Why aren't more cities bidding to host the Olympics?

The IOC holds the franchise for the Olympic Games, which it then rents out to host cities.

By 
 John Rennie Short


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Published: Thu 14 Sep 2017, 9:00 PM

Last updated: Thu 14 Sep 2017, 11:56 PM

It's official: We now have hosts for the next two Summer Olympics. Paris will host in 2024 and Los Angeles in 2028.
The announcement marks a failure: Only two cities competed for the 2024 Summer Olympic Games - Paris and Los Angeles - and two for the 2022 Winter Olympic Games - Beijing and Almaty, Kazakhstan. I've been studying the Olympics enterprise for years, and this narrowing of cities willing to host is another sign that the games are in crisis.
The IOC holds the franchise for the Olympic Games, which it then rents out to host cities. The IOC prefers the current model of competition between bid cities for the simple reason that it reinforces its own power and bargaining ability. The IOC retains control over the games, pockets the revenues from broadcasting rights and corporate sponsorship but is neither responsible for hosting and paying for the games nor at risk if any losses occur. It provides less than 13 per cent of the direct cost of the games. In short: It's a very sweet deal for the IOC. Not so sweet for host cities who have to pay for the games.
The Olympic Games cost a great deal of money, and cost overruns are endemic. The tight deadline for putting on the games can easily lead to price gouging, sweetheart deals, corruption and things simply costing much more than they need to be.
In one of the comprehensive analyses, economists Robert Baade and Victor Matheson in 2016 looked at costs and benefits associated with hosting the Olympic Games. On the expenditure side, they included general infrastructure, specific sports infrastructure and operational costs of hosting the games. Benefits include tourist spending during the games, the "Olympic legacy" that might include improvements in infrastructure and increased trade, foreign investment or tourism over the long run after the games; and intangible benefits such as the feel-good effect or civic pride.
They conclude, though, that the Olympics are a money-losing proposition for host cities since they result in positive net benefits only under very specific and unusual circumstances. Their main finding is reinforced by many subsequent studies. One study, for example, found that hosting the 2000 Sydney Olympic Games led to a real consumption loss of $1.7 billion for the Australian economy.
While hosting the games may increase exports through increased trade, the same effect is found for cities that bid but did not win. It is not necessary to win the bid; the bid itself sends a message to investors that the city is open for international business.
Who actually makes out better when a city hosts the Olympics? Winning the bid to host the Olympics has the clearest benefit, albeit intangible, to the political regimes and economic elites running a city, as they have the opportunity to reshape the city's image in a time of increased global competition.
Financially, the biggest winners are of course the construction and land development companies who do very well from the contracts associated with the direct investment in sports venues and accommodation and the indirect investments. But there are costs to city spending on the Olympics. Hosting the games crowds out other investments, especially those related to social welfare, and often displaces low-income residents and raises rents and property prices. The games are a classic example of the privatisation of benefits and the socialisation of costs. The main benefits, such as spending on real estate development and construction, are captured by the rich and the well-connected.
In my view, we need to replace the notion of a city winning the games with the image of the games capturing a city. Event capture takes four main forms. First, there is infrastructure capture, where the city's infrastructure is constructed and reconstructed around the particular needs of an unusual two-week event. Second, there is financial capture, in which public monies are devoted to funding the games. There are associated opportunity costs as other projects are cancelled or much reduced in order to put on the games and social programmes are sacrificed.
Third, there is legal capture, as new legislation is introduced. Limitations are placed on citizens' rights in order to ensure the financial profitability and the security of the games. A number of studies point to the increased surveillance and security control measures during the games. Fourth, there is political capture, as the normal rules of accountability and transparency are displaced and eroded by nonelected organisations.
Perhaps as a result of all of this, there is growing resistance from communities in bid and host cities. In 2015 the mayor of Toronto decided not to even put the city's name forward as an applicant city to host the 2024 games even although the Canadian Olympic Committee supported the bid. Boston, Hamburg and Budapest all turned their backs on the opportunity to host and gave hope and advice to bid resisters all across the globe.
Some argue, as I have, for a permanent site for the Summer Olympic Games and a limited rotation of host sites for the Winter Olympic Games to reduce the environmental impacts. Others argue for a decentralising to multiple sites.
A legacy of half-used and abandoned expensive Olympic venues litters the landscape of host cities. The more positive legacies, such as new roads and improved airports, could have been provided for less money, with greater transparency and more public input. Hosting the Olympics is a distraction from achieving a fairer, more just and efficient city.
John Rennie Short is Professor, School of Public Policy, University of Maryland
-The Conversation



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