Hosting the Olympics in 2024? It Comes Down to Not Breaking the Bank
12 Aug, 2015By: Mary Helen Sprecher
Los Angeles Claims Frontrunner Status, Says It's Ready, Willing and Able to Take on the World
You break it, you bought it.
That’s more or less the International Olympic Committee’s word when it comes to hosting. In other words, it costs a lot to host the Games, and if there’s a cost overrun that breaks the bank, it’s on you to pay up.
And that, says Los Angeles, is precisely why they should host.
According to an article in the L.A. Times, officials said they can host the massive 17-day sporting event for $4.1 billion and guaranteed the city will cover any cost overruns.
In L.A.’s mind, that makes them the frontrunner.
L.A. Mayor Eric Garcetti said he is pushing for Los Angeles to be named as the replacement for Boston, which dropped its bid amid financial concerns last month. Garcetti and his team have proposed to spend $500 million less than what Boston had planned and expect to finish with a $150-million surplus by generating billions in broadcast and sponsorship revenue.
The U.S. Olympic Committee is expected to make a decision on a bid city by the end of the month and submit it to the IOC by mid-September. Garcetti is convinced the USOC will choose L.A.
"I think it is right for this city. I think it's who we are," he said.
Los Angeles already has the pedigree. It has hosted (in 1932 and 1984) and has an existing collection of high-level venues. And last winter, it was the bridesmaid when Boston was named the American candidate host city.
It is worth noting that Boston struggled with local public opinion from the time the announcement was made, fighting opposition from residents who worried abound land being seized by eminent domain in order to build facilities, as well as concerns that the city could not handle the expense and might turn to a taxpayer bailout. Ultimately, Boston withdrew its bid after Mayor Marty Walsh refused to sign the standard IOC contract guaranteeing the city would cover any overruns.
The Olympics is, without a doubt, the most expensive sports event to host. Ever. And there’s a huge history of cities incurring debt in their attempts to meet the high standards of the IOC, the spectators, the athletes, international governing bodies – in other words, the world.
"Every single Olympics since the 1960s has had a cost overrun," said Andrew Zimbalist, an economics professor at Smith College in Massachusetts.
In a research paper entitled “Bidding for the Olympics: Fool’s Gold?,” the University of Oregon’s Robert A. Baade and Victor A. Matheson noted the misconceptions of the financial value of the Games.
“After the 1984 Los Angeles Olympic Games, the prevailing perception seems to be that a properly run Olympics generates billions of dollars in profit,” the authors noted. “Is this an accurate perception? … Information gleaned from the Los Angeles (1984) and Atlanta (1996) Summer Olympic Games indicate that the event’s actual economic impact was more modest than that projected by those promoting the event in those cities.”
The Olympics, it seems, are at a crossroads. A recent article in Yahoo! News noted the difficulty of the IOC in finding bidders for the Games. The winter Olympics, so recently awarded to Beijing, for example, saw numerous bidders pushing away from the table along the way. Oslo, Norway, the previous favorite to host, withdrew its bid in October amid government and public opposition. Stockholm and Krakow, Poland, also pulled earlier bids.
"What you're increasingly seeing is where there is a lot of democratic input in government, nations are saying 'no,'" said Mark Dyreson, a professor of kinesiology at Penn State University who studies sports and society. "It's really hard to get a handle on how much the Olympics truly cost."
The L.A. Times noted that Olympic history is filled with financial horror stories. Montreal ran up a reported $1.5 billion debt in 1976 and the 2004 Athens Games went 60 percent over budget in a boondoggle that many believe contributed to Greece's financial downfall.
There have also been successes, with the 1984 Los Angeles Games atop the list.
Which brings us right back to why L.A. is so convinced they’re the frontrunner.
"There's zero percent capital improvement on things like roads," Garcetti said of his proposal. "One of the reasons L.A. is seen so strongly by so many IOC members is we're not building a transit system because of the Olympics."
A whitewater course would be added to the Sepulveda Basin and a planned soccer stadium beside the Coliseum would be converted into a temporary swimming site. With these less expensive projects at hand, money could be spent instead on other projects, such as the athletes’ village, a media center and the renovation of the Coliseum. Security is another significant expense.
But Los Angeles says it is ready.
Whoever gets the nod will be in a race that already features Paris, Rome, Hamburg, Germany and Budapest, Hungary, as potential hosts.