France makes multibillion-euro gamble on Olympic gold

• 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

PARIS: France is facing a bill of almost nine billion euros for hosting the Paris Olympics but top officials say 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 nearly nine billion euros ($9.5 billion) 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 $12.9 billion, Japan’s Audit Board has been reported as saying.
Greece’s finance ministry estimates that the 2004 Athens Games cost $9.1 billion — although some independent estimates are closer to $15 billion. London 2012 cost up to $15 billion.
The Paris organizing committee, boosted by ticket sales, sponsors and International Olympic Committee (IOC) funds, has a budget of about 4.4 billion euros 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 alloted another 33 million euros to Paralympics organizers who are struggling with ticket sales.
The government and local authorities have so far committed about 2.4 billion euros 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 five billion euros.
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 $3.2 trillion.
According to the Center for Law and Economy of Sport (CDES), which has been monitoring the Paris Games for the IOC and the Paris 2024 organizers, the event will produce between 6.7 billion and 11.1 billion euros 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 5.3 billion euros 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 can 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 colors, according to its managing director Lea Marie.
“It has created work in our factories” and for the company’s 80 sub-contractors, 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 three billion euros from the Olympics.
Tourism expects to earn up to 3.6 billion euros from the 15 million 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.