'Jaringobi' Paris Olympics... Can It Turn a Profit? [Paris Olympics]

The 2024 Paris Olympics is drawing attention for significantly reducing hosting costs. Recently, whenever the Olympic host city was decided, many local residents opposed the bid for economic reasons. This was due to growing concerns that the Olympics would cause a large-scale deficit and negatively impact the local economy. It remains to be seen whether the cost-cutting Paris Olympics can create a new turning point.

U.S. economic media outlet Business Insider recently reported, citing data from U.S. fintech company WalletHub, that the hosting cost for the Paris Olympics is $8.2 billion. Although some estimates suggest the cost could reach $10 billion, considering recent Summer Olympics hosting expenses, the Paris Olympics cost is relatively low.

According to U.S. economic media MarketWatch, when adjusted for inflation, the most expensive Summer Olympics to date was the 2020 Tokyo Olympics held in 2021. The hosting cost was estimated at $20 billion. Following that were the 2012 London Olympics at $17.1 billion and the 2016 Rio de Janeiro Olympics at $15.6 billion. In other words, compared to the immediately preceding Tokyo Olympics, the Paris Olympics is less than half the cost. Simply put, the Paris Olympics is being held with a budget about half the size of the previous three Summer Olympics combined. It was even so hot that air conditioning was not installed in the athletes' accommodations.

[Photo by Yonhap News]

Although the cost-cutting is reminiscent of being frugal, it is difficult to guarantee whether the Paris Olympics will turn a profit. The Sports Law and Economics Research Institute (CDES) under Limoges University in France estimated that, in the best-case scenario, the economic benefit to ?le-de-France (the Paris metropolitan area) from 2018 to 2034 would be 11.1 billion euros (approximately $12.1 billion). In the worst-case scenario, the economic benefit is expected to be only 6.7 billion euros. CDES presented three possibilities: best, worst, and middle cases, with the middle case estimating an economic benefit of about 8.9 billion euros. Considering the chances of profit and loss for France from the Paris Olympics, it can be said to be about fifty-fifty.

There also appears to be growing skepticism among companies regarding the promotional effects of the Olympics. The International Olympic Committee (IOC) introduced the TOP (The Olympic Partner) program in 1985, granting global companies the rights to promote the Olympics. TOP partners can use Olympic logos and other branding for marketing activities in all IOC member countries. Additionally, only one company per sector is selected as a TOP partner, enjoying exclusive status and exclusive supply of goods for the Olympic Games. Currently, there are 15 TOP partners, including Samsung Electronics.

However, companies' doubts about whether the promotional effects justify the investment costs are increasing. For example, Japanese automaker Toyota announced in May that it will no longer sponsor the Olympics as an official partner after the Paris Olympics. The biggest reason companies hesitate to sponsor is that the Olympics are not as popular as before. Especially, young people are not enthusiastic about the Olympics, which is a competition between countries. The British daily Financial Times (FT) pointed out that skateboarding and breakdancing were included as official sports in the Paris Olympics to attract the under-35 younger generation, but it is uncertain whether the IOC will achieve the expected effects. The FT also predicted that other TOP partners might follow Toyota's example.