This paper examines the short and long term effects of the Summer Olympics, Winter Olympics, and the World Cup on the economy of the host country. We find that selection for hosting the Summer Olympics only produces a significant positive announcement period effect in the host country’s domestic equity market. This effect however resides solely in the construction and building materials industry. We further show that the Summer Olympic game hosting nations generate significant positive economic performance up to 3 years prior to hosting the event, while this positive economic performance disappears 1 year after hosting such an event. Our results suggest that contrary to the conventional claims by mega sports organizers, it appears that there are no significant long-run economic gains from hosting such mega sporting events.
The authors conclude:
Our results suggest that unlike the common claims by mega sports organizers, the economic benefits for hosting a mega sporting event are limited. Summer Olympics may stimulate the domestic economy prior to hosting such an event. However, it appears that there are no significant long-run economic gains from hosting any of the three mega sporting events.
At least the authors do not argue that the organizers lose money. See the paper (Ferris et al July 2012) here.
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