Estimating the Cost and Benefit of Hosting Olympic Games: What Can Beijing Expect from Its 2008 Games?

Industrial Geographer, The, Fall 2005 by Owen, Jeffrey G

It has also been argued that the Olympic Games can advance a city in the hierarchy of "world cities." According to Short et al (2000), "some of the most important global spectacles are sports megaevents such as the Olympics which reach a worldwide television audience and offer perhaps the best stage upon which a city can make the claim to global status" (p. 320). The world cities concept is closely related to the Olympic legacy, especially regarding tourism, which is seen as a modern arena of economic competition among cities. "During this latest phase of globalization, when tourist attractions are highly prized, many cities are repackaging the old with new accommodations or accessibilities to re-present themselves as living history and to take advantage of the global tourism economy" (Short 2000, p. 319). It is easy to see how a city such as Beijing would find the Olympics appealing in this context.

A BRIEF EXAMINATION OF ECONOMIC IMPACT STUDIES FROM RECENT OLYMPICS

Atlanta (Summer 1996)

For the 1996 Summer Games in Atlanta an economic impact study was prepared for the state of Georgia. As one might expect, the study predicted significant economic benefits to the host city and state. The Games in Atlanta did have a definite impact on net exports in Georgia, but there is precious little evidence of extraordinary economic performance in Atlanta due to the Games, bringing into question who actually benefits from increased exports and how this affects the local economy.

In an ex post study, Baade and Matheson (2002) found a modest boost in employment that was short-lived. Even according to their most positive estimates, "the City of Atlanta and the State of Georgia spent $1.58 billion to create 24,742 full- or part-time jobs which averages out to $63,860 per job created (pp. 28-29). A recent study by the Upjohn Institute estimates that a new job adds about fifty cents in economic benefit to a local economy for every dollar of wages, so job creation alone certainly cannot justify the public expense for the Atlanta Games (Persky 2004, p. 1).

Table 1 summarizes the economic impact projections of the Atlanta study. The impact of the Atlanta Games was projected to be $5.1 billion. The source of the impact was nearly equally divided between direct spending by the Atlanta Committee for the Olympic Games (ACOG) for staging the games and spending by out-of-state visitors.

Direct impact was primarily through spending by ACOG, whose budget was comprised of private funds. While expenditures were adjusted downward to account for money that flowed directly out of Georgia, the study made no attempt to determine what percentage of the funding came from sources in Georgia. From a net inflow standpoint, this led to overestimation of economic impact. Ticket sales comprised 25% of ACOG revenues and are the largest single source of measurement error (see Table 2). Tickets purchased by Georgia residents should not be included in impact calculations based on net exports.

Fiscal impacts were not reported. This may be because state and local tax revenue projections of $200 million by ACOG did not cover the $353.9 million in government spending for the games ($92.2 million was federal expenditure).