The host city for the 2016 Olympics will be announced Friday. Chicago, one of the finalists, estimates that it will spend $4.8 billion total to host the games if they win the bid. That sounds reasonable compared to the $1.2 billion the Dallas Cowboys spent to build their new stadium--that's not a typo.
However, there have been a string of Olympic budget overruns that make the Cowboys' stadium look like a monument to frugality. Beijing budgeted $1.6 billion for the 2008 Olympics and spent $40 billion--they were only off by $38.4 billion. London budgeted $8 billion for the 2012 Olympics and that estimate is already north of $19 billion. For more details, read this time.com article.
Chicago should be careful what it wishes for. I'm all for Olympics in the U.S., but burdening a city's future with heavy debt isn't worth it. There is hope, though. Atlanta's $1.7 billion, privately funded 1996 Olympics "generated $5 billion in economic activity, including $1.8 billion in hotel, residential and commercial construction," according to time.com.
The basic lesson is that budgets should be followed and risks minimized when possible. Wise planning can lead to large profits, while excess and lack of foresight can lead to debt for generations. It's a lesson that we should apply to our own finances, and one that all governments and businesses should take to heart when charting economic futures.
(For more Olympic fun, check out this blog and this one.)
--Jens
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