2016 Olympics Effect on the Economy

Sports lovers from all across the globe empty their pockets to watch the Olympic Games no matter which country hosts the event. And this year, Rio de Janeiro has a lot to live up to. Before the start of the Olympic Games, it looked like the city’s economy and infrastructure are not going to be able to handle the pressure of hosting the major sporting event.

Host countries gain several advantages as well as disadvantages from the Olympic Games. The major sporting event can bring in lots of tourists, as well as improve the economic status of the region. Hotels, restaurants, retail, entertainment and public transport are expected to earn a lot during the duration of the games.

However, Brazil also needs to worry about negative backlash and poor impressions that can damage the country’s tourism industry in the future. It requires a large amount of initial budget, and there are instances in which the expenses can lead the city to near bankruptcy.

Costs of the 2016 Rio Olympics

When Brazil was named as the host of the 2016 Olympics in 2009, the economic outlook of the country was positive. During that time, the country just announced its largest oil discovery, and commodity prices were increasing.

However, financial disaster struck the country several years after Rio was named as the 2016 Olympics host. The country faced its worst recession in decades. Brazil suffered from double digit inflation and high unemployment rates.

In 2015, the government had to slash five to 20 percent of the $5 billion budget for the Olympic Games. It was reported that VIPs would be served rice and traditional beans instead of gourmet meals. And the bad news is that profits from the games are not too promising. Although the Organizing Committees of the Olympic Games reported that host cities had broken even since 1984. However, the OCOG didn’t account capital costs that include stadiums, media center, Olympic village, and other infrastructure built for the athletes and other officials.

How Much Money is made during the Olympics?

The International Olympics Committee released estimates based on previous Olympics, as well as the current economic state of Brazil. According to the estimates, the highest revenue channel is the TV broadcasting rights, which is 70 percent of the total. The 2016 Rio Olympics is set to earn more than twice the broadcasting money of the 2004 Athens Olympics.

Another source of revenue for the Olympic Games is sponsorship deals, which makes up 20 percent of the total Olympic revenue. Some of the official sponsors of this year’s event are McDonalds, Coca-Cola, Samsung, Nissan, and Panasonic, just to name a few. Licensing and marketing rights are expected to bring in $300 million.

Although there are bumps on the road, Brazil showed that it was able to host the Olympic Games. The country has spent more than $12 billion to date and managed to show a vibrant image of an economy that is able to come out of its recession. Even just within the duration of the Olympic Games, people have seen a glimpse of the advantages of a stable economic growth and a stable government.


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