Chicago Wins Olympics Bid

October 5, 2009, 6:30 a.m.
Why Chicago Won the Olympics Bid
(brought to you by FromDC2Iowa.blogspot.com*)
Did you read today's blog headline as a typographical error, an Olympics equivalent of the Chicago Tribune's headline following the 1948 election, "Dewey Defeats Truman" -- a triumph of hope over reality?

Not at all. It is the reality.

The fact is that, most of the time, winning an Olympics bid, like many other efforts at local boosterism, turns out to be a Pyrrhic victory.

There may be the equivalent of a Bernie Madoff here and there, promoting various community projects in an effort to make a personal profit. But my assumption is that most community cheerleaders, like modern day George Babbitts [Sinclair Lewis, Babbitt (1922)], with confidence and pride in their town truly believe that their idea -- whether an indoor rain forest, the world's largest ball of string, or hosting an Olympic event -- really will "put their city on the map," while bringing tourists and their tourists' dollars to town. Who needs a business plan when "everyone knows" what a great idea it is?

We hear it now from the restaurant and bar owners in Iowa City -- and the elected officials who promote their causes -- who are proposing to shoehorn the Hancher Auditorium replacement into a downtown Iowa City laid out 170 years ago, in 1839.

All too often the construction money can't be found, or the project is built but it turns out that "build it and they will come" only works in the movies. Or enough public debt is incurred that it is, with the declining revenues that could have been predicted but weren't, the death knell for the project and then -- like paying for a dead horse -- takes years, if ever, to pay off.

But there is no effort at community promotion for which there is a greater disparity between the promised economic benefits and the ultimate disappointment than Olympic venues (with the possible exception of the games held at this, the first venue for the games). Consider the following examples:

o The $2.7 billion debt following Montreal's 1976 Olympics was not paid off until 2005.

o Atlanta's 1996 hope of riches provided few if any increases in retail sales, hotel occupancy or airport traffic during the games. As economist Andrew Zimbalist reports, "The only variable that increased was hotel rates — and most of this money went to headquarters of chain hotels located in other cities."

o The excess costs in Sydney in 2000 were over $2 billion.

o Athens' budget in 2004 was $1.6 billion. The ultimate cost? $16 billion.

o An increase in tourism? As is often the case at Olympic events Athens suffered a 10% decline -- as those who would otherwise have visited at that time but wished to avoid Olympic crowds simply stayed away. A 2002 Utah survey indicated that 50% of the usual non-resident tourist skiers were planning to stay away during the winter games for that reason.

o The newly built facilities not only cost billions to build, they take valuable real estate -- and may involve the removal of those left with no housing -- only to sit unused, or underutilized, after the lights dim and the athletes depart.

o Rio is already projecting a cost of $14.4 billion, and it will be another seven years, and uncounted millions or billions more, before anyone will be saying "let the games begin" in 2016.

It's kind of like second prize is that your city gets to spend billions of dollars hosting the Olympic games for a few days and first prize is that you don't have to.

Or, otherwise put, Chicago can spend billions on the Olympics and feed visitors for a few days, or it can have a sensible business plan to bring midwesterners to Chicago by rapid rail and feed them for a lifetime.

And that's why, I think, Chicago won the bidding in Copenhagen.

[Source for data: See Andrew Zimbalist, "Not a Rosy Picture," in "Room for Debate: Do Olympic Host Cities Ever Win?" New York Times, October 2, 2009, and Andrew Zimbalist, "Economic impact of Olympic Games rarely adds up to much gold," Street and Smith's Sports Business Journal, August 1, 2005, p. 21. For Athens' $16 billion estimate see also "Montrealers identify with Athens' challenges," Canadian Press, CTV, August 5, 2004.]
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* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source, even if I have to embed it myself. -- Nicholas Johnson
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