Olympics in Cologne: Economic researchers warn of high costs and risks

Olympics in Cologne: Economic researchers warn of high costs and risks

A possible bid by Cologne for the Olympic Games is the focus of current discussions about the economic effects of such major events. Oliver Holtemöller, deputy president of the Leibniz Institute for Economic Research in Halle, commented extensively on the advantages and disadvantages. He emphasizes that costs usually outweigh income, which is primarily due to the necessary construction activities. Many cities are faced with the challenge of using existing sports facilities or building new ones, with a major economic impact. A look at the Olympic Games in Barcelona in 1992 and Salt Lake City in 2002 shows that positive effects are often the exception. Infrastructure improvements have been achieved there, but a short-term positive ratio between income and costs is unrealistic.

Cologne citizens should take a close look at the methodology behind the studies on the economic effects. Displacement effects often occur, which significantly complicate the interpretation of visitor numbers. Holtemöller points out that the cost planning for the Olympic Games is often unrealistic and is dramatically underestimated in advance. General inflation and unforeseeable factors also play a role here. In order to make an informed decision, the advantages and disadvantages of the Olympic Games should be communicated transparently.

Costs and benefits in an international context

A look beyond Cologne's borders to Paris shows that the total costs for the 2024 Olympic Games are estimated at around 7.7 billion euros, with 3.3 billion euros planned for infrastructure alone. This is almost twice as high compared to the classic cost range of between 3 and 5 billion euros that is usually set for such events. Timo Zimmermann, a sports economist, draws attention to the high costs, while the University of Limoges expects an economic impact of around 10.7 billion euros from increasing tourism and new jobs. But there is skepticism: Stephan Kemper from BNP Paribas only expects a marginal positive effect on the economy, considering the high expenditure. Security concerns and high hotel prices are also reducing bookings in Paris, where 25% of hotels are currently underutilized.

The expected 15 million visitors during the games, many of whom are French, will also often not stay in hotels - a factor that further depresses potential revenue. In a similar way to London at the 2012 Games, when only 10% of new jobs were created among the unemployed, the creation of new jobs in Paris could also have a temporary impact. The tourism industry is facing fundamentals such as the decline in sales at Air France of up to 180 million euros.

In summary, it can be seen that although enthusiasm for such major events is often high, the real economic effects should be critically questioned. Whether Cologne has a good hand at educating citizens about the real opportunities and challenges is still up in the air.