Baltimore should say no to a 2024 Olympics bid

Promised economic boon almost never materializes for the Games' host

August 13, 2012|By Pat Garofalo

Even before the 2012 London Olympics held its closing ceremonies last night, organizers and politicians were already looking ahead to the next round of bidding to host the games. Toronto is examining whether to throw its hat into the ring for the 2024 summer Olympics, and French President Francois Hollande said that Paris may consider a bid as well.

According to The Sun, local businessmen and political figures are also mulling a D.C.-Baltimore bid for the 2024 Olympics. Relying on a study done in 2000 — when the region unsuccessfully bid to host these 2012 Games — supporters claim that bringing the Olympics to the region will provide an economic boost to the area of $6.7 billion (in today's dollars), along with the creation of nearly 70,000 jobs.

Having the Olympics here could certainly be exciting, but would they actually deliver on the large public investment that would be required, bringing enough dollars into town to make them worth the cost? Overwhelmingly, the economic evidence says probably not.

Before the 2008 Beijing Olympics, economist Jeffrey Owen wrote, "To date there has not been a study of an Olympics or other large-scale sporting event that has found empirical evidence of significant economic impacts. … It is unlikely that anyone ever will." Several other studies support his findings, showing that the gains a city experiences are hardly ever worth the costs.

There are several reasons for the disparity between the promise of economic development and the reality associated with hosting the Games. The first is that much of the money goes toward building facilities that simply don't have much use once the games are over. For instance, how often does a city need a velodrome (used for bike racing) or an Olympic shooting range? As economists Robert Baade and Victor Matheson wrote in their study "Bidding for the Olympics: Fool's Gold?," "Diverting scarce capital and other resources from more productive uses to the Olympics very likely translates into slower rates of economic growth than that which could be realized in the absence of hosting the Olympic Games."

The second is that estimates of the amount a city will spend on the Games are usually too optimistic. Research from Oxford University's Saïd Business School shows that, over the last 50 years, the average host city has overrun its cost estimate by a whopping 179 percent. London is no stranger to this phenomenon, as an initial $4 billion bid has turned into a $15 billion undertaking.

But the most important argument against hosting the games is that the influx of tourists that supporters envision often fails to materialize. Sure, lots of people come to a city to witness the games, but lots of tourists also decide not to visit a city when they know that it will be a circus due to the Olympics. In other words, much of the Olympic tourism simply replaces tourism — and spending by tourists — that would have occurred anyway.

The European Tour Operators Association found in a 2006 report that "there appears to be little evidence of any benefit to tourism of hosting an Olympic Games, and considerable evidence of damage." The ETOA found that hotel occupancy rates actually declined in Atlanta, Sydney and Beijing when the Olympics came to town, compared to years in which they weren't playing host. London retailers reported seeing a drop in shoppers during the games, instead of the anticipated spike.

Of course, hosting the Olympics can certainly have its advantages, particularly if many of the facilities that an area needs are already built, like they are in D.C. and Baltimore. The games can also significantly raise a city's profile. Being a host city is a good way to gin up interest among politicians — both local and federal — for infrastructure projects that needed to be undertaken anyway. There is also evidence that hosting the Olympics can have a positive effect on a nation's exports.

But a city shouldn't kid itself into thinking that the Olympics will provide a unique bonanza of economic activity. On a smaller scale, Baltimore is already familiar with this, as a recent study showed that the economic impact and tax revenue projections for the Baltimore Grand Prix were wildly optimistic; the overall economic boost came in at less than 40 percent of that promised by race organizers. And one sports economist says that number is even too high. That's a figure anyone assessing a future Baltimore bid for the Olympics should certainly keep in mind.

Pat Garofalo, a Baltimore resident, is policy editor for ThinkProgress.org, a Washington-based progressive policy blog. His email is pgarofalo@americanprogress.org.

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