Study Claims Olympics Don't Deliver for Local Economy

(ATR) A new study analyzing data during the Salt Lake City Olympics says the city did not benefit from hosting the Winter Olympics in 2002.

The study came out in a working paper called "Slippery Slope? Assessing the Economic Impact of the 2002 Winter Olympic Games in Salt Lake City, Utah," written by three economists who specialize in economics of sport - Robert Baade, Robert Baumann and Victor Matheson.

Conclusions were reached by looking at the shifts in patterns for taxable sales from 1982 and 2006 for the counties surrounding Salt Lake, where many events were held.

The researchers found that a statistically insignificant $130 million was lost in overall taxable sales income during the Olympics. According to the report, this suggests "at best there was not a statistical increase in total taxable sales during the quarter of the 2002 Winter Olympics and at worse taxable sales may have fallen."

However, there were areas of improvement. During the Olympics, hotels had an increase of more than $50 million in taxable sales and restaurants also increased by an estimated $18.7 million. Other indicators are not so promising.

"General merchandise stores” suffered a net loss of $167.4 million during Games time as did ski resorts and other recreation firms, although not in statistically significant models.

Speaking to Around the Rings, Victor Matheson said mega-sporting events like the Winter Olympics "don’t make money."

"The Olympics may make you happy but they might not make you rich," he said. "It's a fun time to be in the spotlight but most cities lose money."

Matheson said much of the reason for this is the expenditures needed to build massive stadia.

He cited the success of the 1984 Games in Los Angeles where organizers did not build a single stadium for the Olympics. The most infamous Olympic construction boondoggle would be the Montreal Olympic Stadium, which ended up costing tax payers $1 billion and was finally paid off this summer, 32 years after the Games.

However, Fraser Bullock, the Chief Financial Officer for the Salt Lake Organizing Committee (SLOC) said the study seemed to "ignore a few fundamental facts."

"The burden on the local citizen was zero, because the costs of the Games were fully covered by revenues. The expenses incurred by the state and local governments as mentioned in the Holy Cross study were fully and explicitly repaid, with interest, by the Salt Lake Organizing Committee."

He added that Salt Lake Organizers had a unique structure that might have affected the data.

"A lot of people bought memorabilia through us [SLOC] but we were not a taxable entity. There was a temporary short term decline, approximately $5 million in tax receipts but you also get to host the Olympics and get very long term benefits.

"You have one short term $5 million impact that is overwhelmed by the benefits both infrastructure and long term benefits.

You, or anybody else, would have a hard time finding a significant number of people in Utah who believe that hosting the 2002 Winter Olympics imposed a burden, economic or otherwise, on the community."

Matheson also said it was possible to extrapolate from this study what will happen in a Summer Olympics.

"The one nice thing is that it's a relatively large event in a relatively small city. If something is happening because of the Olympics we would expect to find it in Salt Lake. It is much easier to see it in a place like Salt Lake than L.A."

The study concluded on a somewhat dire note for bid cities.

"Given the experience of Utah, potential Olympic hosts should exercise caution before proceeding down the slippery slope of bidding for this event."

While there are few economic indicators from the Beijing Olympics, Matheson said there is "no way Beijing makes money in the short term." Draconian security measures caused tourists to stay home he said, meaning there were just as many visitors in Beijing for the Olympics as there would be in a typical August.

Written by Ed Hula III.