The city of Sochi might gain economically from the recent Winter Olympic Games, but the rest of Russia will see only limited benefits, say experts from the European Bank for Reconstruction and Development (EBRD).

According to EBRD economists Olga Ponomarenko and Alexander Plekhanov, hosting the Olympics almost never generates a profit in pure accounting terms. Sochi is no exception and is expected to generate one of the highest losses on record, with official ticket prices lower than comparable recent events.

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The cost of hosting the Olympics in Sochi, estimated at $50bn by the International Olympic Committee (IOC), is the highest in the history of the games. The EBRD says this record cost could be explained by the fact that developing countries tend to have less developed sports and technology infrastructure, and a lack of management expertise.

Hosting the Olympics can create between 50,000 and 300,000 jobs, according to estimates from the IOC. Most of these positions are temporary, however, and play a negligible role in the economy long-term. For Russia, the short-term implications of hosting the Winter Olympics include increasing labour prices, given the country’s low unemployment rate and tight labour market conditions. 

There are benefits to the Olympics in Sochi, however, including improved consumer and investor confidence, as well as long-term economic returns on infrastructure, say EBRD experts. A recent EBRD survey on the business environment found that infrastructure no longer ranks as a top obstacle to doing business in the region. In fact 15% of the 235 Olympic projects carried out in the run-up to the Sochi games were connected with road projects, and railway and airport upgrades. According to the EBRD, Sochi has the opportunity to further leverage its position as Russia’s leading sea resort and potentially become a regional business hub.

Yet, Sochi’s Olympic legacy could also be one of redundancy – history shows that Olympic facilities, such as convention and sports centres, often remain idle or underutilised. However, a number of cities, including Atlanta, which attracted 280 international companies in the 10 years following the 1994 Olympics, have succeeded in putting especially improved business infrastructure to good use.