PETALING JAYA - Hosting a major sporting event such as the Olympics is not only a difficult task, but is also a capital-intensive exercise in its own right.
"Hosting an international event of this scale would require a lot of capital upfront, not forgetting the period before the event where money, time and effort would be needed to develop local sporting talents," said RAM Holdings group chief economist Dr Yeah Kim Leng.
Such a huge expenditure, usually borne by the Government, would have big multiplier effects on the economy, and the host country would usually see almost immediate spillover effects for a certain number of years until the event date, Dr Yeah said.
Data on public domain showed that Greece, Athens had proposed an initial budget of US$1.6bil (S$2 billion) to host the 2004 Olympics, but it ended up spending US$12bil.
More recently, The Guardian of the United Kingdom reported that the 2012 Olympics that was originally supposed to cost about US$3.8bil saw costs jump to US$14.7bil by 2007, with most of it borne via public spending.
These mostly went into the building of key infrastructure for the games, such as stadiums, roads, public transportation facilities and athletes' housing.
"I think the benefits, both direct and indirect, to the economy are immense," said Alliance Research's chief economist Manokaran Mottain. "The host country would gain on foreign exchange inflows. Other indirect benefits are spillover into the media and advertising industry as well as to the tourism related sectors," he said.
"My estimation is that there will be a 50-100 basis point addition to the host's overall GDP in the years prior to the games, depending on its size, as the host country would usually be given at least five to seven years to prepare," Mottain added.