It’s been 13 years since the pageantry and spectacle of the Summer Olympic Games — and the mythical economic boon that goes with it — has graced US soil. And it will be at least another seven years before such a star-spangled Olympic dream comes true. But we’ll find out next week if, in a secret-ballot vote in Europe, the International Olympic Committee (IOC) will award the 2016 Games to Chicago, the American city competing for the bid.
Yes, on October 2, Denmark will welcome dignitaries from all over the planet as the IOC convenes its 121st session. After a welcoming ceremony at the Copenhagen Opera House, the IOC’s 130 members will gather to decide which of four cities — the Obama-and-Oprah-backed Chicago is up against Rio de Janeiro, Madrid, and Tokyo — will host the XXXI Olympiad.
Global interest in the announcement always runs high, given the perception that securing a host-city platform will punch an economic meal ticket worth billions of dollars. That is surely why both the president of Brazil and the king of Spain have vowed to be in Copenhagen for the announcement — working the room before the vote — and why the prime minister of Japan and even President Barack Obama could also make a showing (First Lady Michelle has already committed to attend).
It’s also of interest to Bostonians, for two reasons: 1) as Americans, we’re eager to see if our country will get the Games, and, more selfishly, 2) if Chicago falters, it means the 2020 Games will almost certainly be served up to whichever enterprising US city emerges from the pack. That’s because the IOC would have to be dumber than a steroid-ingesting shot-putter to reject an American city — with all the attendant broadcasting dollars and sponsorship bucks — three times in a row (New York 2012, Chicago 2016, and TBD 2020). The lucky city could well be Boston, which, sources say, has been quietly readying an exploratory committee should the Windy City be blown away.
Two independent and unofficial Web sites that monitor the bid process have handicapped the 2016 contest. One has Chicago in front, while the other has it trailing both Tokyo and Rio.
A given in the sharp-elbowed scramble to secure the Olympics is the presumption that the Games are an economic golden goose. And that may be true — for multi-national corporations. According to many experts, however, on a local level, hosting the Olympics is actually a recipe for economic ruination. Be careful what you wish for, would-be host cities: you could find that the glorious Olympic torch burns at both ends.
The Olympic legacy of debt
The exact price of hosting the Summer Olympic Games — or any sports “mega-event,” including the FIFA World Cup — is under dispute. (The Winter Olympics, which bring in a quarter of the money and tourists, are actually classified by sociologists as just a “major” sports event.) Leading sports economist Allen Sanderson of the University of Chicago, however, is clear on one point: “Generally, these things lose money.”
The London 2012 Games, for example, were predicted to cost around $3.3 billion USD when the bid was submitted six years ago. That price tag has since quadrupled, and watchers agree that the cost will quintuple before Opening Day.
Potential host cities have kept an eye on such figures ever since Montreal’s $2 billion deficit after the 1976 Games. Barely paid off three decades later, it marked a turnaround in the profitability of a festival that “can no more lose money than a man can have a baby,” as Montreal Mayor Jean Drapeau then famously quipped. (Wrong on both counts there, sir.)
However large that specter of debt looms for host cities, the fact is a $2 billion public debt has become standard — if not, in more recent days, downright charming. Olympic boosters have dispelled such concerns by asserting that the Los Angeles and Seoul Games (’84 and ’88 respectively) both made a profit — upward of $250 million each. This was primarily due to the then-new media-friendly strategy of the IOC, which made sure that broadcast rights brought in more money than cities spent on construction, an economically sound practice. But the 1992 Barcelona Games lost $1.4 billion, which sent Atlanta organizers scrambling.
The 1996 Olympics managed to stay in the black by $10 million (although still short of the billions projected by a hopeful city’s “economic impact statement”), mostly from private donors and sponsors. But the hyper-commercialized result of the ’96 sponsorships also made for some gaudy Games, a fact that led the IOC to make clear that privately funded Olympics would no longer be tolerated. (The IOC went so far as to slip public-guarantee stipulations into the host-city contract and, less overtly, grumbled about US bids for 20 years.)
Researchers dispute the exact final cost of the Sydney 2000 Games, but by nearest estimates Sydney’s taxpayers were bilked of the then-standard $2 billion USD. (Cost overruns budgeted for $1 billion had skyrocketed to $6.4 billion.) The Sydney story doesn’t end there, though: stadium maintenance and upkeep on the largely unused facilities continue to cost the city $11 million per year.