Olympic fever has seized Washington, DC. Mayor Muriel Bowser would love the city to bid for the 2024 Summer Olympics. At least one member of Congress, Rep. Jason Chaffetz (R-UT) supports the idea. And most voters seem to agree, judging by a recent poll in the Washington City Paper.
They should all stop and think twice. Hosting the Olympics is a terrible idea for most cities. And it's very likely a terrible idea for Washington DC.
Just listen to the economists who study this topic: "My basic takeaway for any city considering a bid for the Olympics is to run away like crazy," Victor Matheson, a professor of economics at College of the Holy Cross, told me in an interview last fall. His research has found that hosting "mega-sports events" like the World Cup or Olympics tends to cost an enormous amount — and brings few tangible benefits.
Matheson's argument is a fairly nuanced one. There's nothing inherently bad about hosting the Olympics. In theory, Washington DC might be able to do so at a reasonable cost — and avoid the bloated fiasco we saw in Sochi in the winter of 2014. But in practice, reasonableness rarely prevails. The International Olympic Committee hasn't historically favored cities that pledge to do things cheaply. "The bids that make economic sense are the bids have no chance of winning," is how Matheson put it to me. "And the bid that will end up winning won't make economic sense."
The evidence is compelling. Back in 2013, Matheson and Robert Baumann put out a paper studying the experiences of cities that hosted "mega-sporting events" in the past. They found that the costs tend to skyrocket, the economic upside was negligible, and the cities that have benefited seem to be special exceptions. That said, there is some evidence that hosting mega-sporting events makes people a bit happier. So not all is lost.
The cost of hosting the Olympics tends to get out of control
DC residents might look around and think, hey, it wouldn't be that hard to host the Summer Olympics on a budget. There are already plenty of hotels, good transportation networks, and sports facilities in DC and Baltimore. Why not just take advantage of those?
The big problem here, Matheson and Baumann observe, is that the International Olympics Committee has rarely awarded the Olympics to cities that try to skimp on costs. The committee hasn't usually been thrilled about holding track events held in fields built two decades ago — they'd prefer a shiny new stadium. And if DC doesn't build it, a competing city probably will.
"Faced with bids from multiple competing cities and countries," the authors write, "the organizing bodies have rarely selected hosts that have promised to minimize spending on sports infrastructure." And costs have soared even higher since 9/11, thanks to rising security costs. (Sydney spent a few hundred million dollars on Olympic security in 2000, but Athens was spending over $1 billion by 2004.)
Indeed, it's telling that the one city in recent times that kept costs down was Los Angeles in 1984. That's because LA was the only city seriously bidding that year (others had been scared off by Montreal's experience with the 1976 Olympics, which left the city staggering under $1.5 billion in debt). This allowed Los Angeles to dictate its terms and make heavy use of existing infrastructure like the Rose Bowl. Alas, DC likely won't be the only city competing for the 2024 Olympics — and history suggests that it'll be much harder to hold down costs.
Now, it's possible that the bidding process could become more reasonable in the future than it has in the past. The International Olympic Committee is now trying to revamp the process for the 2024 Olympics — by allowing cities to tailor their bids to their own needs rather than adhere to strict IOC guidelines. (These reforms came after too many cities were scared away from hosting the 2022 Winter Olympics.) These new reforms could help tamp down on the insanity, but that's not yet certain. It might be prudent for cities like DC to wait and see whether the committee really has changed things up.
By the way, there are plenty of ideas for reforming this selection process even more drastically. Some onlookers have argued that the International Olympic Committee should simply pick 4 or 5 cities to host the Olympics in perpetuity, on a rotating basis. That could help keep costs down, as these cities could reuse their fields and stadiums and other infrastructure. But that's not on the table right now.
Hosting the Olympics doesn't seem to boost a city's economy
Of course, some extra spending on the Olympics might be worthwhile if these big sporting events gave a jolt to the economy. But there's little evidence for this. "Unfortunately," Matheson and Baumann conclude, "the academic literature has not been able to link hosting an Olympics or World Cup with economic growth."
Why might that be? The simplest explanation might be that large sporting events are too small to move the needle on a massive metropolitan economy like London's or Atlanta's. Alternatively, much of the "extra" economic activity during the Olympics may just come from locals who would have spent their money regardless.
But there's another more worrisome possibility: Perhaps all those eager sports fans crowd out other businesses. The two economists note that London actually saw an overall drop in international visitors when it hosted the 2012 Summer Olympics, possibly because other tourists stayed away. That's a cautionary tale for DC, which has a vibrant tourism economy.
But what about infrastructure benefits? Olympic boosters often note that a big event like this can give a city an excuse to upgrade its airports, roads, subways, hotels — key improvements that might not otherwise happen. Yet Matheson and Baumann find this rarely goes as planned. The tight deadlines for events like the Olympics "can serve to raise costs due to rushed schedules, relaxed bidding rules, and potential corruption."
Worse still, many cities end up building out redundant infrastructure. "An airport, transportation network, or number of hotel rooms that is the right size for three weeks of tourist insanity may be extensively overbuilt for the post-event period," they write. "For example, two major luxury hotels built for the 1994 Winter Olympics in Lillehammer, Norway, filed for bankruptcy shortly after the close of the Games."
Only a few cities have benefited from hosting the Olympics
Now, to be fair, there are a few cities that have benefited from hosting the Olympics. But those are exceptions. Los Angeles in 1984 got a good deal — but, again, it was the sole serious bidder that year, something that hasn't really happened since. (Though, who knows, if enough cities get scared off from future bids, it could happen again.)
Another beneficiary was Barcelona, which hosted the Summer Olympics in 1992. Yes, its Olympic Park sits lonely and largely unused these days. But the city seemed to get a boost in reputation. "Before 1992, Barcelona had been overshadowed by Madrid, Rome, Paris, etc. They could essentially use Olympics as advertising, to put the city on the map," Matheson said. But don't expect Washington DC to get a similar boost: "For that to work you need to be a hidden gem, a great tourist destination that no one knows about. "
There's one last twist here. Baumann and Matheson do note that it's probably better if a rich country hosts the Olympics than a poorer nation — given all the negative impacts. Here's how Matheson put it to me: "If you're going to waste $10 billion, would you rather waste Northern Virginia/DC's money or waste Cape Town's money?" Which is fairer, economically speaking? So DC could always host the Olympics as an inefficient form of foreign assistance, saving a poorer country from madness. As foreign aid goes, though, this probably ranks below malaria nets and deworming pills in effectiveness.
That said, hosting the Olympics might make people happier
Mind you, there's more to life than dollars and cents. Even if hosting the Olympics is an economic fiasco, it might make locals happier. "There's very little evidence that these sports events contribute to long-run economic growth," Matheson told me last fall. "But there is fairly robust evidence that they make people happier. After Germany hosted the World Cup in 2006, there was a big marked increase in reported happiness."
So there's that. Residents of Washington DC might derive some pride and joy from hosting the Olympics. That's no small thing. Just don't expect too many other positives to come of it.
Note: This post draws on interviews/research I did for a previous piece on this topic, though it's been updated to reflect a few current events (like the news that the IOC wants to change the selection process).