The Economics of Staging the Olympics: A Comparison of the Games 1972-2008
Matheson, Victor, International Journal of Sport Finance
The Economics of Staging the Olympics: A Comparison of the Games 1972-2008 By Holger Preuss, Edward Elgar Publishing (2006), 332 pp.
There is no bigger event in the world of sports than the quandrennial Summer Olympic Games. In recent years, the competition among cities to host the Games has been as vigorous as that among the athletes themselves. But why would a city wish to take on the financial burden and risk of hosting the Olympics? Holger Preuss takes the most comprehensive look to date at the economic, social, and political costs and benefits of hosting the Games in his book The Economics of Staging the Olympics: A Comparison of the Games 1972-2008.
Through an almost bewilderingly thorough examination of sources of spending and revenue, as well as references to academic studies ranging from urban planning to environmental studies, the author traces the evolution of the Olympics over the past 35 years beginning with the Munich Games in 1972 through the Beijing Olympics in 2008. The book details interesting trends in the financing of the Olympics in a way that has not been done before, at least at the level of detail provided here.
The author begins with the 1972 Summer Olympics in Munich. While the terrorist attack on the Israeli athletes overshadowed the economic aspects of the Games, both that Olympics and the 1976 Games in Montreal represented events that were heavily subsidized by local, state, and national taxpayers. Although the subsidies for the Munich Games were high and strongly criticized by some local citizens, the Montreal Games were unquestionably, from a purely economic standpoint at least, a catastrophic failure. For example, with the departure in 2005 of Major League Baseball's Expos for Washington, D.C., Montreal residents were left still making their final payments on an empty, dilapidated stadium that hadn't even opened in time for the Games and never really worked even when brand new. The financial legacy of the Montreal Games induced a fundamental shift in the way the Olympics were financed.
Although this book limits itself for the most part to the economic aspects of the Summer Olympics, the financial viability of the Winter Games during this period was also in question. The voters of Colorado rejected the opportunity to host the 1976 Winter Games after having already been awarded the Olympics by the International Olympic Committee (IOC), because of the costs involved.
Faced with the potentially huge costs of hosting the event, following the Montreal debacle cities shied away from bidding for the Olympics. In stark contrast to the 10 cities that submitted formal applications to host the 2008 Games, in 1984 only Los Angeles stepped forward to provide a location for the event. Furthermore, the Los Angeles host committee was a privately funded group without financial backing from local government. Although public officials might be able to brush off the massive debts often accumulated by the host city as in investment in the city's image or as an impetus to promote needed investment in local infrastructure, private entities need to be concerned about the bottom line, and indeed, the bottom line for the Los Angeles Olympic Games Organizing Committee (OGOC) showed a hefty profit.
As documented by the author, the financial success of the Los Angeles Games was not primarily the result of a surge in revenues, however, but rather was due to the OCOG's ability to control costs. Without any other willing bidders, the IOC lost its ability to dictate terms to the city. The IOC usually demands that all events are to be held in new, state-of-the-art venues, but Los Angeles used existing facilities for almost all competitions. Indeed, the 1984 opening ceremonies were held in the Los Angeles Coliseum, the same stadium in which the 1932 opening ceremonies were held. Total spending on new or refurbished sports facilities in Los Angeles were less than half that of the next lowest Olympic Games between 1972 and 2008 and were roughly one-tenth that spent by Montreal just eight years prior. …