In the final year of his doctoral coursework at the United States Sports Academy (USSA), Edward currently works as a counselor at Pascagoula High School in Pascagoula, Mississippi. Having run and coached the Nicholls State University cross country team, he has enjoyed working with adolescents in athletics and academics for the past 42 years. In sports, amateurism has always interested Edward; so the connection to Olympism turned into an obvious course of study making his choice to attend USSA a great decision. Son to Edward Senior and Janice Burgo, Edward was the oldest of five children and contributes his drive and passion to his parents and gives great credit to Dr. Fred Cromartie for encouragement to continue on the path of education. Special thanks given to Coach Eddie Cole, Coach M.T. Tatum and Brother John Hotstream for mentorship and contributions to the success Edward has been blessed to receive. Show Dr. Fred J. Cromartie, is the Director of Doctoral Studies at the United States Sports Academy. The Benefits of Bidding and Hosting the Olympic Games are Difficult to Justify Due to the Overall CostsABSTRACT Keywords: Agenda Setting, Economic Impact, Facilities, Intangible Benefits, Olympic Bid, Olympic Legacy, Tangible Benefits, Tetradic Estimates Introduction Public Support for Olympic Bids Positive and Negative Effects When cities enter into bids to host the Olympic Games, public excitement rises on the possibility of realizing benefits to the city infrastructure before the Games begin. With the vision of new sporting facilities and other projects, anticipation for job creation grows. The opportunity to receive global exposure during the Games creates thoughts of tourism expansion that may last long after the Games end. The desire for an Olympic legacy regenerating parts of the city that need repair pushed by self-imposed deadlines due to the Games fuel the public support until realizations of costs and risks emerge. Benefits realized are not easily proven by data. As great as the benefits look on paper, funds dedicated for some desired projects may be diverted to address the Olympic preparation needs giving a net zero gain from job creation (1). Cities bidding for the Olympic Games dream of a legacy that includes facilities that will be useful after the Games are completed. Facilities have the possibility to increase sport opportunities to the general public or specialized training opportunities for elite athletes. Planning is the key because facilities can be overbuilt or too specialized for everyday use. The maintenance cost should be justified by the availability of the facilities. During the winter Olympics, some facilities such as ski jumps and bobsled tracks are specialized for only elite athletes, which limits the post-Olympic effectiveness; however, facilities such as skating rinks may be multi-purpose buildings that can host a variety of events leaving the city with an added benefit for public use. The unseen costs of environmental impact may add to the expense and give the public another item to consider. In preparing for the Olympic Games, the hotel industry may suffer long-term economic hardship due to their plans to accommodate the projected number of visitors who demand quality amenities. When the demand dwindles after the Games, a surplus of capacity will force rental prices lower putting the hotels at risk of closing. When 40% of hotels began to lose money, bankruptcies became the story of the 1994 Winter Olympics (2). When considering the Winter Olympics, host cities are discouraged from spending money on luxury developments. Over building in relation to the demand after the Games can add to expenses that may not be recovered easily. City size seems to have an influence on the decision to award the Winter Games. While smaller cities in the mountains have limited space for expansion and infrastructure keeping costs low, the events must be spread to neighboring cities to meet the needs. Conversely, larger cities require greater investment in infrastructure; however, they can address the needs of different events leaving a legacy for future attractions. In both small and large cities, the challenge to reuse facilities is great, and the burden of maintenance is enormous. North American cities have found some degree of success by attracting tourists with use of the facilities while adding educational exhibitions and tours of the sites. Difficulty lies in measuring the success of Eastern countries delivering the same attraction. Infrastructure and Costs In bidding for the 2016 Games, Chicago and Rio de Janeiro both wanted to attract tourism and develop infrastructure and investment that would last long into the future. Chicago wanted to use this opportunity to address needs in transportation, security, and international tourism through the media exposure that would be generated. Predictions of economic benefits developed support for the Chicago bid. Rio wanted to mimic the success that Barcelona had by hosting the 1992 Olympic Games similar to Chicago’s goals of improving infrastructure and attracting international tourists (3). With a bid, opportunity for local governments to appropriate funds for new infrastructure becomes easier. The former Mayor of London realized that an Olympic bid creates the opportunity to generate more money from the government for developing needed infrastructure (2). Due to this philosophy, the cost of hosting the London Olympics ballooned from 2.4 billion pounds to 9.35 billion pounds. This increase of expenditures had the Olympics Minister and others second-guessing the endeavor. Business school professor, Stefan Szymanski, referred to the Games as an expensive party (2). Even though infrastructure may contribute to some long term economic gains increasing property values, the negative effect of rising rental prices may affect the poor while benefiting the middle to upper classes. Leading up to the Seoul Olympics evictions were estimated at 700,000 and 1,500,000 for the Games in Beijing (2). Estimates of economic impact range from $2.3 billion to $15.9 billion for 20 years of Olympic Summer Games from 1984 to 2004. An economic boost of this magnitude is attractive to most bidding cities; however, the projections can be deceiving. Even though improvements to infrastructure and increased media coverage of the city are economic benefits, the long-term benefits are not guaranteed considering the costs associated with host cities. New construction and improvements to existing structures adds debt that cuts into the net benefits, especially if the bids become competitive and cause the cities to over promise. In considering the bids of cities, the International Olympic Committee viewed economically strong areas as desirable. Cities selected usually have greater populations and strong gross domestic product per capita. When examining the expenses of host cities, the benefits are difficult to justify to the public due to contradicting studies. In 1984, the city of Los Angeles budgeted $546 million with $100 million in infrastructure and renovation investments. Atlanta budgeted $1.58 billion with investments of $517 million and $609 million to aid in infrastructure improvements. Salt Lake City budgeted $1.3 billion with $1.3 billion of infrastructure investments in 2002. Greece spent more than $1 billion plus another $1 billion for operating costs in 2004 at the Summer Games (2). Using economic impact studies to measure the effects of the Games, cities can present a strong case for their bids and investments; however, most studies are conducted by entities that stand to benefit from the Olympic Games. In addition, the financial benefits predicted assume healthy local economies. The revenues generated in taxes can also be effected by companies involved with limited tax liabilities. Projections of economic impact are still intriguing with figures of $2.3 billion for Los Angeles, $5.1 billion for Atlanta and $15.9 billion for Athens (4). The Atlanta Olympic Organizing Committee projected that 77,000 new employment possibilities would be created. Sydney projected a $6.3 billion impact creating over 100,000 new employment opportunities. Japan was projected to benefit by $24.8 billion while South Korea estimated an $8.9 billion gain (2). Even with the predictions of significant gains for cities benefiting from investments in infrastructure, many scholars are skeptical about the economic figures projected by people that possibly have a conflict of interest due to their financial ties. Billings and Holladay (3) refer to the impact estimates of three economic studies that observe employment and migration of host cities. Although the studies conducted in 2000 and 2003 resulted in positive impact on employment and migration, a study in 2002 found insignificant impact in both areas for host cities. Infrastructure, either new or improved, seems to create the greatest impact on the host city lowering uncertainty and increasing opportunity for international trade and capital investments. The predictive nature of impact studies generates questions of reliability. Because the economic data gathered make assumptions of finance estimates, the results depend on infrastructure creating interest, and visitors spending discretionary funds that exceed the cost of travel and event expenses. Results estimate the number of people attending the event, the length of time they stay in the city, and the amount they will spend; therefore, the direct impact on the economy can lead to skewed estimates. If people plan to spend money only on the event, businesses that would have generally benefited from daily purchases would not see the desired outcome due to reallocation of finances by customers. Some travelers may have the opportunity to stay with relatives instead of staying at a hotel and pass on eating at restaurants. In some cases, travelers that were looking to visit a city may change plans to coincide with the event; therefore, the actual purpose is blurred. Tourists that are not interested in the Olympics may decide to go to a different city to avoid the action. If the event fills up hotel occupancy, tourists may not have places to stay. Local families may choose to stay home due to excessive crowds; therefore, exact estimates are virtually impossible. An expected result of the Olympic Games is that visitors may travel from overseas especially for the event; however, when South Korea hosted the World Cup, the number of foreign visitors was identical to the previous year (2). Expenditures seem to suffer during that time period as casinos and hotels experienced some losses. Similarly, Atlanta experienced crowd avoidance by travelers during the Olympic Games. Local Business vs Corporations The bidding process for the International Olympic Committee (IOC) is extremely competitive. In addition to the city’s explanation of motivation for hosting the Games, the IOC investigates proposed and existing infrastructure to be used. Attractive potential described by the city can aid in the advancement from the application stage to the candidate stage. Candidates must submit a detailed plan that describes the vision, political background of the host committee, effect on the environment, finance, advertisement, venues, security, facilities, transportation, electronics, and media preparation (3). Because of the competition to build an infrastructure that will leave an Olympic legacy, cities open the treasury often bidding more than projected returns. The IOC conducts site visits and selects the host city about seven years before the event so that progress can be monitored. One advantage that some cities may have over others is the strength of their political leaders and their ideology. The cities with strong leaders who push agendas with the idea of growth creation seem to have the edge over cities with different beliefs. Billings and Holliday (3) noted that cities with greater population growth and gross domestic product were selected to host the Olympics significantly outpacing the other finalists. The IOC selection committee has moved to allowing countries to select one city each to compete for final consideration. Host cities and finalists seem to have several common factors that gives westernized countries an edge when competing. Developed language with limited fractionalization is important for communication and economic stimulation with projecting growth and limited corruption. Tendencies for those countries seem to be more peaceful in nature allowing for a greater vision of legacy through investments. When cities met the criteria of models that addressed population and economic growth, results of the study showed that host cities had greater success with achieving a positive Olympic legacy. Due to the large amounts of money needed to invest in a bid to host the Games, only two cities from developing nations hosted the event between 1896 and 2004 (2). Mexico City hosted the Olympic Games in 1968 and Seoul in 1988. Building new stadiums or renovating old ones, most cities have tried to make the best of their winning bids by upgrading the infrastructure to meet the IOC’s expectation and the city’s desires. Considering that most workers that build the stadiums come from outside the local area, the economic benefit to the local economy is overstated with some economists saying there is no correlation to economic development. With newly constructed stadiums’ cost rising, there is often a debate as to whether a greater benefit could be derived from investing the money elsewhere. Construction of stadiums could be considered temporary and may only transfer workers from other employment creating zero net benefit to the economy. Contradicting the common belief that the Olympic Games lead to a cannibalization of profits due to consumers rotating their discretionary funds into different purchases, Leeds (6) found that the Winter Games of 2002 in Salt Lake City, Utah produced over $160 million in retail sales to 16 counties in Colorado. Whereas, despite predictions of 77,000 in jobs creation for the Atlanta Games of 1996, studies found that increases were realistically found to be between 3,500 and 42,000. The same outcome was noticed in Los Angeles in 1984 when the 5,043 additional jobs were found to be transitory leaving zero net gain (2). Facing uncertain economic benefits from an Olympic bid or hosting opportunity, cities may investigate the intangible factors that accompany the Games. Recognition generated by media coverage brings the city from insignificance to importance. The perception is that recognition will lead to competition for financial relevance among the world renowned cities. In the case of the 2008 Olympics held in Beijing, China aimed to develop a stronger competition with Asian cities that dominated the region economically. In addition to any monetary benefits that China hoped to gain, displaying their democratic and civil advancements of their society was very attractive. Some other benefits that China wished to gain were citizen self-confidence, civic pride and dynamism (2). Skepticism of the Chinese financial returns is common especially when the opening ceremonies in Beijing were estimated at $100 million (7). To justify the cost of new infrastructure, city integration of new additions is imperative. Increased Trade Comparing host cities to bidding cities for export impact, Rose and Spiegel (7) found insignificant differences. When examining bidding and host cities with same size populations, improvements to infrastructure were similar. Even though some situations could not be applied to bids like South Africa for 2004 due to their economic push in the 1990’s, the question of motivation to host the Games is not very clear. As cities are experiencing equivalent economic growth, the incentive becomes less tangible and more about status. The liberalization and open export are attractive features gained from Olympic bids. Local and federal governments are attracted to this addition and interpreted as future economic growth. In the study conducted by Rose and Spiegel (7), the data do not explain the support because the difference in gain significant. The proponents for hosting the Games believe that even if the expenses outweigh the profits, the intangible feelings that a citizen gains will create a greater sense of pride and good will (7). Because the intangible benefits are difficult to measure, scholars debate the cost effectiveness of hosting the Games. In studying the effect of the Olympics on the host city’s trade between 1950 and 2006, results came in surprisingly positive (7). The study showed a 39% permanent economic impact on trade for countries that hosted the Summer Olympics. Global visibility of host cities appears to significantly stimulate exporting of goods around the world. Belief by investors in the effect of the Olympics on a city’s economic success outweighs the risk of capital required. Using sensitivity checks, Rose and Spiegel (7) claimed that the results of economic impact and two-way trade are sustainable. When the criteria of distance, population, and income is examined, the results of trade remain strong. Even regional variables do not affect the strong results. No matter how the data are manipulated, countries that host the Olympic Games show stronger trade results than other countries. In examining the countries’ economic standing, wealthy countries are more likely to have cities that bid for the Games as the monetary investment is so great. Inevitably, the main reasons that countries explore the opportunity to host the Games are international exposure and financial gain (7). When comparing the data of host cities to unsuccessful bidding cities, trade improvement and economic impact do not vary significantly. In choosing the cities to compare, the first runner up was examined with variables of population size and same bidding year. Examining the cities may seem like a difficult comparison; however, the results produced similar success lasting for decades. The conclusion is that the effect on trade does not necessarily come from hosting the Games but rather bidding on the games (7). To arrive at the results, Rose and Spiegel (7) used Tetradic Estimates; however, three pairs of countries and timelines were used rather that two. This calculation helps to avoid a large number of estimates. The intangible benefits are expressed by cities as a selling point to the citizens even though results are difficult to prove. Outside factors of political corruption are difficult to measure and can have an adverse effect on expected results. Leading up to the 2012 Olympics in London, the evidence of a positive legacy could not be determined by the Economic Development Committee. On the other hand, Rio’s Bid Book projected a great influence of the 2016 Olympic Games on the public with increased sport participation. The measurements for success were taken in a perception study that interviewed professionals in the field of physical education. Searching for intangible gains in Olympic legacy, this study attempted to look beyond the cost and benefits. Subjects of the study used the 2007 Pan American Games as a predictor of the Olympic effect on the community. When examining the results, the Brazilian culture was taken into consideration as most of the responses reflected the influence of infrastructure on the community rather than the intangible influences. The 2007 Pan American Games left a legacy of many broken promises; however, the hope of many was that the 2016 Olympic Games would not be subject to the corruption and the abandoned facilities. As the media coverage did not produce greater participation by the community in sport, the skepticism was obvious in the responses. Even though there were not many negative responses in regards to hosting the Olympic Games, the fear of corruption was great. As the Brazilian culture fancies a good celebration, the Pan American Games were well received, and thoughts were that the Olympics would have the same community effect. In the study, people concentrated on the tangible legacy of infrastructure and overlooked the intangible legacy of sport on the community (8). Economic Spillover When Vancouver was selected to host the 2010 Winter Games, the Vancouver Organizing Committee sanctioned a report to gather information of other North American Olympic events and the legacy left behind. The three cities, Lake Placid, Calgary and Salt Lake City had developed successful legacies. They addressed issues of tourism, attracted international competitions, developed participation, became sport hubs, developed professional athletes, invited sports companies to relocate, and encouraged the children to participate in sport. The information collected allowed the committee to develop an informed comprehensive plan for success. Maximizing the benefits that the city could obtain was a top priority. A non-profit organization called Legacy Now was created in 2000 by the city for the purpose of developing support for the 2010 Winter Games. Starting in 2000, they followed the process from beginning to end whether the Games were awarded to Vancouver or not. The objective was to work together with all the British Colombian communities to develop a legacy addressing activities and volunteerism. There were 11 individuals directly responsible for making sure the process went smoothly; however, the total number of people involved was near 100,000. The people involved addressed tangible and intangible legacies. Infrastructure for sport facilities, transportation, communication, environmental needs and the cultural needs of the city were the categories of tangible legacies addresses with the plans organized in a way that the process could be followed or duplicated. The intangible legacies addressed knowledge, reform, emotional, social and city image. In addressing the development of the organization, everyone must be educated on how the process works and the duties to perform. Communicating with the public and implementing programs that are meant to last long after the event is complete. The organization should be able to run even if people move on to different opportunities. Ownership of the event should be felt by the entire community building an excitement and a memory while developing a sense of pride in the accomplishment through local and international recognition. In addition, the organization and the community should be trained to handle adversity through proper communication. When the event is complete, the realization of costs becomes real. Funds that could have been used for different projects or for everyday maintenance used for wants instead of addressing the needs. In the end, the region recognized the construction of a legacy that was developed and changed the community (4). In the case of many cities, there are winners and losers. Not every city can win the bid to host the Games. For cities in the East with far less resources, the task of winning the bid is daunting. In the case of Istanbul, Turkey, city officials wanted to regain prominence after losing the status of nation’s capital in 1923. In 1851, the Ottoman Empire sent participants to London for the world fair. By 1863, Istanbul was hosting an exhibition and gaining confidence that the city could become a major player in hosting mega-events. The city of Izmir was awarded the international fair in 1934 and made some improvements to the infrastructure of the city centrum. Istanbul realized that there may be a chance to host a major event. Chief planner, Henri Prost, was brought in to redesign the city and address issues that would help to attract mega-events. Prost stayed in Istanbul from 1936 to 1951. Because Istanbul held the Balkan Games in 1935, the desire to host larger events became clear. Prost was given instructions to design a stadium. With this in mind, he had the vision of hosting the Olympics. In 1937, Prost submitted his plans for a stadium with updated roads and green spaces addressing needed improvements to the city infrastructure. In 1939, the master plan was approved; however, the outbreak of the Second World War caused the economy to delay the project. With a celebration looming in 1943, the mayor granted Prost the opportunity to move forward with the project. Aiming for 1952 or 1956, Turkey neglected to put in an official bid. As the 10 year celebration moved forward, Prost was trying to address the infrastructure needs that would aid in possibly hosting the Olympic event. Istanbul missed the opportunity for the 1948 Olympics and the Universal Exposition in 1958. Some of Prost’s visions were finally implemented by the early 1980’s; however, the population had grown eight times making some of the plans obsolete. With changes in government, the parliament passed a law in 1992 giving three entities the power to organize a bid for the 2000 Games; however, the organizations bickered and were unable to agree. An Olympic stadium was finally built in 2002, 20 miles from the original site; however, disagreements on ways to improve infrastructure as well as the political climate have created hurdles that are difficult to overcome. Summary and Conclusions References 2. Barclay, J. (2009). Predicting the costs and benefits of Mega-Sporting events: misjudgment of Olympic proportions? Economic Affairs, 29(2), 62-66. doi:10.1111/j.1468-0270.2009.01896. 3. Billings, S. B., & Holladay, J. S. (2012). Should cities go for the Gold? The long-term impacts of hosting the Olympics. Economic Inquiry, 50(3), 754-772. doi:10.1111/j.1465-7295.2011.00373. 4. Kaplanidou, K., & Karadakis, K. (2010). Understanding the legacies of a host Olympic city: The case of the 2010 Vancouver Olympic Games. Sport Marketing Quarterly, 19(2), 110-117. 5. Kim, A., Choi, M., & Kaplanidou, K., (2015). The role of media in enhancing people’s perception of hosting a mega sport event: The case of Pyeongchang’s Winter Olympics bids. International Journal of Sport Communication, 8(1), 68-86. 6. Leeds, M. A. (2008). Do good Olympics make good neighbors? Contemporary Economic Policy, 26(3), 460-467. doi:10.1111/j.1465-7287.2007.00067. 7. Rose, A. K., & Spiegel, M. M. (2011). The Olympic effect. Economic Journal, 121(553), 652-677. doi:10.1111/j.1468-0297.2010.02407. 8. Sousa-Mast, F., Reis, A., Gurgel, L., & Duarte, A. (2016). Are cariocas getting ready for the Games? Sport participation and the Rio de Janeiro 2016 Olympic Games. Managing Leisure 2013, 18(4), 331-33 http://dx.doi.org/10.1080/13606719.2013.809187. How are cities chosen to host the Olympics?It is the members of the IOC, meeting at their Session, who choose the hosts. Electing hosts for the Olympic Games is one of the responsibilities of the Session. A host is elected by a majority of the votes cast by secret ballot. Each active member has one vote.
What are the benefits of hosting the Olympics?The Olympics increase valuable tourism, which can boost local economies.. The Olympics increase a host country's global trade and stature.. The Olympics create a sense of national pride.. Who chooses the next host for the Olympic Games and how?Who chooses the host for future Olympic Games? It is the members of the IOC, meeting at their Session, who choose the host. Electing the host for the Olympic Games is one of the powers of the Session. The host city is elected by a majority of the votes cast by secret ballot.
Who will host 2040 Olympics?Mayor of London Sadiq Khan announced his bidding hopes for London to host the summer Olympic Games for a historic fourth time in 2036 or 2040 ahead of the Tokyo Olympic Games in 2021.
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