‘The Olympic Sinkhole’

“Going for the Gold: The Economics of the Olympics,” a paper co-authored by sports economist Victor Matheson, professor of economics at the College of the Holy Cross, and Robert Baade, A.B. Dick Professor of Economics at Lake Forest College, was the basis for a recent opinion piece in the Washington Post. The author focuses on how hosting the Olympics is an economic drain, rather than the “national trophy” it once was for bidding cities.

According to the piece, hosting the Olympics has become a financial sinkhole for cities, and is made less attractive due to slow economic growth and tax revenue. “In most cases the Olympics are a money-losing proposition for host cities,” cites the article from Matheson’s and Baade’s paper.

The piece states “Russia’s Sochi Winter Olympics cost $51 billion” and the “estimated price tag for Beijing’s 2008 Summer Olympics was $45 billion”.

For the Olympics to make financial sense, Baade and Matheson argued, the short-term and long-term economic benefits have to fill the gap between immediate costs and revenue. “The actual impacts [on short-term economic growth] . . . are either near-zero or a fraction of that predicted,” said Matheson and Baade.

They also claim long-term benefits are skimpy. Many cities have to build new stadiums that are often not used once the Olympics are over. “Beijing’s iconic ‘Bird’s Nest’ Stadium has rarely been used since 2008 and has been partially converted into apartments,” they wrote. “Some projects are put to good use after the Olympics (in Atlanta and Los Angeles, Olympic villages became college dormitories), but they are exceptions.”

The piece ran in more than 20 media outlets across the country.

Read the full article at the Washington Post’s website.

Read “Going for the Gold: The Economics of the Olympics” at the Journal of Economic Perspectives (Spring 2016) (PDF)

Related coverage

The Atlantic, June 14: 'Is There a Better Way to Build a Stadium?'

Bloomberg, June 21: 'Rio 2016 Organizers Remain in Denial Even as Tourism Flags'

This “Holy Cross in the News” item is by Jessica Kennedy.