Local and federal governments are attracted to this addition and interpreted as future economic growth. In the study conducted by Rose and Spiegel 7 , the data do not explain the support because the difference in gain significant. The proponents for hosting the Games believe that even if the expenses outweigh the profits, the intangible feelings that a citizen gains will create a greater sense of pride and good will 7.
Because the intangible benefits are difficult to measure, scholars debate the cost effectiveness of hosting the Games. Global visibility of host cities appears to significantly stimulate exporting of goods around the world. Using sensitivity checks, Rose and Spiegel 7 claimed that the results of economic impact and two-way trade are sustainable. When the criteria of distance, population, and income is examined, the results of trade remain strong.
Even regional variables do not affect the strong results. No matter how the data are manipulated, countries that host the Olympic Games show stronger trade results than other countries.
Inevitably, the main reasons that countries explore the opportunity to host the Games are international exposure and financial gain 7. When comparing the data of host cities to unsuccessful bidding cities, trade improvement and economic impact do not vary significantly. In choosing the cities to compare, the first runner up was examined with variables of population size and same bidding year. Examining the cities may seem like a difficult comparison; however, the results produced similar success lasting for decades.
The conclusion is that the effect on trade does not necessarily come from hosting the Games but rather bidding on the games 7. To arrive at the results, Rose and Spiegel 7 used Tetradic Estimates ; however, three pairs of countries and timelines were used rather that two. This calculation helps to avoid a large number of estimates. The intangible benefits are expressed by cities as a selling point to the citizens even though results are difficult to prove. Outside factors of political corruption are difficult to measure and can have an adverse effect on expected results.
Leading up to the Olympics in London, the evidence of a positive legacy could not be determined by the Economic Development Committee. The measurements for success were taken in a perception study that interviewed professionals in the field of physical education. Searching for intangible gains in Olympic legacy, this study attempted to look beyond the cost and benefits. Subjects of the study used the Pan American Games as a predictor of the Olympic effect on the community. When examining the results, the Brazilian culture was taken into consideration as most of the responses reflected the influence of infrastructure on the community rather than the intangible influences.
The Pan American Games left a legacy of many broken promises; however, the hope of many was that the Olympic Games would not be subject to the corruption and the abandoned facilities. As the media coverage did not produce greater participation by the community in sport, the skepticism was obvious in the responses. Even though there were not many negative responses in regards to hosting the Olympic Games, the fear of corruption was great.
As the Brazilian culture fancies a good celebration, the Pan American Games were well received, and thoughts were that the Olympics would have the same community effect. In the study, people concentrated on the tangible legacy of infrastructure and overlooked the intangible legacy of sport on the community 8. Economic Spillover Leeds 6 discovered that there is significant spillover of economic impact when hosting the Games.
Surrounding cities stand to enjoy an economic boom just like the host city. Leeds 6 hypothesized that the two cities may have been better off working together to lend support to the other and benefit from the spillover in economic impact. In his research of the Winter Games in Salt Lake City, Utah, 10 of 16 surrounding counties in Colorado benefited from the spillover effect. Whereas most studies show limited economic impact and benefit established by hosting the Games, evidence of spillover into Colorado contradicts their findings.
Economists seem to have many contradictory results from mega-events claiming little to no economic impact resulting from the activity. Events such as the Super Bowl, College Bowl Games, and World Cup Soccer games show little evidence of a substantial gain economically; so in theory, cities located near the event may profit from supporting the host city.
When Vancouver was selected to host the Winter Games, the Vancouver Organizing Committee sanctioned a report to gather information of other North American Olympic events and the legacy left behind. They addressed issues of tourism, attracted international competitions, developed participation, became sport hubs, developed professional athletes, invited sports companies to relocate, and encouraged the children to participate in sport.
The information collected allowed the committee to develop an informed comprehensive plan for success. Maximizing the benefits that the city could obtain was a top priority.
A non-profit organization called Legacy Now was created in by the city for the purpose of developing support for the Winter Games. Starting in , they followed the process from beginning to end whether the Games were awarded to Vancouver or not.
The objective was to work together with all the British Colombian communities to develop a legacy addressing activities and volunteerism. There were 11 individuals directly responsible for making sure the process went smoothly; however, the total number of people involved was near , The people involved addressed tangible and intangible legacies. Infrastructure for sport facilities, transportation, communication, environmental needs and the cultural needs of the city were the categories of tangible legacies addresses with the plans organized in a way that the process could be followed or duplicated.
The intangible legacies addressed knowledge, reform, emotional, social and city image. In addressing the development of the organization, everyone must be educated on how the process works and the duties to perform. Communicating with the public and implementing programs that are meant to last long after the event is complete. The organization should be able to run even if people move on to different opportunities.
Ownership of the event should be felt by the entire community building an excitement and a memory while developing a sense of pride in the accomplishment through local and international recognition. In addition, the organization and the community should be trained to handle adversity through proper communication. When the event is complete, the realization of costs becomes real. Funds that could have been used for different projects or for everyday maintenance used for wants instead of addressing the needs.
In the end, the region recognized the construction of a legacy that was developed and changed the community 4. In the case of many cities, there are winners and losers. Not every city can win the bid to host the Games.
For cities in the East with far less resources, the task of winning the bid is daunting. In , the Ottoman Empire sent participants to London for the world fair. By , Istanbul was hosting an exhibition and gaining confidence that the city could become a major player in hosting mega-events. The city of Izmir was awarded the international fair in and made some improvements to the infrastructure of the city centrum. Istanbul realized that there may be a chance to host a major event. Chief planner, Henri Prost, was brought in to redesign the city and address issues that would help to attract mega-events.
Prost stayed in Istanbul from to Because Istanbul held the Balkan Games in , the desire to host larger events became clear. Prost was given instructions to design a stadium. With this in mind, he had the vision of hosting the Olympics. In , Prost submitted his plans for a stadium with updated roads and green spaces addressing needed improvements to the city infrastructure. In , the master plan was approved; however, the outbreak of the Second World War caused the economy to delay the project.
With a celebration looming in , the mayor granted Prost the opportunity to move forward with the project. Aiming for or , Turkey neglected to put in an official bid. As the 10 year celebration moved forward, Prost was trying to address the infrastructure needs that would aid in possibly hosting the Olympic event.
Istanbul missed the opportunity for the Olympics and the Universal Exposition in With changes in government, the parliament passed a law in giving three entities the power to organize a bid for the Games; however, the organizations bickered and were unable to agree.
An Olympic stadium was finally built in , 20 miles from the original site; however, disagreements on ways to improve infrastructure as well as the political climate have created hurdles that are difficult to overcome.
Summary and Conclusions With high costs of investments in infrastructure and the political environment, many cities are no longer interested in taking the risk of hosting the Olympics.
The return on investment is risky, and the additional costs for security for such an event is scary. For countries that have money to invest, the opportunity to improve the infrastructure is attractive; and investors are still willing to put money into an event that is high profile on an international level. Cities that can plan and stay within their budget can find success. Advancing the technology and infrastructure may attract attention from the national stage.
The process is very competitive; however, as research has shown, a bidding city also benefits from economic impact and international recognition. References 1. This type of commitment is customary and may be a prerequisite to winning IOC support. Similarly, bid cities must report to the IOC about the effect of national, state, and local tax laws on payments to foreign parties associated with the Olympics. For example, Los Angeles organizers have committed to work with U.
The LA organizing group, however, has committed itself to funding the Olympics from private sources. In August , bid officials released a rough sketch of what a privately financed LA Games budget would look like. The portion of the budget to be financed by the OCOG and not other private entities is summarized in Figure 5. Revenue would be received primarily from three sources: IOC contributions from broadcast and sponsorships, domestic sponsorships, and ticketing revenue.
Olympic Committee. While the August budget is useful in giving a sense of the broad categories of costs and revenues associated with the Games, it will be refined and revised in the coming months.
The City Council is engaging independent analysts to review the bid plan before it takes a final vote on the bid by early A final proposed Games budget is expected to be completed prior to the submission of Stage 3 bid documents to the IOC in February Bid leaders also have repeatedly committed themselves to minimize risks of cost overruns.
After these and any other available sources are exhausted, the state could be on the hook for certain payments under the terms of recent legislation, as summarized below. Direct Federal Subsidies Not Available. While the U. The federal government does provide important security and intelligence services, in partnership with state and local law enforcement agencies, for Olympics hosted in this country. State governments in the U.
As noted earlier, California provided a large share of the funding for the and Games, while the Los Angeles Games in were almost entirely privately funded. The bill anticipates that the exact funding mechanism will be determined at or about the time Los Angeles is selected to host the Games next year. Senate Bill specifies the uses of the state security and the conditions that must be met to access the funds. In particular, the funds may be used for certain payments to third parties for costs related to the games and OCOG deficits resulting from the Los Angeles Games.
The state most likely would provide funding only if the Games experienced significant financial problems. Short—Term Economic Gains Likely. While the Los Angeles bid assumes no new permanent sports venue or major public infrastructure construction, it would require billions of dollars of spending—paid from Olympic revenues—to construct temporary venues, pay for temporary venue upgrades, and build the technological and other improvements needed to host large numbers of athletes and other visitors.
This billions of dollars of spending—funded largely from out—of—state sources—would generate economic activity in the Los Angeles region during the Games and in the few years before the Games, as preparatory activities occurred. Moreover, hundreds of thousands of visitors, including spectators, athletes, officials, and members of the media, would arrive for the Games in , spending money for food, lodging, and other goods and services.
This sort of short—term economic boost—an increase in jobs, for example—directly linked to the Games is visible when looking at jobs data for the Atlanta and Salt Lake City regions during the period they hosted the Olympics in and , respectively. As shown in Figure 6, seasonally adjusted employment in the Atlanta region jumped by nearly 50, up 2.
That being said, as shown in Figure 7, the February jobs data for the Salt Lake City region jumped by about 4, up 0. In , economic analysts estimated that Los Angeles experienced net economic gains due to the Games. The Games produced an estimated employment increase of 37, jobs primarily short—term , with additional income also generated for 37, others who already had jobs. The total economic impact of the Games represented 1.
For example, it is believed that many visitors to other Los Angeles attractions stayed away that summer, fearing traffic congestion, and some residents left the region during the Games. We note that such displacement estimates are difficult to develop and must make a variety of assumptions, such that different analysts could come up with larger or smaller economic displacement estimates.
In addition to these analyses, both our office and the DOF estimated that the state experienced additional economic activity and state revenue growth in specifically due to the Games. Similarly, if Los Angeles is chosen to host the Games, a short—term boost in state and local tax revenues is likely, which would offset some or all public costs associated with the Games. Lasting Economic Gains Unlikely.
When hosting events like the Olympics, some cities hope to achieve positive economic gains by building new athletics or other community facilities. Studies of sports facilities in host communities generally find little or no net long—term economic benefit associated with stadiums and arenas. Accordingly, for Los Angeles, there is less of an argument than usual that the Olympics will generate future economic gains related to new sports facilities.
General infrastructure improvements can produce long—term economic gains for a region. Accordingly, for Los Angeles, the Olympics probably would not generate much or any long—term economic gain related to new infrastructure.
Some Olympic hosts—including the relatively new ski development, Squaw Valley, in —seem to have benefited over the long term due to visibility provided by the Olympics. Assuming that this type of long—term economic gain will materialize, however, seems problematic in the case of Los Angeles, a city already well known to people and businesses all over the world because it has hosted the Olympics before and appears constantly in films and on television.
If Los Angeles hosts the Games, some short—term net economic gains in and in the years just before the Games are likely. Lasting economic gains, however, appear unlikely. That being said, the low—risk financial strategy of the bid greatly reduces the risk that the Southern California economy will bear large, long—term taxpayer expenses related to the Games.
For these reasons, under the current bid plan, the long—term economic effect of the Games probably would be close to neutral. Negotiations Delegated to the Governor. That being said, the state can be expected to incur some other, potentially small, operating costs if Los Angeles is selected to host the Games. In negotiating with Games organizers, the Governor may want to keep these costs in mind. Among the questions that the Governor may face in contract negotiations are the following:.
Full answers to these questions will not be available until after the host city is chosen next year. The Governor, however, can set important benchmarks for future discussions even in early negotiations with Games organizers.
All parties, however, will expect the state to provide funds as envisioned in the contract the Governor negotiates with the Los Angeles OCOG. The timing of any such payments will depend on the details of the contract the Governor negotiates. For example, after the Games conclude, the OCOG could be required to certify to the Governor that conditions for a state payment have or have not been met, and the Governor could then be required under the contract to request an appropriation to provide any anticipated payment.
This is similar to a mechanism in state law for the Governor to ask the Legislature for funds if tobacco settlement revenues are insufficient to meet debt service and other related costs on certain bonds issued after The cities whose bids are approved to be part of the selection are then put into a rigorous ten-month audit that seeks to ensure that they have what it takes to host an international sporting event.
Ample accommodation is a requirement that the IOC never compromises on. The city also has to have an efficient transport infrastructure that is organized to avoid delays since all Olympic events follow a strict schedule. There also has to be ample security as any danger to the athletes may disrupt the games. The host city has to have all the venues necessary for all the sporting disciplines, and these venues have to be of high standards.
Once a city has passed the first set of requirements, it is now considered a Candidate City and continues to the second stage of vetting.
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