Behind the grandeur of the Olympic Games lies a huge financial challenge-how to keep budgeted costs in line with revenues. For example, the 2006 Winter Olympics in Turin, Italy, narrowly avoided going into bankruptcy before the Games even started. In order for the event to remain solvent, organizers canceled glitzy celebrations and shifted promotional responsibilities to an Italian state-run agency. Despite these efforts, after the Games were over, the Italian government created a lottery game to cover its financial losses. Organizers of the Winter Olympics in Salt Lake City cut budgeted costs by $200 million shortly before the events began. According to the chief financial officer, the organizers went through every line item in the budget, sorting each one into must have versus nice to have. As a result, the Salt Lake City Games produced a surplus of $100 million.

Why does it matter whether the Olympic Games exceed their budget?