Many of the “benefits” of hosting the Olympics or the World Cup never play out

By Andrew Zimbalist

REUTERS/Pilar Olivares

The following is an excerpt from Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup

Several short-run benefits are commonly touted in connection with hosting the Olympics or the World Cup. An evaluation of the key benefits mentioned in this regard suggests that the vast majority do not play out in reality.

Overcoming Political Gridlock

A common and often sensible claim made by mega-event boosters is that without the pressure that comes with being thrust onto the world stage and a firm deadline, the local political system would be incapable of appropriating money for sorely needed infrastructure. For instance, in 2004, when New York City was bidding to host the 2012 Summer Olympics, it was frequently argued that a major benefit was that the Javits Convention Center on the west side would finally be expanded and modernized. Various funding proposals had been presented to the state legislature in Albany over the years, but the Republicans and Democrats could not agree. While there may be some validity to this reasoning, it might also be argued that the planned investment in the expansion of the Javits Center was ill conceived in the first place.

A similar argument was made for Brazil being the host of the World Cup: it would create enough urgency for infrastructure investment and pacifying the favelas that it would finally get done. The question here is whether the Brazilian political morass was actually overcome or whether the morass precluded the effective installation of needed infrastructure and constructive development.

In general, if the political system is so ineffective, it is questionable whether it is desirable to entrust it with planning and implementing a mega sporting event. In the end, government must learn to effectively plan and administer policy without the pressure of a mega-event.

REUTERS/Pilar Olivares

Higher Real Estate Prices

Higher land prices are often cited as a benefit of hosting mega-events. Land prices do tend to rise where infrastructure and facility construction is taking place. Such price increases undoubtedly benefit landowners, real estate agents, and speculators, but they are also likely to hurt lower-income families, who are evicted or unable to afford rising rents. These families are often obliged to relocate miles away, disrupting travel to work and to school for their children, as well as compelling a social and emotional adjustment to a new community.

Feel-Good Effects

Being at the center of the world stage creates excitement, as does the buildup to the several weeks of fame and glory. Survey work in host cities confirms that, with some exceptions, the mood and spirit of the local population tend to be uplifted. (Brazil 2014 is arguably an exception to the rule.) Host committees organize thousands of local residents to do volunteer work for the games, and this engenders a greater sense of community and cooperation. To the extent that this effect takes hold, however, it tends to be ephemeral. When the planet’s attention disappears, life and spirits return to normal.

Purchase Andrew Zimbalist’s book: Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup

Andrew Zimbalist is the Robert A. Woods Professor of Economics at Smith College. He is the author of three Brookings Institition Press titles: Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums (1997); May The Best Team Win: Baseball Economics and Public Policy (2003); and National Pastime: How Americans Play Baseball and the Rest of the World Plays Soccer (2005).