The Olympics were financed almost entirely by Montreal city's public funds (2004).
Allan Drury stated in The Journal News (2005) that Montreal city spent huge amounts to build venues and develop infrastructure without assessing the income generation aspect. Allan Drury also stated that the Montreal Olympics were a failure not due to operational reasons but because the mayor borrowed 30-year bonds which are being paid off and will not finish paying the debt of US $ 2 billion in principal and interest till 2006.
The European Economic Outlook states that the impact of Montreal Games was such that other cities were not ready take the risk and thus deferred bidding for Olympics for some time as depicted in Figure 1.1 (2004).
But Allan Drury stated in The Journal News (2005) quoting Humphreys saying that spending occurs for constructing athletes' venues, housing and other infrastructure and the financial success of the Atlanta games could be attributed to good planning and corporate contributions. Thus unlike in Montreal the taxpayers were not asked to pay huge amounts.
According to The European Economic Out...
Thus unlike in Montreal the taxpayers were not asked to pay huge amounts.
According to The European Economic Outlook Los Angeles Olympics of 1984 were almost entirely privately-financed since the citizens voted against public financial support, thus beginning the era of commercialisation of the Games and also developing the global Olympic sponsorship deals. Statistics proved that the games were a financial success, generating budget surplus with little spending for up gradation of city's infrastructure. As shown in the table 1.1 revenues were very high over operational costs leaving relatively good balance excluding investments and also an excellent overall balance when compared to that in the previous Olympics.
Table 1.1 - Financial balance of Olympic Games Organising Committees (Source: Price water House Coopers European Economic Outlook, June 2004)
The European Economic Outlook further stated that commercial success of Los Angeles Olympics in 1984 followed by Seoul Olympics in 1988 and Barcelona Olympics in 1992 encouraged and attracted many cities to bid for hosting Olympic Games. The Olympics proved useful to a city by improving its infrastructure, transportation, telecommunication facilities, construct new urban centers with housing, retail and other community facilities which could be fully integrated into metropolitan areas and thus the focus was on macroeconomic impact of the games.
Understanding the Economic Effect
According to Evangelia Kasimati (2003), when a city is awarded Olympic Games the country is expected to experience a major economic effect by way of receiving large amounts of foreign currency and recirculation of this money in local, regional or national economies. The inflow of money would be through the so called