"Hosting a large sporting event potentially offers both direct and indirect economic benefits. Direct benefits include capital and infrastructure construction related to the event, long-term benefits such as lower transportation costs thanks to an improved road or rail network, and spending by tourists who travel from out of town to attend the games. Indirect benefits may include advertising effects that showcase the host city or country as a potential tourist destination or business location in the future and an increase in civic pride, local sense of community, and the perceived stature of the host city or country. But there is also a potential downside, resulting from possible cost overruns, poor land use, inadequate planning, and underutilized facilities.
The Olympic Games are much like other large sporting events, such as the World Cup, Super Bowl, or World Series, but they involve many more participants, officials, and fans; require more infrastructure construction; generate many more out-of-town visitors; and generally have a much higher profile."
The development of games-related infrastructure can have long-term benefits for host cities, but also represents large upfront investments that prospective hosts might not be able to afford. However, past hosts have shown that indirect benefits from these sorts of events can be even greater than those directly related to the games.