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

ABSTRACT

Cities who entertainer the Olympic Games must commit to significant investments in sports venue and other infrastructure. It is commonly assumed that the scale of similar and event and the scale of the preparation for it will create large and lasting economic benefits to the entertainer city. Economic impact studies confirm these expectations by means of forecasting economic benefits in the billions of dollars. Unfortunately these studies are filled with misapplications of economic theory that virtually guarantee their projections will be large. Ex-post studies have consistently ground no evidence of positive economic impacts from mega-sporting facts even remotely approaching the estimates in economic impact studies. For the 2008 Summer Olympic Games in Beijing, it appears China will take these massive investments in venue and infrastructure to a of recent origin level. If organizers of the Beijing Games base their expectations upon economic impact studies from previous Olympics, they are certain to be disappointed. The potential for drawn out term economic benefits from the Beijing Games will be pendent critically on how well Olympics related investments in venue and infrastructure can be incorporated into the overall economy in the years following the Games.

INTRODUCTION

"Mega-events" of the like kind as the Olympic Games require large totals of public money to be worn out on venues and infrastructure improvements. In order to justify the use of public capitals economic impact studies are many times commissioned which invariably project large inflows of coin that will have a long-term positive consequence on the economy by similar means as job creation and visitor spending. circumstances of the scale of the Olympic Games, which attract large amounts of currency from outside a local economy, are forecasted to have economic impacts in the billions of dollars.

Ex-post studies, however, have consistently base no evidence of positive economic impacts from mega-sporting circumstances even remotely approaching the estimates in economic impact studies. In a investigation of the impact of Super goblets on local economies, Philip Porter (1999) lay the foundation of "no measurable impact on spending associated with the circumstance The projected spending and spillover benefits of regional impact archetypes ever materialize" (Porter 1999, p 61) Porter's explanation is that capacity constraints in the [i]cabaret[/i] industry cause room prices to increase with no change in occupancy rates. Higher rates contribute to the crowding on the outside of regular traffic and snare spending in areas other than house of entertainment rooms changes little or not at all.

Longer confine sports programs, usually involving stadium subsidies to attract or detain professional teams, have also failed to deliver upon projected economic benefits. Even for cities that usually are considered succes stories for sports unfolding strategy, such as Baltimore (Hamilton and Kahn 1997) and Indianapolis (Rosentraub 1994) empirical research does not find evidence of statistically or economically significant positive impacts.

In July of 2001 Beijing was awarded the 2008 Summer Olympic Games. greatest in quantity people assume that such an circumstance will bring enormous economic benefits to the entertainer city not just during the circumstance but for years afterward. "The scale of the organisation, facilities and infrastructure required for of that kind a huge undertaking are similar that the Games cannot on the contrary have substantial economic effects" (Sydney 2000 Games, p 2) on the contrary what exactly are these economic issues and how do they affect the quality of life of local residents?

The relevance of studies of the like kind as these to the Beijing games be pendents in part on the similarity of the economic conditions in China to previous entertainers It seems logical that a les lay opened country will have more to gain from drawn out term growth opportunities. Matheson and Baade (2003) argue, however, that the fields of mega-sporting events are flat worse for developing countries. The opportunity take away froms of providing state of the art facilities are plenteous higher and lack of late infrastructure requires significant additional investment.

In what tread on the heels ofs misconceptions that lead to the overly optimistic forecasts of economic impact studies will be explained, with a closer direct the eye at impact studies from new Olympic Games. Finally, the plan for the Beijing Olympics will be examined to diocese how China's experience may compare to other Games.

THE FALLACY OF ECONOMC IMPACT STUDIES

Economic impact studies have become standard operating process for supporters of public funding for sports teams or incidents Their prevalence has led to acceptance of their findings by means of the public, media, and smooth academic circles with little or no critical evaluation. Because of the high profile of of the like kind events, large (and positive) economic events are taken as given; the studies confirm what is already believed. Short et al (2000) provides an example of a typical statement: "The promise of worldwide exposing and economic gain has made hosting these major and regularly scheduled sporting affairs a lucrative goal for aspiring cities around the world" (Short 2000 p 320)