AILSA CHANG, HOST:
The Olympics are thrilling to watch but expensive to host, leaving most cities in the red. It's a big enough problem that the International Olympic Committee is finding it harder to lock in locations for future games. Darian Woods and Wailin Wong of THE INDICATOR crunch the numbers and ask whether it ever makes business sense for a city to host the costly competitions.
DARIAN WOODS, BYLINE: So the way the Olympics works is this. Cities submit bids for their vision, plans and budget for a future Olympic games. A city is then chosen. The International Olympic Committee pays for some operational costs, like the Games' broadcasting, but the host city is on the hook for pretty much everything else - the stadiums, the Olympic village, security. And essentially, whatever the IOC asks for, the host city has to pay.
BENT FLYVBJERG: We find that there's not one instance of an Olympics that were delivered to budget.
WAILIN WONG, BYLINE: Oxford and IT University of Copenhagen professor Bent Flyvbjerg co-published a paper on Olympic hosting costs. Bent says, one big reason for this is something he calls eternal beginner syndrome, as in the host cities, or at least the people who run them, are always newbies. Also a lot of big projects delay their completion date when things go wrong. But being late is not an option for the Olympics. So instead, the costs get blown out.
FLYVBJERG: Just imagine if you're going to build a new house, and you can write the specs, and you don't have to pay the bill.
WOODS: That would be great. I'd have a swimming pool, I'd have maybe an elevator. Why not?
WONG: The IOC is aware of this issue of high costs. In response, the IOC has tried to make the games cheaper to host. And the first initiative is learning.
FLYVBJERG: Around Sydney, 2000, they did something they called a knowledge-sharing program.
WOODS: So the host of the next Olympics can sit on meetings and planning for the current Olympics.
WONG: Unfortunately, though, Bent and his colleagues' research concludes that it didn't really reduce costs.
WOODS: Another thing the IOC is trying - modular designs. This means blueprints for stadiums that any country can pick up and use.
WONG: Bent supports this, but he hasn't seen evidence that it's really been pushed to host cities in a way that can make the Olympics cheaper and easier to plan.
WOODS: Another tactic the IOC is using to try to lower costs - renovating existing buildings. That's something you're seeing a lot with the Paris Olympics. Fencing and taekwondo and the epic glass-and-steel Grand Palais. You've got equestrian at the Versailles Palace gardens.
WONG: Versailles, famous for being a symbol of thriftiness. But is renovating really cheaper than building from scratch?
FLYVBJERG: It looks great. I think it works aesthetically, and it works in the sense of the experience that people get and so on. But when we look, you know, hard at the numbers, we can't actually see that it's that big of a saving.
WONG: OK, so those are the huge costs, always bigger than expected and giving cities like Rio buyer's remorse. But what about the benefits?
WOODS: Could it be that despite the high costs, the Olympics could still be worth it for the hosting city?
FLYVBJERG: We do have colleagues who have studied this question. Did the benefits actually justify the cost? And on average, they don't. So my advice is that if you're considering hosting the Olympics, you shouldn't do it for business reasons. You should do it for, you know - for what it is. It's a great party. And if you are rich enough that you can afford event like that, by all means, go ahead, and do it. But don't do it because you think it's good business.
WOODS: We want to have a gigantic party and invite the world, but let's not kid ourselves that the tourism benefits and the economic development benefits are going to outweigh that, and it's gonna pay for itself.
FLYVBJERG: For sure.
WONG: Wailin Wong.
WOODS: Darian Woods, NPR News.
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