Costs of London Olympics ballooning. Can Paris play host? Athens?

Even if the London Olympics stuck to its original book cost, the net benefits would be negative.

Stefan Wermuth/Pool/AP/File
Britain's Queen Elizabeth II viewed London's main Olympic stadium construction site Last November. Even if the planners stuck with their original budget (which they haven't), the net economic benefits won't be positive.

We've been told endlessly that the London Olympics is going to make us all such a wonderful profit! You know, never mind the expense, just feel the width of all that infrastructure. Poeple will be so impressed with London that they'll all come as tourists for years to come! Slightly missing the point that anyone who has the money to travel has almost certainly heard of London already.

To assuage our doubts over all of this we've been offered a number of papers from the various organisers and boosters stating that all will indeed be well. However, here's a paper looking at the costs, in an impartial manner, of the current Vancouver Games. Agreed, it's a student paper but at least it's not being paid for by people looking for a particular answer.

And the answer that's found is that, even if the Games stuck to their orignal book costs (an assumption in our own case which has been blown through by a factor of four already and we've still two years to go) then the net benefits of the Games would be negative. There's a very clever little observation in there as to why this might be so as well:

“Economic theory casts doubt on a substantial windfall for the host city from the Olympic Games. Cities competing with one another for the Games would theoretically bid until their expected return reached zero.”
(Rob Baade)

Quite: in order to get the games you've got to bid more than everyone else. More in terms of the new stadia you will build, more you'll spend on making it the bestest outdoor jamboree for track suited drug addicts ever. And it takes place in an auction atmosphere, which leads to the winner's curse, the bidding is done by politicians which is never a good sign and the bidding is done with other peoples' money which is a violation of Uncle Milt's the four ways to spend money.

Then we go off and hire a bunch of superannuated politicians (look, Seb Coe was a great runner and is a nice man but losing your seat as an MP in Falmouth does not make you a great construction manager) and we're surprised when the Olympics bankrupt most of the places that hold them?

I'd just like to repeat the point that it's really not too late to give Paris a phone call and ask if they're still interested. Indeed, I think we might find that Athens has everything necessary and it's certainly true that they could use the influx of what cash there is right now. They've already built all the stadia anyway....

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