[Example] Paris could change how cities host the Olympics for good

THE OLYMPIC flame will illuminate the City of Light from July 26th, when the world’s greatest sporting spectacle gets under way in Paris. Although France still lacks a government after a snap national parliamentary vote in recent weeks, its capital will host the 33rd Olympiad in style. Dressage events will take place in the magnificent grounds of Versailles; volleyballs will whizz over nets by the Eiffel Tower. Organisers hope to show the best of France to visiting sports fans, business executives and foreign politicians. One of the thousands of volunteers involved describes “an infectious positive energy”.

Not all locals are so enthused, however. Security is tight over terrorism fears and much of central Paris has been zoned off. Restaurants and other businesses in these areas are emptier than normal and bookings at the poshest hotels were down between 20% and 50% in July, according to UMIH Prestige, which represents them. Overall, 44% of Parisians consider the games to be a “bad thing”, according to recent polling; 50% said they would consider leaving the city to escape them. “I want this event to be amazing,” explains Paul Hatte, a Parisian councillor who represents the city’s 17th arrondissement, “but it feels more like it will be an international party in Paris without the Parisians.”

Such responses are hardly unusual in an Olympic host city; no one likes disruption. But the Paris games are stirring up other well-worn concerns, too: Is hosting the games really worth it? Need they be an environmental calamity? And what of the tricky political decisions around participation and protest? The International Olympic Committee (IOC) has been wrestling with such matters in a bid to break the cycles of doubt that seem to accompany each Olympiad. The games in Paris will reveal whether it has found smart new solutions to stubborn old problems.

It is a century since the French capital first held the Olympics. Back then, 3,000 athletes representing 44 countries competed in 126 medal events. This year’s extravaganza will feature 10,500 athletes from 206 countries and 329 medal events. Almost 9m tickets have been sold—a new record. The approach of the games has encouraged vast investment in Paris’s amenities. The Metro network is in the middle of a 200km-long expansion costing €42bn ($46bn), and over €1.4bn has been spent on cleaning up the River Seine.

But do cities benefit from holding the games? The economics of hosting the Olympics are challenging. In 2016 a review of studies examining the economic impact of the games concluded that the short-term effects are “near-zero” and that the long-run ones are “elusive”. Ten of the 13 summer games until 2016 had resulted in losses, and all of them ran over budget. Recent research by Alexander Budzier and Bent Flyvbjerg at Oxford University estimates that each Olympiad overshoots its original budget by an average of 195% (see chart 1). In Paris the figure is projected to be 115%.

As the Olympics have grown, they have attracted more media interest and larger pots of sponsorship money. At present the IOC still retains the bulk of the games’ earnings from broadcasters and sponsors. Broadcast revenue rose from $2.2bn in the 1993-96 cycle to $4.5bn in 2017-21 (at 2021 prices), while top-tier sponsorship jumped from $480m to $2.3bn over the same period. Major sponsors of the Paris games include LVMH, the French luxury empire. But costs have grown even faster than sponsorship has. In 1924 the Paris games cost around $9m in 2022 prices; this time the estimated cost is around $9bn (see chart 2). The Parisian organising committee, however, will almost certainly need to stump up more because of overruns. The private sector will foot most of the total bill through the IOC, partner firms, tickets, licensing and more.

In the past, prospective hosts spent heavily to try to beat out rivals. Huge demands were then heaped on a single city for shiny new venues to be built according to a tightly fixed schedule. Sometimes they were abandoned later. In the year after Rio de Janeiro’s games of 2016, 12 of the 27 venues failed to host another sports event. Judging by previous games, “The value proposition was not appealing,” admits Christophe Dubi, the IOC’s executive director.

All this hardened public opinion. A decade ago voters in Munich rejected a proposal to host the Winter Olympics in 2022, as did those in Krakow and St Moritz. Beijing won them instead and covered an area of 800,000 square metres with fake snow. A bid for this summer’s games was knocked back by the people of Hamburg. Only two cities—Paris and Los Angeles—wound up bidding. That was down from nine cities wanting the 2012 games; seven battling for the 2016 ones and six for the 2020 ones. Officials gave Paris the 2024 games and Los Angeles the 2028 ones.

Crucially, the IOC seems to have learned from the episode and has altered the way countries now bid for competitions. It has moved from a “beauty contest” to a collaborative means of finding a “preferred partner”, according to Mr Dubi. Opponents say this is more opaque; the IOC reckons it should cut bidding costs by 80%. Brisbane is the first partner picked this way and it will hold the 2032 games; Seoul was among those miffed at the outcome. Possible hosts for 2036 are lining up already.

At the same time, the committee wants to rein in the Olympics’ growth to reduce both costs and environmental damage. It has capped the number of athletes for summer games and prioritised bids that require minimal new infrastructure. Of the new venues to be used in Paris, only three are permanent, purpose-built structures. Organisers hope that sublime backdrops will compensate for pop-up seating.

Greenery is front-of-mind in all this. The games in Rio and London each produced more than 3m tonnes of carbon-dioxide equivalent, roughly equal to the annual emissions of Iceland, a country of 380,000 people. In Paris organisers want the “greenest-ever” games and hope to cut emissions in half from Rio and London levels. They plan to use only renewable energy and to offset emissions through carbon-credit purchases. Environmentalists are sceptical and some initiatives seem superficial. Air-conditioners are banned from the Olympic village despite the fact that they, like most electrical appliances in France, would be powered by nuclear energy. Many teams are just bringing their own.

Alongside the financial and environmental issues, the IOC is dealing with tough political concerns. The original idea was for the Olympics to stay above politics as a “mighty ally” for peace, as the father of the modern games, Pierre de Coubertin, put it. Yet on occasion they have become a stage for geopolitical flexing. Most notoriously, the Berlin games in 1936 were a propaganda tool for Nazi Germany. Consecutive games in Moscow and Los Angeles in the 1980s became another front in the cold war. And the Olympics have not escaped accusations of “sportwashing”: in 2008 China used the Beijing games to announce itself as a superpower. Saudi Arabia might try to show its clout by hosting in 2036.

Questions around participation attract particularly intense scrutiny. The IOC recognises 206 National Olympic Committees (NOCs)—for context, the UN has 193 member states—and welcomes entities including Kosovo and Palestine. For those seeking nationhood, the Olympics can be a powerful platform for their cause. Participation is at the IOC’s discretion. In Paris, there will be neither Russian nor Belarusian flags. Both these countries’ teams have been banned over the war in Ukraine, but some of their athletes can compete as neutral individuals. That appears to have irked some. A Russian chef was arrested in Paris just days before the opening ceremony on suspicion of plotting acts of “destabilisation”. An investigation is under way into his possible links to members of the Russian intelligence services.

Meanwhile, the IOC has refused to ban Israel for its war in Gaza and its lawyers have dismissed comparisons with Russia. Critics still perceive inconsistency. One far-left French MP was condemned recently for suggesting that Israel’s team would not be welcome in Paris. The entire issue is intensified by past tragedy: at the Munich Olympics in 1972 a Palestinian terror group killed 11 Israelis.

Doping is another heated area. After the discovery that Russia had run a state-sponsored doping programme at the winter games in Sochi in 2014, the World Anti-Doping Agency (WADA) recommended that all Russian athletes be banned from competing at the summer games in Rio. The IOC kicked the can down to the individual sporting federations. Several still allowed Russian athletes to take part.

America is also at loggerheads with WADA for failing to act against Chinese swimmers who tested positive for a performance-enhancing drug months before the Tokyo games in 2021. Members of this group went on to win three gold medals. WADA maintains it has no case to answer; China has accused America of “slander”. Should any of the implicated swimmers win in Paris, tensions are bound to flare.

The IOC’s reforms are a welcome start. But more could be done in future to make the games easier to host. One idea is to spread the Olympics out. Different cities in different countries could host different events. For economists this is the surest way to cut costs: more places spending on events would mean a smaller bill for each. And a multi-city model could also help assuage local concerns by reducing the pressure on any single host. It might also make it more difficult for autocrats to use the games for their own agendas. There could be environmental benefits, too. At present the IOC rejects such decentralisation. It would “undermine the unifying power” of the games, says Mr Dubi. Yet it is already happening to an extent. For Paris, some basketball and handball matches will take place in Lille, a town 140 miles away. And surfing is in Tahiti, some 10,000 miles away.

In reality, the tremendous power of the games does not come from bringing people together physically but from captivating the world’s attention for a fortnight. Over 3bn viewers tuned in to Tokyo and even more are expected to do so for Paris. “People believe the Olympics transcends issues like doping, geopolitics and corruption,” reckons Terrence Burns, a former IOC consultant. He points out that the games have survived far trickier geopolitical moments, including the cold war and two world wars. “The Olympics are the last best place where we can come together as a species,” he says. ■