Chicago 2016, the organization seeking to bring the 2016 Summer Olympic and Paralympic Games to the Windy City, recently went public with details of its official bid to the International Olympic Committee. Sports economist and UI professor of recreation, sport and tourism Scott Tainsky discussed cost-benefit factors associated with Chicago’s proposal to host the games in an interview with News Bureau editor Melissa Mitchell.
Chicago 2016’s bid projects a total cost to the city of $4.8 billion. Who actually picks up that tab, and how is the expenditure expected to translate in terms of an economic return to the city?
The city bears the brunt of the upfront costs, although it has secured hundreds of significant pledges from prominent members of the private sector. So far, there seems to be overwhelming support from Chicagoans of the $4.8 billion estimate, but caution is in order – the Beijing games cost China over $40 billion and the final tally in Athens was close to four times the original $2.4 billion estimate. We always tell our students to consider the source; here, the source is politicians and big business – who stand to gain politically and financially from the prestige of winning an Olympic bid. As far as returns, there’s a belief that the games can generate $3.8 billion in book revenues, but most have scoffed at that number.
What about the State of Illinois? Does it stand to gain as well?
Not just Illinois, but Indiana and Wisconsin, too. It’s already been decided that Madison, Wis., will serve as the hub for cycling, and it’s not out of the question that facilities on the University of Notre Dame campus may host some events. Let’s also consider that fans may fly into the Gary, Ind., or Milwaukee airports and perhaps find hotel accommodations outside of Chicago.
Apart from the promise of boosting the local economy, are there other, more intangible benefits for cities that host Olympic Games?
That’s the hope. Based on previous Olympics and comparable mega-events, I would not anticipate that the direct receipts will cover the costs. The expectation is that there are additional long-term benefits associated with being an Olympic host city. The organizing committee looks at the worldwide telecast as a 16-day infomercial for the region and, as an economist and taxpayer in the state of Illinois, I hope they already have calculated the value of every panoramic shot of the lakefront and skyline and determined that the advertising benefits outweigh the costs. It’s important to note that their hopes are only that – it’s been 13 years since the Atlanta games and I’m not so sure they launched Atlanta into the upper-echelon of world cities. Plus, not to paint such a bleak picture, but whereas there’s some cachet to skiing the Olympic mountain that may triple (or more) the cost of a lift ticket, no such parallel exists for the summer games.
Are there any possible down sides to hosting the games?
Certainly. For starters, every dollar invested in the games is money not spent on clearing trash from the streets. Beyond the direct opportunity costs, Olympic fans are notoriously low spenders outside of the costs of attendance. After spending all day going from match to match, they’d rather retire to their hotel rooms than go to a bar, restaurant or the host city’s unique attractions, so most spill-over benefits projections are overly optimistic.
While short-term gains are more obvious, what about long-lasting results of the infrastructure. For instance, when Chicago hosted the 1893 World’s Fair, the event literally changed the face of the city. Does a similar potential exist in this case?
Here, the organizing committee made really sensible choices. For instance, Chicago doesn’t have an appropriate Olympic Stadium, but it also doesn’t have the need for another gigantic outdoor stadium, so the new construction is only a temporary structure that will be converted to a smaller, more practical permanent one after the games. Also, with the exception of the lakefront Olympic Village, the lasting changes in infrastructure are focused on the Washington Park and Woodlawn communities, ones where these structures can be instrumental in increasing real estate values in underappreciated parts of the city.
Much media attention has focused on Lake Michigan as Chicago’s ace card for winning the nod to host. Do you think the lake and adjoining lakefront area will indeed help boost the city’s chance winning the bid?
When you’re up against Rio de Janeiro, Madrid and Tokyo, lakefront is more of a seven of clubs than an ace. Style points matter, but in my opinion, the bid will be won by the city that can safeguard the games from politics. As much as we fans love the moments like Jesse Owens, an African-American, winning four gold medals in 1936 with Hitler in attendance or Tommie Smith and John Carlos’ 1968 black-gloved salute, the IOC would rather keep political headlines to a minimum. The IOC simply cannot have a repeat of the boycotted games in Moscow 1980 or Los Angeles 1984. Beijing 2008 was a risk; this time, it’s safety first. There’s no trump card, but Chicago has a reasonable shot at hearing its name called on October 2.
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