Not a Rosy Picture
Andrew Zimbalist
Andrew Zimbalist, a professor of economics at Smith College, is the author of “Unpaid Professionals: Commercialism and Conflict in Big-time College Sports.”
The evidence from past Olympic Games hardly suggests that thereÂ’s a resounding economic gain from being the host city. MontrealÂ’s 1976 Olympics left the city with $2.7 billion of debt that it finally paid off in 2005.
A city looking for an economic boost, would be wise to not host the Olympics.
The Barcelona Organizing Committee in 1992 broke even, but the public debt incurred rose to $6.1 billion. Similarly, the Atlanta Organizing Committee in 1996 broke even, but the bottom line there is not encouraging. An econometric study using monthly data found that there was insignificant change in retail sales, hotel occupancy and airport traffic during the games. The only variable that increased was hotel rates — and most of this money went to headquarters of chain hotels located in other cities.
The Sydney Organizing Committee in 2000 also reports breaking even, but the Australian state auditor estimated that the games true long-term cost was $2.2 billion. In part, this was because it is costing $30 million a year to operate the 90,000-seat Olympic Stadium.
When Athens won the right to host the 2004 games in 1997, its budget was $1.6 billion. The final public cost is estimated to be around $16 billion — 10 times the original budget! Meanwhile, most of the Athens’ Olympics facilities are reportedly underutilized. Maintenance costs on the facilities in 2005 came in around $124 million and, reportedly, there is little use of the two Olympic soccer stadiums.
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If a city is looking for an economic boost, there are better ways to invest its money.