Debunking Olympic Myths About Economic Prosperity

By Matthew Burbank, U Associate Professor Political Science

Is it a good idea for Salt Lake City, or any American city for that matter, to host the Olympics? With the Games here in Salt Lake only days away, it may seem a little late in the day to raise such a question. Still, Samuel Johnson once wrote the prospect of being hanged in a fortnight tends to concentrate the mind wonderfully, so perhaps now is a good time to examine this question.

To progress toward an answer, let me first clarify what is being asked. The question here is not whether the Olympics themselves are a good thing or not. Nor is the question whether the reporters and spectators visiting Salt Lake City will find the place as enjoyable as other Olympic locales. Rather, the question I wish to ask is whether, as a matter of public policy, it is a good thing for U.S. cities to seek the Olympics as a path to economic prosperity?

Perhaps the best way to address this question would be to dispel a few common myths about the relationship between host cities and the Olympics.

Myth #1: The Olympics are about sport, not politics; so, choosing a location for the games is about selecting the best place for athletes to compete.

Supporters of the Olympics may make this claim, but anyone who followed the Salt Lake Olympic scandal even slightly will see through this Olympic myth. In fact, the process of selecting host cities is a thoroughly political process.

And this is true both from the perspective of the International Olympic Committee (IOC) as well as from the perspective of cities seeking to land the Games. From the perspective of the IOC, selecting sites is about rewarding friends and punishing perceived enemies, while still recognizing the importance of the marketplace. From the perspective of U.S. cities, getting the Games is not primarily about hosting athletic events. Rather, the Games are an opportunity to promote the city on a world stage and, with any luck, getting someone else to pay the costs.

Myth #2: Since they are the “Salt Lake City” Olympics, city officials are in charge and can run the Games to the advantage of the city.

This myth is rooted in the fact that according to the rules established by the IOC only cities, no states nor nations nor private companies, can host the Games. And, of course, it is true that Salt Lake City is the IOC’s designated host city for the 2002 Games.

It is emphatically not true, however, that city officials are in charge of the Olympics or even that city officials can make sure that the Games are conducted in such a way that residents of the host city will benefit. Why?

There are two reasons. First, IOC owns the rights to use the “Olympic” name and so maintains ultimate control over whether and how any city may stage related events.

In this sense, hosting an Olympics is more like running a McDonald’s franchise than starting your own business. If the goods are not produced in exactly the manner specified, you don’t get to use McDonald’s marketing to pedal your burgers.

Second, it is nearly impossible in the American federal system of government for a city to have the resources to conduct an event of the magnitude of the Olympics. In fact, the day-to day operation of putting on the Games are handled by a private, nonprofit organization whose job is to put on the games according to IOC specifications and not necessarily to make city residents happy.

In the case of Salt Lake, this is the Salt Lake Organizing Committee (SLOC). SLOC’s job is to stage the Games in the manner specified by the IOC and how that process effects the people of Salt Lake or Utah is a secondary concern at best. And, even though the mayor of Salt Lake City is a member of the SLOC board of trustees, in reality the mayor does not have the power to get SLOC to do what he wants.

So, city officials are not in charge of how the games are run. Does that matter? What it should remind us of is the fact that regardless of what residents of Salt Lake City or their elected officials may think is best, ultimately, neither citizens nor their elected representatives are in control. City officials may be able to make life difficult for SLOC, but city residents cannot hope to get their way when it comes to Olympic matters unless what they want happens to coincide with what Olympic organizers want to provide.

Myth #3: The 1984 Los Angeles Olympics proved that a U.S. city can make a profit hosting the Games.

It is true that the L.A. Games generated a $225 million surplus because the organizing committee raised more money than it needed to stage the Games. And, the L.A. surplus has become part of the lore of the Olympics among city leaders ever since. It is worth noting, however, that none of the surplus went to the city of Los Angeles (it was split among various nonprofit, athletic organizations).

The real lesson to be learned from the L.A. experience was that the Games can be staged with minimal use of state or local tax dollars if they use existing facilities. The surplus from the L.A. Games was a result of both aggressive fund raising and keeping costs down by not building new facilities.

Of course, most cities don’t have the athletic facilities or the tourist infrastructure to hold an event the size of the Olympics. Moreover, most city leaders would prefer to use the Olympics as a justification to build a new stadium, ski jump, or what-have-you. But, as Atlanta and Salt Lake City have shown, building new facilities usually means investing tax dollars. And using tax money to build venues for elite athletics raises questions about whether those same tax dollars might not be better spend on crime prevention, street repairs, or other things that directly benefit city residents.

Myth #4: Hosting the Olympics is a net benefit to the city because of all the positive publicity generated by worldwide media coverage.

Certainly the Olympics do generate an enormous amount of media attention and much of the reporting, especially from the network which paid for the broadcast rights, will be positive for the host city. Still, this claim qualifies as an Olympic myth for several reasons.

First, it completely ignores cost. Even if much of the money spent to host the Games comes from private sponsors or the federal government, there are still costs to local residents which may never be recovered even with hours of positive publicity. Second, not all publicity is positive. The image of Atlanta coming from the international media in 1996 was one of a city overwhelmed by transportation problems, crawling with tacky street vendors, and lacking amenities.

Similarly, the barrage of national and international media coverage of Salt Lake’s bid scandal revealed the other edge of the double-edged sword of media attention.

In short, hosting the Olympics will generate attention, but whether that attention is on balance positive or negative is impossible to predict.

Third, positive publicity by itself does not guarantee a benefit to the host city. While it may be nice that the folks in Wichita think Salt Lake is a lovely place, unless the Olympic coverage motivates them to pack up and head for the Utah slopes, that positive image isn’t doing anyone in Utah much good.

Thus, even with loads of positive media, the payoff of increased tourism over time is still an uncertain one and, in reality, much more influenced by factors such as the general state of the economy.

So, where does that leave us? The reality is that holding an Olympics is not a sure path to economic benefit for the host city. Of course, nearly any strategy for a city to seek out long-term economic development has risks.

The problem with using the Olympic Games as a means to enhance a city’s image and tourism potential is not merely that it is risky. Rather, the real problem is that the risks of such an endeavor are largely hidden from citizens by the myth and imagery of the Olympics.

If city residents were to make an informed choice to invest in the Olympic Games as a path to future economic prosperity, such a choice would be unobjectionable. With the way the Olympic bidding and organizing process works, however, it is hard to argue that is what happened in Salt Lake City or will happen in future American cities.

Matthew Burbank is an associate professor in the department of political science and is the author, with Gregory Andranovich and Charles Heying, of Olympic Dreams: The Impact of Mega-events on Local Politics (Boulder, CO: Lynne Rienner Publishers, 2001).