The Paris 2024 Olympic Games not only promise to be a spectacular event, but they are also currently generating a notable economic impact and capturing global attention.
In this blog, we will analyze how the Olympic Games are influencing the global economy, considering both the benefits and the associated costs.
The amount of investment in the Paris 2024 Olympic Games is a clear reflection of the magnitude of the event. Multinational companies are making big bets. According to the International Olympic Committee (IOC), sponsorship revenues are expected to exceed $3.5 billion USD, with brands like Coca-Cola, Toyota, and Samsung leading the way. James Quincey, CEO of Coca-Cola, commented: “The Olympic Games offer an unparalleled platform to connect with global audiences and promote our commitment to wellness and community.”
Additionally, broadcasting rights are also a crucial piece. The IOC has sold these rights to networks like NBC in the United States and Eurosport in Europe, generating revenues estimated at around $4.2 billion USD, according to a Deloitte report.
The Paris 2024 Olympic Games are on track to be one of the most economical in history, according to economic experts. The event is estimated to have a total cost of approximately €8.9 billion, representing only 0.3% of France’s GDP in 2024. By comparison, the London 2012 and Rio 2016 Olympic Games each had expenditures of around $13 billion (€12 billion), while the Tokyo 2020 Games reached approximately $35 billion, according to S&P Global Ratings.
Paris allocated most of its budget, about €4.5 billion, to infrastructure improvements, funded by a combination of private and public investments, according to the Paris 2024 Olympic Games Organizing Committee (COJO).
Unlike previous Olympic Games, which faced difficulties in controlling costs, Paris has managed to keep spending low by largely utilizing existing structures for the events, something Los Angeles also did in 1984.
The Olympic Games are generating significant economic benefits:
Boost to Tourism: The Games are projected to attract more than 10 million international visitors to Paris. The Paris Tourism Office estimates that the event is generating around $8.2 billion USD in tourism revenue. Oxford Economics notes that this increase in the number of visitors is also boosting hotel occupancy and spending in restaurants and shops.
Job Creation: The organization of the Olympic Games is creating a large number of jobs. More than 200,000 temporary jobs are at stake during the event. Michael Payne, former marketing director of the IOC, highlights: “Job creation is one of the greatest benefits of the Olympic Games. Not only do they create direct jobs, but they also stimulate the local economy.”
Increase in Commerce: Local businesses are also seeing an increase in demand. A McKinsey & Company report suggests that commerce in Paris and its surroundings could be growing by 15% during the Olympic Games, driven by the influx of tourists and economic activity associated with the event.
However, despite the benefits, the Olympic Games also present costs and risks today. The event is estimated to have a total cost of approximately €8.9 billion, representing only 0.3% of France’s GDP in 2024.
Major international events like the Olympic Games are subject to risks. A study by the National Bureau of Economic Research (NBER) highlights that events of this magnitude can face economic challenges due to fluctuations in demand and logistical issues. The report indicates that local economies may face difficulties if projected revenues do not materialize as expected.
Nevertheless, no host city has managed to keep costs below the projected budget, and Paris is expected to be no exception, with a possible cost overrun of at least 25%.
Evaluating the long-term impact is essential. An analysis by the University of Oxford suggests that while some benefits, such as increased tourism, are evident in the short term, the long-term impact on the local economy can be uncertain. Simon Chadwick, a professor at the University of Oxford, states: “The legacy of the Olympic Games often depends on the planning and execution of post-event projects.”
Conclusion: At this moment, the Paris 2024 Olympic Games represent a significant investment with a broad global economic impact. While the event promises considerable benefits, such as a boost to tourism, job creation, and increased commerce, it also poses financial challenges and associated risks. As the Games conclude, it will be crucial to closely monitor both the successes and challenges they face to gain a complete perspective on how the Olympic Games are shaping the global economy.
