The Olympics Are a Multi-Billion-Dollar Boondoggle, but Mayors Love 'Em Anyway

Oslo is considering dropping its bid for the 2022 Winter Olympics, which is really the only sensible thing to do.

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Sep 16 2014, 11:54am

Photo via RVR Photos--USA Today

It's likely going to be the biggest sports news out of Oslo, Norway since Tex Schramm was awarded the Nobel Peace Prize for ending the war between the NFL and AFL. (Note: No, not really. Though he should have been.) Sometime in the next month or so, the Norwegian parliament is set to vote on whether to formally withdraw Oslo's bid for the 2022 Winter Olympics.

If that happens — and with 56% of Norwegians now hoping to scrap the bid, it's a pretty good bet — the International Olympic Committee will be left with only two candidates for the 2022 games: Almaty, Kazakhstan and Beijing, which would become the first city to host both the Summer and Winter games.

While neither of these outcomes would be a disaster for the IOC—much as it would be fun to picture, the chances of the 2022 Olympics being held in a frozen-over Tim Hortons parking lot are pretty much nil—the likely Oslo defection is a sign of the extent to which things have gone very, very wrong with everybody's favorite quadrennial celebration of sports that we never think about the rest of the time. Not long ago, there was a time when cities were willing to risk as much as a billion dollars in red ink for a shot at hosting the Olympics; now, after Athens ($14 billion in losses), Beijing ($40 billion), and Sochi ($51 billion, more or less), a mere billion-dollar loss seems like chicken feed. Vancouver spent more than $6 billion total on venues, infrastructure, and security for the 2010 Olympics, and got back less than a third of that from ticket sales and corporate sponsorships—and Vancouver is considered one of the more successful Olympics.

It's numbers like those that are spooking not just Oslo, but other cities all over the world. Voters in Krakow overwhelmingly voted to pull out of the 2022 race in May, joining Stockholm and Munich as cities deeming the Olympics too rich for their blood. And even Philadelphia Mayor Michael Nutter gave a nod to the insane expense of hosting the games when he pulled out of the bidding for the 2024 Summer Olympics earlier this year, calling it a "tremendous, costly endeavor" that his city simply wasn't ready to take on.

It's all enough to make you think that maybe the Olympics' staggering price tag has finally reached the point where soon enough, the IOC may be left with no suitors willing to ante up for future bids.

Ha, ha, just kidding!

When it comes to the Olympics, it seems, P.T. Barnum's famed apocryphal phrase that "there's a sucker born every minute," is, if anything, an understatement. In the U.S. alone, we have Los Angeles, whose bid revolves around rehabbing the 82-year-old L.A. Coliseum into a "state-of-the-art" facility; San Francisco, which has a glowing recommendation letter from Mayor Ed Lee and little else in actual specifics; Boston, which is trying to sell the IOC on a "New England Olympics" with events stretching as far as Maine; and Washington, D.C., the only bid that includes an initial price tag — $4 to 6 billion—and whose website offers a helpful graphic that lists "things you didn't know about the capital region." (Sample: "175 embassies." I think I could have guessed that one.)

None of the elected officials in these cities — or the unelected business barons who are leading the bid committees — are denying that hosting three weeks of Greco-Roman wrestling and trampoline will cost a buttload of money, both because few cities have a spare velodrome handy and because the infrastructure and security costs to get Olympic tourists around town quickly and safely are enormous.

Instead, the usual defense has become that sure, the Olympics may cost a few billion dollars, but they can also lead to subsequent riches—why, the London Olympics created $15 billion in economic benefits in the next year alone, enthused DC 2024 chair Russell Ramsay last week, pointing to a recent study issued by the British government: "They set up a business incubator, they used the contracting and bidding of the games to bring businesses into the city. ... it's about having a set of economic initiatives and what we hope is to learn from what's worked in London."

Unfortunately, that's not what the report shows at all. (It mostly shows many, many photos of double-decker buses and cars painted with the British flag.) Yes, British corporations did a lot of business deals during the Olympics, but there's no indication of how much, if any, of that wouldn't have taken place without the games—especially when the "British Business Embassy" that sealed the deals will simply take its act on the road to Rio in 2016.

Meanwhile, any concrete positive economic return from hordes of Olympic tourists spending money at London shops turns out to be mostly invisible, thanks to the fact that anyone without tickets hightailed it out of town that month as fast as possible. In the end, London ended up seeing about the same amount of spending as during the previous, non-Olympic summer—and tourism from overseas, in particular, actually went down.

(This displacement of regular visitors by sports fans is actually a common occurrence for other sports mega-events such as the Super Bowl, which similarly underperform when you look at the actual sales tax receipts.)

So why do mayors keep falling for the Olympic siren song? In part, it comes down to supply and demand: The IOC, like the NFL with the Super Bowl, has a rare commodity, and the minute you have more buyers than sellers, you have conditions ripe for a bidding war. It's why Rob Livingston, who as proprietor of GamesBids.com for the last 16 years, doesn't think even Oslo's defection should prompt much worry in IOC boardrooms.

For starters, when it comes to the summer games, "you're on a different playing field," says Livingston. "There are a lot more eligible cities." Sure, some may decide to bow out or even to trim the lavishness of their offers—as Oslo has already done—but it's a double-edged sword, he says: It'll give them a better chance of keeping their bids alive, but hurt their odds of actually getting picked to host.

And that's the rub, because as much as mayors may hate red ink, they really, really like shiny objects. "There is a seemingly non-falsifiable belief among policy makers that creating tourist economies, even temporary ones, are a political economic panacea," says Rick Eckstein, a Villanova University sociologist who has researched why city officials are so quick to approve megaprojects like sports stadiums and casinos. One of the mainfactors, he and his co-author Kevin Delaney found, is the presence of "growth coalitions" of local business leaders who grow fat on construction contracts, but don't have to pay the bills.

Of course, just because mayors and local business leaders want something, doesn't mean it's necessarily going to happen—just a year ago, after all, there were plenty of bidders for the 2022 games, before half of Europe got cold feet. Maybe, just maybe, if enough people balk at multi-billion-dollar price tags, we can go back to the days like L.A. in 1984, when Carl Lewis won his four gold medals in a half-century-old stadium and nobody died of embarrassment.

Okay, probably not. Butif the Olympics are about anything, they're about impossible dreams, right?