- - Wednesday, September 2, 2015

CIRCUS MAXIMUS: THE ECONOMIC GAMBLE BEHIND HOSTING THE OLYMPICS AND THE WORLD CUP

By Andrew Zimbalist

Brookings Institution Press, $25, 174 pages Let The Games Begin — Elsewhere

If I had the money to spare I would send a copy of this book to our splendid Mayor Muriel Bowser and each of the thirteen solons who adorn our Washington, D.C. City Council. Then, just maybe, we can get them to drop the foolish proposal to bid to host the 2024 Olympic Games.

Indeed, anyone in our broad metropolitan region who worries about the development binge that treats our unique area as a mega-mall for paving over, or who worries about the corrupting influence that commercialization has brought to all amateur sports should read this book.



Author Andrew Zimbalist is a much-published and authoritative analyst on the economics of sports. This cleanly written and information-packed analysis of the destructive impact on cities that have invested billions in providing the venues for the various Olympic Games and the FIFA soccer World Cup extravaganzas is proof positive that the much ballyhooed promises of economic benefits is so much buncombe.

Mr. Zimbalist produces case study data that explains what the citizens of Boston knew instinctively when they forced their business community boosters to drop their bid for the Games in 2024. Importantly, he concludes that this recent phenomenon is not necessarily irreversible. We can have international sporting events without bringing economic harm to the communities where they are held.

The stench of greed and corruption that taints the biggest international sporting events is a recent phenomenon. It also threatens not only the governments that seek those games but also the integrity and nobility of the contests themselves, Mr. Zimbalist argues.

There was a time when the Olympics were fairly modest affairs that netted their host cities a tidy profit, economic development and international prestige. Mr. Zimbalist notes that as late as 1984, the civic committee that organized the Olympics in Los Angeles were able to turn a $215 million profit by using stadiums from the 1932 Games and prudent financing.

But prudent financing is one of the first casualties in the current era of mega-bids for the Games and World Cup. Just to submit a bid can cost the promoters $100 million to organize and market their offer. Both local governments and private financial supporters find staggering costs go with winning the contest to be a host. The Beijing 2008 Summer Olympics cost China more than $40 billion; the Sochi Winter Olympics of 2014 cost Vladimir Putin $50 billion. When the United States last hosted the World Cup in 1994 it cost the organizers several hundred million dollars; by 2010 South Africa had to stump up $5 to $6 billion; last year Brazilians rioted when its government diverted $15 to $20 billion. Current headlines have shocked that oil-rich Qatar has pledged to spend $200 billion to host the soccer contest in 2022.

Two factors drive this transformation. The lure of the potential revenue flow from television broadcast rights has raised the stakes exponentially, Mr. Zimbalist documents. The 1996 Atlanta Olympics generated $898 million in revenue from the networks; the London Games of 2012 earned $2.6 billion. But host cities now see less and less of that potential bonanza; as late as 1968 host cities got nearly all of those fees, by 2010 more than half now goes to the International Olympic Committee.

There is not enough space here to review the recent flow of scandals that have besmirched the hierarchies of both international governing bodies. Mr. Zimbalist treats this taint as a side issue. The real issue is whether such excesses in spending, debt accumulation and physical upheaval actually benefit the communities that divert huge portions of their tax revenues. Advocates promoting bids for such contests tout a stimulus effect that will boost jobs, swell tourist revenues and enhance the local tax base. But do they?

The short answer is both Olympic and the World Cup events are long-term money losers for the hosts. Mr. Zimbalist cites 19 independent studies of the economic impact of recent events. He notes, “In sixteen cases, the games were found to have no statistically significant impact on employment or income.” In three cases there was outright income loss and in seven, there was modest short-term jobs growth but at the cost of diverting public funds from other social programs.

Mr. Zimbalist reserves his final blast for the promoters’ customary boast that whatever the short-term costs, the longer-term “legacy” benefits in prestige, urban development and community pride are worth the ever-increasing cost. Citing the multiple stadiums that both the Olympics and FIFA officials demand be built, he argues, “But more often than not, the main legacy consists of white elephants that cost billions to build and millions annually to maintain, along with mountains of debt that must be paid over ten to thirty years.”

This book will convince you that Boston was right.

James Srodes’ latest book is “On Dupont Circle: Franklin and Eleanor Roosevelt and the Progressives Who Made Our World” (Counterpoint).

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