The economics of hosting the Olympics are often a rosy picture painted by a bidding group that fades away with time, according to Smith College economics professor and noted Olympic critic Andrew Zimbalist at a June 15 Jamaica Plain event.
Zimbalist’s JP visit was based on his new book “Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup.” The event was hosted by the Jamaica Plain Forum, Papercuts JP and NoBoston2024. About 65 people attended the event at First Church in Jamaica Plain, Unitarian Universalist.
Zimbalist talked about the Olympics being plagued by cost overruns. He gave the 2012 London Summer Olympics as an example with the original bid at $4.5 billion and the final bid coming in at $6.5 billion. He said the final cost, excluding infrastructure, was $18 billion, according to a government audit report. Zimbalist said the cost overruns for the Summer Olympics since have been 3.52 times the original estimation.
Zimbalist said that the overruns are the results of several factors, including the bidding group underestimating the costs in order to gain approval and then adding the “bells and whistles;” entering into the international phase of the competition where the bidding group will give away any potential gains to try to win; rushed construction projects; and payoffs and corruption.
He said that in Boston and elsewhere the bidding groups are made up of construction and hospitality leaders who are concerned with their interests and not the common interest.
Zimbalist said there have been exceptions where hosting the Olympics turned out favorably in financial terms: Los Angeles in 1984 and Barcelona in 1992. He said that in Los Angeles, the City Council passed an ordinance that banned public money. Zimbalist said that the International Olympics Committee (IOC) would normally say no to that, but there were no other bids for that year.
He said in the case of Barcelona, the city had developed a master plan in the late 1970s that it was able to use. Zimbalist said Barcelona flipped the usual process where the IOC dictates “we need this; build this.”
Zimbalist also went over the financials of Boston 2024’s original bid. The group is currently on a public relations blitz, selling a new bid piece by piece instead of releasing the full bid with all the details.
Zimbalist called Boston 2024’s projection of $1 billion for security paid for by the federal government “dubious,” saying it will likely cost more and be shared by the local government. He noted some members of Congress have already said that the federal government shouldn’t pay for security and that if Boston wants to host the Olympics, it should pay for it.
Zimbalist also went after Boston 2024’s projection of having $1.1 billion in ticket sales. He noted that London had only $990 million and it had an Olympics stadium with 80,000 seats with a premium section. Boston 2024 has a proposal for a 60,000-seat stadium with no premium seating.
That Olympic stadium may be funded through a private/public partnership, according to Boston 2024. The professor attacked that idea, saying it was “simply inconceivable” that a company would fund $500 million to build a stadium. He said that some corporations might buy naming rights for a sports stadium, like Metlife Stadium in New Jersey. But those stadiums stay operational for a long duration, while the Olympic stadium is supposed to be temporary and will only operate for 17 days.
“To my knowledge, not one company has come forward,” Zimbalist said about private funding for any of the Olympic venues.
He said it is “conceivable” that a private company would pay to build an Olympic Village, as it could turn it into residential housing afterwards. Zimbalist said that was the plan in both Vancouver and London, but in both cases, the developer pulled out and the city was left “on the hook.”
He said that in Atlanta, host to the 1996 Summer Olympics, built an Olympic Village that was later turned into dorms for a university. But, he added, a low-income community had to be razed for that to happen and homelessness in the city went up during that time.