| By: |
Victor Matheson (Department of Economics, College of the Holy Cross);
Robert Baade (Department of Economics and Business, Lake Forest College) |
| Abstract: |
In this paper, we explore the costs and benefits of hosting the Olympic Games.
On the cost side, there are three major categories: general infrastructure
such as transportation and housing to accommodate athletes and fans; specific
sports infrastructure required for competition venues; and operational costs,
including general administration as well as the opening and closing ceremony
and security. Three major categories of benefits also exist: the short-run
benefits of tourist spending during the Games; the long-run benefits or the
"Olympic legacy" which might include improvements in infrastructure and
increased trade, foreign investment, or tourism after the Games; and
intangible benefits such as the "feel-good effect" or civic pride. Each of
these costs and benefits will be addressed in turn, but the overwhelming
conclusion is that in most cases the Olympics are a money-losing proposition
for host cities; they result in positive net benefits only under very specific
and unusual circumstances. Furthermore, the cost-benefit proposition is worse
for cities in developing countries than for those in the industrialized world.
In closing, we discuss why what looks like an increasingly poor investment
decision on the part of cities still receives significant bidding interest and
whether changes in the bidding process of the International Olympic Committee
(IOC) will improve outcomes for potential hosts. |
| Keywords: |
sports, public finance, economic impact, New Orleans, Hurricane Katrina |
| JEL: |
L83 |
| Date: |
2016–02 |
| URL: |
http://d.repec.org/n?u=RePEc:hcx:wpaper:1605&r=spo |