a "mere" US$1.2 billion, back in 1976 this was a sizable amount. The Olympic Stadium was nicknamed the "Big Owe" because the city of Montreal did not pay its final bill for the Olympics until 2006. The event was such a financial disaster that it is said to have put many cities off even bidding on the Olympics.
The Bottom Line
Despite the costs having skyrocketed since its initial bid in 2005, the London Olympics will not be the most costly on record. At a time when the British people are suffering in the economic downturn, almost US$15 billion is a hefty sum to spend. In fact, economists have suggested that these Olympic Games could lift the economy out of recession with the revenue and tourism generated. If it does manage that, then US$15 billion might in fact be a small price to pay.
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