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

Sydney (Summer 2000)

The Economic Impact Study of the Sydney Olympic Games by the University of Tasmania along with Arthur Andersen (1999) purports to have been prepared "using the most up-to-date modelling techniques . . . and detailed financial information available" (p. 1). Unfortunately, it was also prepared using the most fundamental flaws in economic impact analysis, just like all of the studies that came before.

The report identifies three sources of direct expenditure: infrastructure construction, operation of the Games, and visits by spectators and participants; along with an induced impact: visits due to publicity and awareness of the Games. All four of these expenditure sources then contributed to the indirect impact (p. 4). (The Sydney and Atlanta studies reverse the use of the terms "indirect" and "induced.") Revenues from ticket sales and visitor spending, and expenses from construction and Games operation are treated exactly the same. There is no recognition of the opportunity costs of devoting capital and labor resources to the Games.

The study projected an increase in the Gross State Product of New South Wales of $5.1 billion, which coincidentally is the same as the total output impact projected for Georgia from the Atlanta Games. Two fifths of the impact is projected to go towards household income (about $2 billion). Corresponding estimates for Australia as a whole are about 25% higher.

Some legacy effects from the Sydney Games are incorporated into the economic impact calculations. Specifically, international tourism after the Games is considered the third phase of Olympic impact. Other legacy effects are barely mentioned in the study.

The facilities legacy appears to be one of expense. Sydney had plans for the long-term use of many of its venues, but four years later the arena that housed gymnastics and basketball is in receivership and "the State Government has been propping up other uneconomic venues since the Olympics to the amount of about $46 million a year" (Sydney Morning Herald).

Beijing

The Beijing Organizing Committee of the Olympic Games (BOCOG) is charged with the planning and administration of the 2008 Games. Detailed information on Olympic financing and predicted economic impact are not available for two reasons- the games are still four years away, and it is not necessary for Chinese officials and Olympic organizers to use the overstated findings of an economic impact study as a public relations tool.

Still, there are some indications of the objectives and the scope of the Beijing Olympics. Essex and Chalkey examined each of the modern Olympic Games (begun in 1896) in terms of their impact on urban change. They divided the Games into three categories: low impact (minimal infrastructure investment, such as Mexico in 1968 and Los Angeles in 1984), Games focusing mainly on additional sports facilities (such as Atlanta in 1996), and Games stimulating transformations of the built environment (such as Tokyo in 1964 and Montreal in 1976). As the Games have grown in stature, so have the ambitions of host cities, so more recent games are more likely to be in the third category. This certainly appears to be the case for Beijing.