American taxpayers should breathe a retrospective sigh of relief that seven years ago New York was not chosen from among five finalists to host this summer’s Olympic Games. The International Olympic Committee (IOC)’s selection of London as the 2012 host city ensured British taxpayers are picking up the exorbitant tab for the world’s most economically dubious sporting event.
Simply bidding for the Olympics cost London a cool $25 million. Proponents saw that as money well spent given that no other sporting event draws more visitors from so many parts of the globe nor so visibly showcases the host city. It was assumed that the Olympics would bring London enormous economic benefits.
After all, everyone knows that such mega sporting events as the Olympics generate so-called “Big Booms” of tourism, boosting local incomes while construction and infrastructure projects create large numbers of new jobs. At least, that’s what the host cities’ economic impact studies always tell us.
Today, Britons are told that building the Olympic Park will regenerate a rundown section of London’s East End, a lasting legacy thanks to new rail lines and improved public transport. At an original estimate of $2 billion, such urban regeneration was an obviously sensible investment.
Such economic confidence stemmed, however, from a peculiar reading of the economic history of the Olympic Games. London’s backers expect a significant “Olympic Legacy,” whereby a successful event increases post-Games tourism and attracts new foreign investors as infrastructure improvements kick-start blighted urban areas.
“Ballooning budgets and debt burdens are always the most likely Olympic outcome.”
Sadly for the British taxpayer, such pro-Olympics economic propaganda represents the triumph of hope over experience, as both London 2012 and past Olympics perfectly illustrate.
For the 2012 Games, London originally estimated total costs at $4.7 billion. Within two years, the official estimate had risen to $15 billion, more than triple the cost at the time of the 2005 bid. As significant private funding never materialized, $15 billion in British taxpayer money was hurriedly allocated to pay for these Olympics.
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