By Xavier Bremner
With today's Olympic opening ceremony spectacular, London's moment in the sun begins. And here's to a successful 2012 summer games. But when the last medal is handed out and the tourist throngs depart from Heathrow, will the London regional economy really be better off? The short answer: Despite the conventional wisdom that the Olympics bring huge economic benefit for host cities, the net result for London may well be negative.
Andrew Zimbalist over at the Atlantic's Cities notes that Games might bring in $5 to $6 billion in total revenues, but half of that will go to the International Olympic Committee. Meanwhile, the cost of putting on the Games is about £11 billion (or $17.2 billion), according to the Wall Street Journal. Then, says Zimabalist, the real challenge begins:
Once the 17-day extravaganza is over, the city must then attempt to find productive use of the dozens of venues it has built. These projects often cost hundreds-of-millions of dollars to construct, take up 10 to 20 acres of valuable urban real estate (frequently for decades), and cost tens-of-millions of dollars to maintain each year. Despite this, many of these former Olympic venues are scarcely used, as is the case with Beijing's Bird's Nest and Water Cube, or many of the venues built for the Athens games. The list of white elephants is long.
Stephen Dubner with Freakonomics, who recently appeared in his regular segment with American Public Media's Marketplace show, says the academic research shows little to be gained by hosting the Games.
He noted research done by Allen Sanderson at the University of Chicago that measured economic gains between host cities and nearby cities that didn't get to host the games. Turns out the twin city analysis showed no big benefits for host cities, not even tourism. Explains Dubner: "Well keep in mind that a place like London already has plenty of tourists. So to some degree what you're doing is replacing a Trafalgar Square tourist with a synchronized swimming tourist."
To listen to the full and very interesting interview, click on the button below.