Predicting the costs

From Games Monitor:

P R E D I C T I N G T H E C O S T S
AND B E N E F I T S O F
M E G A – S P O R T I N G E V E N T S :
M I S J U D G E M E N T O F O LY M P I C
P R O P O R T I O N S ?

Jonathan Barclay

The economic benefits of hosting mega-sporting events are often exaggerated. Ex-ante impact studies typically overestimate the gains and underestimate the costs involved. It is therefore difficult to explain in economic terms the intense competition among cities to hold such events.

Introduction

In recent years cities have competed
vigorously for the right to host what can be
labelled as ‘mega-events’, namely the
quadrennial Olympic Games and FIFA
Football World Cup. One can afford such a
description when one considers the scale of
these sporting extravaganzas, with in-person
attendance in the millions and television
audiences in the billions.1
There are a variety of reasons why cities
may wish to host these events, the most
compelling being the promise of a vast
economic windfall forecasted by economic
impact studies. Given these forecasts, an
increasing number of developing economies
have joined the bidding frenzy, insisting on
their right to receive a share of the monetary
spoils and hopefully kick-start their
development. It is also evident that cities that
host these events must commit a significant
investment into sports stadia and other
miscellaneous infrastructure. Therefore, the
question is whether the economic benefit
compensates for and outweighs the vast costs
and substantial risks incurred. Are the games
‘fool’s gold’ (Baade and Matheson, 2002) or a
lottery jackpot (Preuss, 2006, p. 183)?

Read more: Games Monitor 2014