The Price of Glory


Well, the Sochi Olympics are in the history books and the Russians bested us in the medal count.  Actually they tied us for gold if you consider an American really won two of their medals.  Not that I begrudge Vic Wild his just desserts, after he was forced to join the Russians when the US cancelled the alpine snowboarding program in which he excelled.  It’s actually quite American in spirit to work around a bureaucracy to achieve one’s goals and aspirations, though it’s a shame he didn’t do it for us.  The Ruskies paid big money for that medal, and for the games themselves.

The figure most often bandied about is $51 billion.  For some perspective, that’s a few billion more than the state budgets this year for Delaware, South Dakota, Mississippi, Montana, New Mexico, Oklahoma, West Virginia, Wyoming, and Vermont – combined.  While the real number is likely lower than $51 billion, it is fair to say at least half that figure was borne by Russian taxpayers.

Last year, the United States Olympic Committee ruled out bidding for the Winter Olympics anytime soon, choosing to focus instead on bidding for the 2024 Summer games.  At least seven American cities are seriously considering a bid, and the decision will be made soon.  The Summer games are generally cheaper than the Winter ones, but the numbers are still staggering.  Add to that the fact that the costs never seem to go down, and always seem to go up – often more than double.  That’s because there is so much wishful thinking and accounting when the city bids are made.

The budget for the London’s Summer budget was about $4 billion, but came in at over $15 billion.  Beijing said they spent about $15 billion, but the real number there is somewhere in the mid $40 billion range.  Rio de Janeiro will host the 2016 Games.  Last month alone, they upped the budget by 27%.

What does this mean in terms of a bid for an American Olympics?  Well, first of all, whatever you hear about the budget for the games, don’t believe it.  Think about doubling it…or more.  “The games overrun with 100 percent consistency.  No other type of megaproject is this consistent regarding cost overrun. Other project types are typically on budget from time to time, but not the Olympics.”  That’s what two Oxford University professors demonstrated.  They concluded: “The data thus show that for a city and nation to decide to host the Olympic Games is to take on one of the most financially risky type of megaprojects that exists, something that many cities and nations have learned to their peril.”

The other problem often seen with the host cities is that the costs don’t end with the Games themselves, but continue on well into the future to upkeep and maintain the structures built to house the exhibitions.

Looking back at recent past hosts, the results are a mixed bag, but often not pretty.  It costs a great deal of money to maintain these large infrastructure projects, so there needs to be a viable ongoing revenue stream for them not to turn into an albatross for the area.  The Olympics are often sold to cities and by cities as a boon for tourism and development lasting well beyond the Games themselves, and constituting financial benefits that outweigh the costs.  But the numbers don’t really bear that out, and according to this scholarly analysis of recent Olympic Games’ economic impact on host cities/areas, “We couldn’t find any difference in terms of building permits, tourism, anything before or after.  If you masked the name of the cities, you would not be able to tell which of these two cities had the Olympics and which did not.”

It seems one of the keys to making a bid a somewhat reasonable proposition for host cities’ taxpayers is not building too much new infrastructure.  To build up a small place like Sochi to accommodate the Games makes little or no economic sense considering the likelihood that people will not continue to use the facilities in numbers sufficient to support the outlay.  On the other hand, if the games are held in a place that already has many venues, hotel rooms, and transportation options, the numbers become more reasonable.

Bidding cities should not go forward with wild plans for new venues and construction knowing these costs will weigh down the taxpayers for a generation or more.  Furthermore, knowing the troubles besetting host cities post-Games, the USOC should not select a city bid unless they are already well situated with the necessary infrastructure.  For example, Tulsa surely would be left with dire problems if they proceed with their plans to host the Summer Olympics in 2024.  Yes, that’s Tulsa, Oklahoma.

As University of Chicago sports economist Allen Sanderson economist said, “We do lots of things that don’t turn a profit.  We own dogs. We have boats. Those things lose lots of money, but we know it.”  There is perhaps no easy way of measuring civic pride, the lifelong benefits of motivating our youth into healthy and beneficial sports, and the potential regional upside to a well managed games.  These are all viable considerations.  Not saying American cities shouldn’t bid for the Olympics, but the cities and especially the taxpayers ultimately responsible for such huge outlays must go into this with eyes wide open.

  • Elle’s Island

    Well, it’s not Vlad Putin waging war against our sacred Constitution – it’s delusional marxist Hussein Obama.

  • Chris

    Building an Olympic venue is nothing more than building a sports venue – on steroids.

    The real story, which the Olympics provide a great reason to bring up, is the hundreds of millions of dollars that professional sports franchises extort from local taxpayers every timey the want to build a stadium in an American city. They always sell the new ballpark (or whatever) as an anchor for future development and with a few exceptions they never work out that way. “Successful” stadiums are those already near downtowns, such as CenturyLink Field in Seattle or Camden Yards in Baltimore. But even when the venue does become part of a vibrant, walkable neighborhood, the municipality still loses money because it doesn’t get a fair share of revenue from the venue itself.

    At the very least, if a city builds a stadium, it should get a significant chunk of the income from ticket and concession sales. Ideally, cities would get out of the stadium building industry entirely.

  • MD Russ

    Very good points, Tim. Here is another one: the cost of security. After the Atlanta Olympics bombing and the Boston Marathon bombing, how can any city provide adequate protection? The Olympic Games are a terrorist magnet, both the foreign and domestic variety. Unless you want to create a police state bubble around them like the Russians did in Sochi, then hosting the game is an invitation for violence. Some will say that not hosting the games means that the terrorists have won. News flash: every time that you take off you shoes or submit to a pat-down at an airport then the terrorists have won.

    BTW, one of the things that has always trouble me about the Olympic Games is the hyper-nationalism that surrounds them, symbolized by the medal count. It seems that instead of honoring individual and team accomplishments, we care more about which country garnered the most hardware. That is not the original spirit of the Olympics.

  • Arlingtonvirginia–my-brother-s-keeper–to-help-young-minority-men-025659695.html
    Apparently obama has never heard of the equal protection clause. How would this survive strict scrutiny? There are poor whites. Lots of them. What compelling state interest is there in excluding them?
    Let me guess, we should wait until the next election cycle, right? Do nothing.

    • Chris

      To start with, white people aren’t a protected class.

      Beyond that, we need to know a lot more about the types of programs being contemplated.

      On the federal level, there’s no state action here. All the action is going to be taken by “private businesses, nonprofits and local governments.”

      Where I think there could be an equal protection issue would be if local governments created, for example, libraries and excluded white people from them.

      But Obama is free to bring together outside groups to discuss an issue. That doesn’t constitute government action.

      • Arlingtonvirginia

        If there’s no public money and no government involvement, then that’s not as bad, but I just can’t see if a president had told private businesses/foundations to set aside $200M for whites only projects, then I think there would be outrage still.

        • Chris

          Oh, God, yes.

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