Paris Olympics: France makes €9bn gamble but cost to be less than Tokyo, London, even Athens
- While it will take time for the final bill to be known, the event is set to produce €6.7 to €11.1 billion in economic benefits
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France is facing a bill of almost €9 billion for hosting the Paris Olympics but top officials said the financial fallout could be more “psychological” than economic.
Ahead of the July 26 opening of the Games, ministers and financial observers are juggling the figures to estimate the costs and benefits of the sporting spectacle.
So far, French authorities are predicting a cost of almost €9bn (HK$75bn) for the Paris Games, although the official figure will take time to confirm.
Costs are always difficult to predict or confirm.
The Tokyo Olympics, delayed for a year until 2021 because of Covid-19, cost about US$12.9bn (HK$101bn), Japan’s Audit Board reportedly said.
Greece’s finance ministry estimates that the 2004 Athens Games cost US$9.1bn – although some independent estimates are closer to US$15bn. London 2012 cost up to US$15bn.
The Paris organising committee, boosted by ticket sales, sponsors and International Olympic Committee (IOC) funds, has a budget of about €4.4bn and a similar figure has gone to the Solideo public company that has built the Olympic Village north of the French capital.
But the final bill will depend on spending on Olympic bonuses for metro drivers, police and emergency services, as well as the general cost of security.
The government this week allotted another €33 million euros to Paralympics organisers, who are struggling with ticket sales.
The government and local authorities have so far committed about €2.4bn to the Paris Olympics, mainly for construction. But the head of the government’s Court of Accounts has estimated that the final state cost could be up to €5bn.
Bruno Cavalier, chief economist for Oddo BHF financial services group, said the “direct state involvement is relatively limited”. He added that the Olympics will not “radically change” France’s public debt of about US$3.2 trillion.
According to the Centre for Law and Economy of Sport (CDES), which has been monitoring the Paris Games for the IOC and the Paris 2024 organisers, the event will produce between €6.7bn and €11.1bn in economic benefits for the Paris region.
But it added that these benefits would be spread over 20 years.
In February, the Asteres consultancy estimated that the Games would bring in €5.3bn in extra tax and social revenues.
Deutsche Bank said in a study this month that “host nations of the Olympics or Fifa World Cups rarely earn positive economic or even social returns on what are often massive and publicly-funded investment sprees on new stadiums and public infrastructure”
It said that even the short-term boost to investment and employment was “limited” unless the host country is going through a recession.
For Bank of France governor Francois Villeroy de Galhau, the Paris Olympics will have more of a “psychological” impact than economic.
But he said if France could improve its image around the world through the Games, then it could eventually expect new investment.
In the short-term, some companies are already seeking to cash in.
Le Slip Francais, an underwear maker, is making thousands of extra underpants, swimming costumes, pyjamas and other goods in the Olympic colours, according to its managing director Lea Marie.
“It has created work in our factories” and for the company’s 80 subcontractors, she said.
Companies linked to the Olympic building spree have also benefited.
According to the CDES, construction and refurbishing companies expect to increase revenues by up to €3bn from the Olympics.
Tourism expects to earn up to €3.6bn from the 15m visitors predicted for the Games, including two million from abroad.
Oddo BHF predicted that media, leisure, drinks and alcohol, consumer goods and transport companies would all benefit from the Games.
