Chicago 2016: At What Cost?

By Kevin Robinson in News on Mar 7, 2007 2:50PM

As the US Olympic Committee packs their bags this morning and Daley and his cronies assert that an Olympic bid by Chicago is "eminently doable," the rest of us are left wondering what bringing the event to Chicago really means.

Mayor Daley and other civic boosters have touted the Olympics as an economic boon to the city, citing the jobs created by new infrastructure projects (such as the "temporary" stadium to be built in Washington Park) and the effect that they will have on "widespread urban revitalization." They trumpet the creation of a mixed-use community on the south lake front and the revitalization of an entire South Side neighborhood. They suggest that the spike in tourism will pour millions of dollars into our local economy, entice global corporations to relocate their headquarters here, and continue to bring visitors to Chicago for years to come to "remember and relive the 2016 spectacle, see the venues, and experience Chicago firsthand." They are promising to do all of this without the use of public money.

We agree that bringing the 2016 Summer Olympics to Chicago will raise our city's profile, here and abroad. But there are some deep questions that remain, and some issues that we are still quite skeptical about. This is an event that certainly seems to be a prize for many other cities as well: besides Los Angeles, there are myriad other cities vying for the opportunity to host these games, including Nairobi, Kenya; Cape Town, South Africa; and Doha, Qatar, among others. Still stinging from the Millennium Park debacle, we wonder if the numbers being cited by the Chicago 2016 group, including the awfully low price tag of $366 million for an Olympic stadium and $1.1 billion for the Olympic village. London has already spent nearly $1 billion on their stadium and is still encountering project delays. Beijing has been burning cash at an even quicker pace.

For more perspective on the economic realities of a proposal like this, we called University of Chicago economist Allen Sanderson.

Professor Sanderson told us what the 2016 Summer Olympics might mean for Chicago, before, during and after the games. According to Sanderson, cities and countries tend to compete for an event like this one by how much they are willing to spend. He referred to landing the Olympics as something of a "winner's curse." In general, costs tend to escalate in situations like this one, often winding up costing the host city two, three and even four times the initial estimate, especially when faced with a firm deadline that must be delivered upon. He weighed the anticipated economic benefits of hosting an event such as the Olympics against the disruption costs (diverting resources away from other necessities in the city in order to satisfy a temporary need) and the congestion costs (lost productivity and opportunity due to the massive crush of people that will descend on the city) that come with hosting an event like this. Sanderson cites Athens and Sydney as examples of these economic losses, with Sydney experiencing no economic "bounce," and the tremendous economic losses incurred by Athens when they hosted the Games. In fact, according to Sanderson, there is no empirical evidence that hosting an event like this yields an economic return to the host, and in fact the high cost and low return on the investment tend to have an opposite effect, making it a drain on the local economy. Further exacerbating this is the reality that this is the first post-9/11 event of this magnitude to be held in the US, and both the costs and implications for security are staggering.

We think that this bid to host the Olympics is just local politicians and their financial interests dancing around the real issues: Chicago has no place to host the Olympics, and the real questions about what the South Side really needs aren't being adequately addressed. If the goal is to revitalize the South Side, and to create affordable housing in Chicago, why are we being asked to wait nearly ten years for the payoff? Sports entertainment revenues are elastic, and are generally a substitution of revenues, rather than an economic engine. People spend their money on and at a sporting event, rather than in the local economy. So the dollars that are spent on tickets, food and beverages, and other incidentals are dollars that aren't spent in other parts of the local economy. Wouldn't those scarce local resources be better spent building affordable housing and creating economic growth now, rather than after the 2016 Summer Olympics? We also take issue with the mysterious contention that some anonymous local donors will pony up the remaining $50 million. We remember that promise every time we pass the Bean.