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Whistler’s 2010 Olympics: Red Alert

Posted on 17. Dec, 2009 by Kerry Banks in Fresh Trax, teaser

2010 WINTER OLYMPICS UPDATE

The Economic Benefits: Facts versus hype

by Kerry Banks

In the euphoria that followed the announcement that Vancouver had won the bid to host the 2010 Winter Olympics, there was a lot of talk about how the Games would be a gold mine for the local economy: creating jobs, boosting tourism and providing a bonanza for local suppliers. But while it is undoubtedly true that same local businesses will make a killing – porta-potty companies, for example, and parking lot owners, limousine rental firms and flower shops – a number of studies by top economists reveal little evidence that hosting the Games produces significant economic benefits for any host city or region. In fact, according to a 2008 study by three economists who specialize in the economics of sport, in the short-term, taking on the Games can actually be damaging. In their analysis “Slippery Slope? Assessing the Economic Impact of the 2002 Winter Olympic Games in Salt Lake City, Utah,” for example, the authors found that “general merchandise stores suffered a net loss of $167.4 million during  the Games time,  as did ski resorts and other recreation firms.” As Victor Matheson, one of the paper’s authors, noted, “It’s a fun time to be in the spotlight, but most cities lose money.”

Although the accounting methods of Olympic organizing committees are often murky, the evidence further suggests that all of the last six Winter Olympics ended up losing money. The organizers of the Turin Games in 2006 admitted to a $32 million deficit. And while organizers of the 2002 Salt Lake City Winter Olympics boasted an operating profit of $110 million, the U.S. General Accounting Office determined that the federal government contributed $1.3 billion toward the event. Plagued by cost overruns, the 1998 Nagano Olympics also lost huge piles of dough, though no one knows exactly how much because the organizers burned the accounting books, leaving the financial impact a mystery.

Likewise, the 1994 Lillehammer and 1992 Albertville Olympics ran multimillion-dollar deficits. Even Calgary, where the 1988 Winter Games were claimed to have turned a $90-million profit, lost money. In 1999, Tom Walkom, a Toronto Star reporter, discovered that Calgary’s organizing committee had omitted the cost of building sports facilities from its figures, and the federal, provincial and municipal governments contributed $461 million toward the games – nullifying any profits.

In light of the past record of host cities, then, Vancouver’s chances of avoiding a similar financial disaster are slim. As a recent editorial in Forbes magazine ominously states: “Over the past five years the operational costs of the 2010 Winter Games has mushroomed from $1.3 billion to almost $2 billion. In other words, Vancouver is going to take it on the chin as declining sponsorship and tourism revenue combined with higher security costs push the Vancouver Olympic Committee deep into the red.”

Tags: 2010 Winter Olympics, Olympics: economic benefits