Dr. Stefan Szymanski is a professor of economics at City University London, and the author of Playbooks and Checkbooks: An Introduction to the Economics of Modern Sports. As such, he knows far more than you and I do on the subject of whether hosting Olympic Games is a good or bad deal for host cities. And now that the deliriously happy crowds have departed Vancouver, like all party hosts in the cold hard light of the morning after, we British Columbia taxpayers can re-assess our own 17-day party.
Between now and the next Olympics in London, you can expect to hear lots more of the harsh economic reality from unbiased economists like Dr. Szymanski. They know their stuff.
Unlike the party-goers making their hungover but happy way home after Canada won gold in men’s hockey (the only gold medal that hockey-mad Canadians really needed to win, and a wildly popular TV event watched by 80% of all Canadians. Just check this revealing graph of Edmonton toilet flushing usage for proof!) – these economists study what has actually happened around the world in other host cities following their own Olympic Games.
You won’t hear any of this reality, by the way, from the Vancouver Olympic Organizing Committee and assorted boosters, politicians, corporate sponsors, or the 100,000+ party people who celebrated nightly into the wee hours along Vancouver’s Granville Street (ungraciously dubbed “the river of vomit” by The Globe and Mail’s Christie Blatchford). And TIME magazine’s Sean Gregory added this description of us:
“Let’s face it: if public intoxication were an Olympic sport, Vancouver and Whistler would own the podium. These are the fourth Olympics I’ve covered, and Vancouver drinks Athens, Torino and Beijing under the table. And all of that drinking has led to a lot of public urinating. The city has had to force liquor stores to close at 7 p.m. on the nights the Canadian hockey teams played.
“Vancouver appears to have more morons per square foot than TV’s Jersey Shore house.”
Kind of makes you proud to be a Canadian, eh? Then BC Business magazine predicted in its February Olympics feature, Ten Debt Sentences:
“You can count on three things being true with these Olympic Games: the initial cost estimates for staging the Games will be underestimated, the Games will almost certainly lose money, and organizers will claim they made a profit. Yet all this appears to be forgotten when a new city hosts the next Games.”
As quoted in Why the Olympics Are Bad Business, sports economist Dr. Jeffrey Owen of Indiana State University reminds us:
“To date, there has not been a single study of an Olympics or other large-scale sporting event that has found empirical evidence of significant economic impacts.”
* NOTE: The budget for the 2012 Olympic Games in London was set as £9.3 billion in 2007 (almost four times the original estimated cost at the time London first bid two years earlier).
Now that our obscenely expensive 2010 Vancouver Winter Games party is history, let’s revisit this Washington Post essay in which Dr. Szymanski dissects these five common Olympic myths:
1. The Olympics will pay for themselves.
“Nope, they never do!” claims Dr. Szymanski. The Olympics have always needed a public subsidy, but in recent years the cost has ballooned as the number of cities vying for the big prize has grown. This is no coincidence.
More competition means brasher promises and bigger purses. Representatives of national Olympic committees, governments and other interest groups are fond of saying that the revenues from ticketing, broadcast rights, sponsorship and merchandising will cover the operating costs. This leaves out the cost of the Olympic infrastructure — the stadium/arena, velodrome, athletes’ village, aquatic or speed skating centre and the rest.
“London is building a 12,000-seat handball arena for 2012. Most Brits don’t even know what handball is.”
2. Winning the Games means a gold rush of jobs for the host city.
The truth is that, aside from basic construction projects, the local economy doesn’t get much of a boost while those shiny new athletic venues are being built. Many of the early jobs created are filled by specialists who come in from outside. To construct a luge course, it helps to have built one before.
“These specialized construction experts take their pay home with them.”
And speaking of outside workers taking money out of the pockets of locals, consider the sad story of Misty Moonlight (perhaps not her real name?) who is a Vancouver escort. She complained of an Olympic-sized escort service price war during an interview with The Tyee:
“Our average rates are somewhere between $200 and $300 per hour depending on what someone is looking for. But for the Games, you’ll see $40, $60, $80 rates advertised by outside sex trade workers, and that’s a significant difference. These visiting women are fly-by-night chicks who are in-and-out to make a quick buck. Men looking for cheap sex could be ripped off. Just because a girl’s cute, it doesn’t mean anything. It’s about service!”
And during the Games, a strange urban business phenomenon is seen based entirely on geography. Vancouver consultant and author Maurice Cardinal told CBC Radio this week that just short blocks away from the crazy lineups at downtown Vancouver shops and restaurants were countless disappointed retailers in the normally bustling Denman Street, 4th Avenue or Commercial Drive neighbourhoods – so dead that you’d never even guess that the Olympics were in town.
Dr. Kennedy Stewart, a professor of public policy at Vancouver’s Simon Fraser University and now on sabbatical at the London School of Economics, told the New York Times that showing potential investors a good time during the Olympics won’t create future jobs either, or resolve Vancouver’s long-term economic issues either.
“What’s the substantive thing Vancouver has to offer to investors other than its nice mountains and vastly overpriced real estate? “
3. The Olympics will boost tourism.
For most foreign visitors, attending the Olympics is a proposition that costs thousands of dollars. True, many foreigners and Olympics die-hards will come, but far more of the attendees will be locals taking advantage of the party of a lifetime. And of those who do travel from abroad, many will be what’s known as “time-switchers”: people who would have come anyway, but plan their trip to coincide with the Games. Tourist arrivals usually fall after the Olympic circus leaves town.
“When Athens hosted in 2004, Greece didn’t see visitor numbers recover to their pre-Games level until two years later.”
4. Playing host to the Olympics changes the landscape of a city forever.
Dr. Szymanski says this may be, but he claims it’s not a legacy worth much. Athens has struggled with unused venues. The Beijing Bird’s Nest stadium is mostly empty, having hosted just two major events last year (an opera and a soccer game). London is building an 80,000-capacity Olympic stadium for 2012 only to strip it down to 25,000 seats immediately after the Games. Even Sydney, which staged one of the best Games of recent decades, has already torn down a number of Olympic venues.
In the end, the cost of maintaining unused buildings (over $90 million per year for the Bird’s Nest stadium alone, for example) is so high that demolition is often the only sane option.
“The infrastructure carries a construction premium — facilities must be built on time (contractors ruthlessly exploit this) and to the IOC specifications, which may not even be what the city needs.”
5. The Olympics inspire greater participation in sports.
In recent years, concern about our growing obesity crisis has offered another crutch to bid-city boosters: The Olympics will make us more active and therefore healthier. It’s hard not to be skeptical, though, about claims by any organization whose major sponsors are Coca-Cola and McDonald’s that what it does is good for your health.
We may admire Olympic champions, but we are not likely to take up the bobsleigh or biathlon because of their TV appearances, warns Dr. Szymanski.
“When did you last watch a bout of Greco-Roman wrestling and say to yourself: ‘I fancy a go at that’?”
Read Dr. Szymanski’s feature article in the Washington Post. See also:
- Why The Olympics Are Bad Business
- More Myths About the Olympic Games
- Busted! Ski Resorts Lure Weekend Skiers with False Snow Reports
- What Legacy, Vancouver? from The Globe and Mail, February 12, 2010
- The Vancouver Olympics: A Gold in Drinking from Time, February 28, 2010