Cost of the Olympics
When London was selected as the host city for the 2012 Summer Olympic Games, years of research and planning had already been done. They had already devised a plan and the designs were complete to build the Olympic Park and the other necessary venues that would be needed to house the Olympic Games. To host this world-wide sporting event is a great honor for any country but it also comes with a hefty price tag and must involve securing funding.
The original budget that the London Organizing Committee on the Olympic Games (LOCOG) developed was about £3 billion and included both building and hosting these events. The budget included £560 million for the completion of the Olympic Stadium, £650 million for the development of the Olympic Village, £1.5 billion to run the Olympic Games and £200 million for security. These numbers have quickly risen and most people believe the initial figures were greatly underestimated. Currently, it is believed that the correct total figure will be more like £8 billion. The funding for the London Olympics comes from both public and private means.
Public funding for the London Olympics is collected to cover the costs of the building venues needed for the games and for the infrastructure that is to be built to support these venues. This is ideally to be comprised of 64% of the funds to come from the Central Government, 23% of the funds to come from the National Lottery and 13% of the funds to come from the Mayor of London and the London Development Agency.
The cost of the 2012 London Olympic Games has continuously risen over time. Just the Olympic Stadium itself has increased from the original budget of £560 million to almost £1 billion. The already tight budgets of both England and London have caused many to worry that they will run out of cash if the costs are not kept under control. Many of the government agencies have put caps on what they will be able to contribute and most people in the UK do not want the government to take any more funds out of the National Lottery account to spend on the Olympic Games.
Private funding for the London Olympics is comprised of sponsors, partners and supporters and these private funds are collected to pay for the running of the games. There are several worldwide official sponsors of the Olympic Games and they include big name companies like Coca-Cola, McDonald’s, GE, VISA and Samsung. Many more chose to become official partners for the 2012 London Olympic Games and these include companies like, Adidas, BMW, British Airways and BP. Official supporters include smaller companies like UPS, Adecco, Cisco and Cadbury.
In addition to the sponsors and partners, funding for the London Olympic Games is also collected on the sale of tickets and merchandise that are sold before and during the Olympic Games. These funds collected directly offset the costs involved in running the games.
Although, hosting the Olympic Games can be quite costly and securing funding for the London Olympics can be difficult, the economic impact that the games will have on the city of London and the surrounding areas is immense. Revenue collected from hotels, restaurants and stores in the area will bring in a lot of extra tax revenue for the city.