Economic impact of 2024 Olympic Games on France examined

4 months ago 14

The Olympic flame arrived in Marseille on Wednesday (8 May) in front of 200,000 spectators, just a few weeks before the opening of the Olympic and Paralympic Games, which will run from 26 July to 8 September. What economic impact will the competition have on France?

On 15 April, 100 days before the start of the event, President Emmanuel Macron told BFMTV/RMC that France had invested “two billion euros” in public funds to build the facilities needed for the Games. “Housing, offices, sports facilities. These two billion euros have already generated more than six billion euros worth of business. We’ve put 2,000 companies to work and created jobs”.

The official budget for the 2024 Olympic and Paralympic Games is currently estimated at €8.8 billion, a 15% increase on the figure announced when France submitted its bid in 2017.

“During previous editions of the Games, certain budgets were multiplied by seven or eight, so I wouldn’t say that there was any slippage [in the case of France]. This increase can be explained by inflation, as part of a multi-year project,” Christophe Lepetit, head of economic studies at the Centre de droit et d’économie du sport (CDES), told France 24.

In a report on the Olympic Games published in July 2023, the Court of Auditors explained that “the increase in expenditure since the bid budget is partly the result of inflation, exogenous to the organisation of the Games, which was much higher than anticipated. However, two thirds of this increase is due not to management drift or ill-considered changes to the project, but to a clear underestimation of the bid budget”.

According to the latest figures, the Organising Committee for the Games (OCOG) has €4.4 billion at its disposal to welcome the athletes and organise the competitions, 97% of it from private sources. A further €4.4 billion, 50% of which is public funding, is also being provided to SOLIDEO, the Société de Livraison des Ouvrages Olympiques, which is responsible for overseeing the construction and renovation of sports and non-sports infrastructure.

In total, the budget for the competition is expected to be just over €10 billion, or 0.4% of French GDP, as Bruno Cavalier of ODDO-BHF points out for Les Echos, a figure similar to that for the London Olympics in 2012. This figure does not take into account the “induced costs” for the State, particularly in terms of securing public spaces.

More than 15 million visitors are expected in France for the duration of the competition, although there could be a “crowding out effect”, with some tourists postponing their trip due to exceptional crowds in the country. Will the business generated by the Games be able to offset the sums involved?

Will the Games be profitable?

According to a report by ODDO-BHF, the impact of the Games is likely to have “very limited, if any, economic benefits in the medium term”. “No significant macroeconomic impact is expected”, the study notes, “but there will be microeconomic and sectoral impacts”, for example in the media, hotel, leisure, catering, drinks, consumer goods, property and transport sectors.

For all that, “the Games should finance the Games”, as President Emmanuel Macron has been saying for years.

According to a study by the consultancy Asterès, expenditure linked to the organisation of the Games is expected to generate €5.3 billion in tax and social security revenues, an amount broadly equivalent to the public expenditure incurred.

This is a conservative estimate, according to the firm, which does not take into account the impact of the competition on tourism or the country’s attractiveness. All in all, the Olympic Games could support French growth over the summer, with GDP growth of 0.5% in the third quarter, before falling back to 0.1% for the following three months.

Ultimately, it will be difficult to draw up a full picture of the actual financial revenue before the competition is over and new studies have been carried out.

“We don’t host a sporting event to generate economic growth, but for geopolitical and social reasons, to position France internationally,” adds Christophe Lepetit. All that remains is for Paris to ensure that no organisational or security problems disrupt the competitions.