The Olympic Bid is Terrible News for Boston’s Pocketbooks
The city of Boston may have won the nomination for the United States’ 2024 Olympic bid, but in the end, its taxpayers may end up losing.
It was a good week for taxpayers in Los Angeles, San Francisco and Washington, D.C. They won’t have to spend roughly $100 million to compete against a half dozen of the world’s largest cities to be anointed as the host the 2024 summer Olympic games.
Better yet, they won’t have to spend $15-$20 billion building or renovating the 30-odd sports venues, along with parking lots and roads to service them, required to host the games.
Boston taxpayers were not as fortunate.
Of course, Boston 2024, the private group of executives from the construction and other industries that is leading the bid effort, is spinning a different story. The group’s leaders say Boston will prove that it is a world-class city and that it will only cost $4.5 billion to host the games.
Good luck with that. London’s original bid budget for the 2012 games was $4 billion; the final cost approached $20 billion—depending on how the numbers are juggled. Boston’s Big Dig was budgeted at $2 billion, it wound up at $15 billon.
Boston 2024 allows that there will be an additional $5 billion of money spent on infrastructure, but, they say, the infrastructure spending would have happened anyway so it is not a cost of hosting the Olympics.
The problem with this logic is that: (a) if the money were going to be spent on improving infrastructure anyway, then it can be spent anyway (Boston doesn’t need to host the games to improve its roads) and (b) some of the $5 billion would inevitably end up being diverted away from the more urgent infrastructural needs to service Olympic needs (special road lanes for Olympic executives, transportation links directly to the sporting venues, etc.)
Mayor Marty Walsh pledges that he won’t spend any public money on the games. Really? How will he manage that?
For starters, it must mean that the $5 billion on infrastructure doesn’t count because it would have been spent anyway. Next, it must mean that Boston police and sanitation workers won’t work the Olympics.
But how will Boston 2024 and Mayor Walsh improve upon London’s fiscal fallout, where billions of public dollars were needed to pull off its Olympic plan?
Consider the financial balance of the London games: TV revenue, $713 million; international sponsorships, $310 million; domestic sponsorships $1.15 billion; ticket sales, $988 million; and, licensing, $119 million – for a total revenue of $3.28 billion, or somewhere between one-fifth and one-sixth of London’s total hosting expenses.
London 2012 boosters will ask: what about all the additional tourism dollars and the new trade and investment deals that came London’s way? Actually, London’s tourism fell during the month of the Olympics relative to the previous year (the same happened in Beijing in 2008), as normal tourists decided to stay away from the anticipated congestion and high prices.
Some PR claims to the contrary, there is no hard evidence that England’s trade or investment got a boost from hosting. To be sure, as I elaborate in my new book, Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup, academic studies on the economic impact of staging the games on trade and investment for other Olympic host cities have found no positive effect.
To avoid white elephants, Boston 2024 states it is planning to build a temporary 60,000-seat Olympic stadium that will be taken down after the games. Building a 60,000 capacity facility, complete with luxury suites, electronic signage, concessions, catering, media hookups and Wi-Fi, for less than a month’s use, doesn’t sound like the most effective and sustainable use of scarce resources.
Not to worry, as Boston 2024 says it will use modular design so that parts of the stadium can be donated for use at area colleges. A luxury suite on the second floor of Harvard’s Widener Library would work well.
Actually, it is unclear whether they will take down the entire Olympic stadium or just part of it. London’s 80,000-seater is being reduced for the Premier League’s West Ham club. The reduction is costing $400 million of public funds. So perhaps the MLS’ New England Revolution will have a new home, but the team would be better off with a stadium built from scratch.
Part of the problem in assessing the impact of the Boston 2024 plan is that they haven’t shared most of it with the public. They claimed that the documents delivered to the United States Olympic Committee were proprietary—a nice way to insulate the plans from public discussion and criticism.
Here’s the good news for Boston. Neither the city council nor the state legislature ever voted on whether or not they wanted Boston to host the Olympics. Either legislative body can still declare that it wants no part of the 17-day extravaganza.
The citizens of Denver, Colorado did just that prior to the 1976 winter Olympics. The International Olympic Committee (IOC) awarded the games to Denver, then the local electorate mobilized and voted it down in a referendum. The IOC had to scramble and convinced Innsbruck, Austria, which had hosted the games in 1964 to do it again since they already had all the venues.
If Boston stays in the race, it will have 32 months to convince the IOC that it is a more worthy host than a handful of other cities from around the world. Thus far, Paris, Rome, Berlin, Istanbul, Hamburg, Johannesburg, Durbin, St. Petersburg, Doha, Budapest and Melbourne have thrown their hats in the ring. So, citizens of Boston, don’t despair. You might still lose.