The Olympics Aren’t Good for Cities, So Can the Magic of the Games Survive?

The IOC decides to pin down the hosts for the next two Summer Games—just in case there are no more takers.

The Olympic Aquatics Stadium, which hosted the swimming competition at the 2016 Olympic and Paralympic Games in Rio de Janeiro, in a photo taken on May 27, 2017.

Photographer: Buda Mendes/Getty Images

For most people the Olympics are an extravaganza that’s broadcast on television for two weeks every two years. A baroque opening ceremony is followed by several sports—including many rarely seen on TV otherwise—and then a torch gets put out. For those who’ve tuned out since the flame was extinguished in Rio de Janeiro last summer, an update: The Olympics and the International Olympic Committee—the organization that parcels out the rights to host them—have a growing reputation problem. Cities don’t want them coming around.

Two years ago, when the IOC picked Beijing for the 2022 Winter Games, the only other option was Almaty, Kazakhstan. Oslo, Krakow, Stockholm, St. Moritz in Switzerland, and the Ukrainian city of Lviv had all backed out. For the 2024 Summer Games the IOC began with a healthy list of possible hosts. Then Budapest, Rome, Hamburg, and Boston gave in to resistance at home and abandoned their bids, leaving only Los Angeles and Paris at the table.

And so, on July 11 in Lausanne, Switzerland, the IOC approved by a 78-0 vote (with 17 members absent or recused) a proposal to award both the 2024 and the 2028 Summer Games at the same time, with one going to Paris and the other to Los Angeles. Standard procedure is to pick one site at a time, seven years ahead of each event. But the committee wants to nab both cities while it can. Now the IOC has to decide which city gets the games first and persuade the other to wait until 2028. IOC President Thomas Bach, a native of Würzburg, Germany, had earlier explained the thinking this way: “In German we have a saying—I don’t know whether I can translate this properly—but the saying is, ‘It is better to have a small bird in your hand than a big bird on the roof.’ Here we have two big birds in our hands, and I cannot see any small bird on the roof. There may be some flying over the roof and making some noise, but none of them has landed on the roof even.”

The metaphor is more apt than Bach might have intended. Cities have increasingly come to view the IOC as a glutton that feasts on its host cities and leaves behind only feathers and bone. In Rio de Janeiro, organizers of the 2016 Summer Olympics struggled to repay debts for months after the closing ceremony, offering creditors used air conditioners from Olympic facilities in lieu of cash. The city’s venues sit empty, littered with garbage, while federal prosecutors investigate corruption that helped push construction costs to $15 billion. White elephants also abound in Athens, host of the 2004 Summer Games, and in Sochi, where Russia spent a record $51 billion to stage the 2014 Winter Games. “It’s becoming a greater problem as episode after episode of the Olympic Games go on,” says Robert Barney, an Olympic historian and co-author of Selling the Five Rings.

Pinning down Paris and Los Angeles now would buy the IOC time to improve the business model for cities to profit from the games.

But is that even possible? Hosting the Summer Games is a gargantuan undertaking for even the most well-prepared city. It requires staging more than 300 events across some 30 sports in 17 days; housing 11,000 athletes and 5,000 coaches; finding 42,000 hotel rooms for Olympic officials and corporate sponsors; staffing almost 300,000 contractors and volunteers; supplying a 20-acre broadcast center with enough electricity to power 10,000 homes; and deploying some 20,000 military, police, and private-security personnel.

The Los Angeles bid group has often touted the fact that the city won’t have to build a single permanent structure. Even so, the city is planning to spend $5.3 billion. Paris, which plans to build a $1.8 billion apartment complex along the Seine to serve as its Olympic Village, is budgeting $6 billion. Los Angeles says it can pay for the Summer Games without taxpayer help (other than the federal government’s security contributions). Paris plans to use about $1.5 billion in public funds.

To help offset these costs, the 2024 host is set to get about $1.7 billion from the IOC, plus the revenue from ticket sales and whatever local sponsorships it can sell without stepping on the IOC’s global deals. The committee itself isn’t about to collapse financially, despite all the bad publicity. The IOC’s global sponsors, including Coca-Cola, Samsung Electronics, and Toyota Motor, provide $1 billion every four years, a figure that’s set to double during the cycle that begins in 2021. An estimated 3.2 billion people, a little less than half of the Earth’s population, watched at least some part of the Summer Games in 2016. NBC has committed to pay more than $10 billion for the next eight Olympics through 2032.

Still, the IOC needs to persuade cities to continue stepping forward to provide a backdrop, which, at the very least, means making the games less of a burden to the host. “A harm-­reduction model at this point in the Olympics is almost the best you can ask for,” says Jules Boykoff, a political science professor at Pacific University in Oregon and the author of the Olympics history Power Games. The IOC recently codified the doctrine that host cities should build as little as possible. To prevent the cycle of boom and bust, the committee needs to go further. It should abandon the idea that the Olympics can be a transformative force in the economic and cultural life of a city—a concept that has been central to the modern games since they were conceived by Pierre de Coubertin in the late 19th century.

In the Journal of Economic Perspectives in 2016, economists Robert Baade and Victor Matheson found, once again, that the “long-run benefits of the games prove to be elusive.” It would make sense, as many have suggested, to rotate the Olympics among a handful of cities that already have most of the necessary infrastructure. Such a plan is unlikely, however, because members of the IOC would have to surrender their primary power—to grant the right to hold the games. With each bid cycle, celebrities, royals, heads of state, and other luminaries rush to flatter and fete committee members to try to win the games. Even with only Los Angeles and Paris in the picture, IOC evaluators have been treated to a dinner with Kobe Bryant, Sylvester Stallone, and Plácido Domingo at the Beverly Hills home of L.A. bid Chairman Casey Wasserman and in Paris to a visit with newly elected French President Emmanuel Macron at the Elysée Palace. The IOC is not about to fix the Olympics, because the IOC is what’s broken: It can’t face giving up the creature comforts that come with the job.

The first step toward a final agreement on 2024 and 2028, Bach said in Lausanne, will be a joint dinner with the Los Angeles and Paris bid groups that begins with an “ice-cold Californian chardonnay” followed by “a very heavy French Bordeaux.” A final vote is set for an IOC session in Lima in September.

There’s no guarantee that Paris or Los Angeles will be without problems, ranging from terrorist attacks to transportation snarls. Still, the cities offer relatively low-risk bids because they don’t need to splurge to accommodate the Summer Games. Paris has so far maintained that its bid is a 2024-or-never proposition, while Los Angeles has signaled that it is willing to wait. “President Bach set a vision for a win-win-win,” Los Angeles Mayor Eric Garcetti said in Lausanne on the day of the double-­award vote. “Our job now is to work with the IOC to forge the best path forward.” That flexibility—along with a U.S. president who is deeply unpopular abroad—has almost certainly cost Los Angeles the chance to host in 2024, but it also leaves the city with unusual leverage. The IOC will need to provide incentives to make sure the city is happy to wait. It’s likely that L.A. will get an increased share of broadcast and sponsorship revenue and that the IOC will pitch in to help the organizers sustain a games office in the city for the next decade. It’s the least the committee can do—and the most that its noblesse oblige mindset will allow it to do, so long as one or two cities are willing to play supplicant every two years.

Bach, for one, isn’t ready to let go of the IOC’s fantasy of civic patronage. In June, when a reporter asked whether Paris or Los Angeles might need to be rewarded for waiting an additional four years to hold the Summer Games, he bristled and said: “I don’t think that you need to reward somebody if you give somebody a present.”

    Before it's here, it's on the Bloomberg Terminal.