Are the Olympics a White Elephant?

January 22, 2009 7:59 AM

Do the Olympics pay for themselves in the long run?

For host cities, do the investments to building new infrastructure, facilities, marketing, etc. end up costing them more than if they did not host the games? Do cities use the Olympics to justify urban renewal projects that would never otherwise happen? Are there statistics on the long-term effects of whether or not host cities are better off 10 years or so down the line?

I wonder if the cost of hosting the games is never really recouped, and it seems that the facilities in previous host cities are not always well used (or maintained). What's the attraction if they aren't cost effective?

posted by qwip to sports, hobbies, & recreation (11 answers total)

Article about 2008 Olympics

This article deals with the need to profit, and specifically mentions the Los Angeles Olympics
posted by Brettus at 8:15 AM on January 22, 2009

I don't know about the Olympics per se, but the use of taxpayer funds to build stadiums for sports teams is controversial. It's unclear if taxpayers break even with these deals, let alone come out ahead. There's a book about it called Major League Losers: The real cost of sports and who's paying for it.

There is also this article about the Bird's Nest, and the likelihood that it will not recoup building costs.
posted by OmieWise at 8:18 AM on January 22, 2009 [1 favorite]

I'd look into the 1976 Montreal Olympics, and the 1988 Calgary Olympics. Montreal's were an infamous fiasco of financial mismanagement, with some saying the citizens of Montreal are still paying them off today. Calgary on the other hand, made money hand over fist and invested in infrastructure that is still benefiting the city today (the light rail transit system being the most obvious example). Clearly two examples are not definitive, but given that they were both in Canada and only about a decade apart, comparing Calgary and Montreal might be a good place to start.
posted by mizike at 8:33 AM on January 22, 2009

It probably depends on each Olympic game - for example Salt Lake City was famously turned around by Mitt Romney.

Apparently it made a $100 million dollar profit in the end.
posted by jourman2 at 9:16 AM on January 22, 2009

I live in Salt Lake and I was here during the Olympics. I would probably say that the Olympics here probably paid for themselves in the sense that it created a lot of exposure for the Winter tourism market here in Utah. We've seen record numbers of skiers every year since. Also, when you consider that 4 years later they were showing clips and refering to Salt Lake at the next winter Olympics in nearly doubles our exposure.
posted by trbrts at 9:45 AM on January 22, 2009

vancouver's in a bit of a bind.

seems they pinned everything on the insane idea that realestate prices would skyrocket indefinitely.

and the van olympics haven't even happened yet!
posted by klanawa at 9:59 AM on January 22, 2009

This is some great information, everyone. Thanks for the insight and links.
posted by qwip at 10:08 AM on January 22, 2009

A white elephant that builds light rail. It has been used to justify infrastructure projects that otherwise might encounter resistance, and allows the city fathers a moment of control they dream for. The Chicago Exposition and St. Louis are great examples of big events that had long lasting positive effects on their communities.

Budgeting for Olympic events isn't a simple single organization single event model. Often the Olympic event will be funded separately from the necessary infrastructure costs and much of the "benefits" are diffused (hotels & restaurants don't directly pay for the events). There is some differences between Winter Olympics and Summer as well, but generally the average local tax payer is not getting a particularly good deal with the Summer Olympics.

London is a great example, it is currently 3 times over the original estimated budget and is currently estimated to cost 17 billion dollars (certain to cost more). They expect to get 22 billion in "benefits" but those don't directly go back to expenses, and they may not get that much (hello bad economy). London set up a number of quasi public organizations including the big daddy, Olympic Delivery Authority, that will be used to fund the village, stadiums, and many of the venues. These are partially funded by private sponsorship, but the market downturn has limited private funding, and the public is obligated to fund the difference and had to already draw on their cash reserves. The actual Olympic event will be handled by a totally separate organization, that might charge enough money to pay for its own budget, and thus could be called "profitable."

Much like how sports franchises socialize the cost of stadium construction to their host community and then keep the ticket sales and kicknack sales. They make a "profit" because they didn't pay for the costs associated with the entire endeavor. The citizens of London partially pay for both the event and the infrastructure, and are responsible if either goes over budget or if the private agencies pull their support. Even if the event itself makes money, it is doesn't include the other costs, which are separated and essentially hidden in these special organizations like London's Olympic Delivery Authority. The reason the "benefits" are always listed as a general or in an over all picture is because much of that money is spent on getting to the Olympics and staying at the Olympics, and not all of this cash is spent at the Olympics. There is lots of money moving around, from tax payer to stadium fund, and tourist to airlines and hotels. One is not paying for the other.

I love that Vancouver has provided that strongest tax revolt against Olympic spending in recent memory.

More acedmic info here: Economic aspects and the Summer Olympics: a review of related research Evangelia Kasimati in International Journal of Tourism Research journal.
posted by zenon at 10:23 AM on January 22, 2009 [2 favorites]

Here is the wikipedia entry on the '84 LA Games that mention that through sponsorships and use of pre-existing venues, they made a ton of money. However, as mentioned above, each Games is going to be different.
posted by mmascolino at 11:46 AM on January 22, 2009

Mother Jones doesn't like the Olympics. Accusations of bribery and corruption aside, they were meant to bring nations together but have consistently been divisive and heavily political. The World Cup probably does a better job of fulfilling the goals set out by the Olympics.
posted by christhelongtimelurker at 4:28 PM on January 22, 2009

The Sydney Olympics in 2000 are certainly presented to our state taxpayers as neutral in cost, and positive overall. I think most Sydney people agree they were a net good. People outside of Sydney but still in NSW might think they were not that great.
Sydney got a new stadium that was largely financed by public enterprise (and was a terrible investment) and a bunch of second tier sport facilities - we would never have built a kayak course, baseball diamond etc. which have ongoing community value, even if they were negative on finances.
posted by bystander at 4:36 AM on January 23, 2009