Tokyo Is Just the Latest City to Pay aHigh Price for Olympics

pa href=https://www.cato.org/people/david-boaz hreflang=undDavid Boaz/a/p pI’ve written before about the high costs and minimal benefits that cities derive from hosting the Olympics, and assessments are starting to roll in for the recently completed Tokyo Summer Games. Michelle Ye Hee Lee and Simon Denyer paint anbsp;bleak picture a href=https://www.washingtonpost.com/world/2021/08/15/olympics-tokyo-costs-japan/in the Washington Post/a. Tokyo spent more on the Games than any previous city, and the absence of visitors made for an especially bad bargain:/p blockquotep“If you’re just looking at those spreadsheets, you know, there was no reason for this game to go on, at least from Tokyo’s perspective,” said Victor Matheson, who studies sports economics at College of the Holy Cross in Worcester, Mass./p pBy conservative estimates, the Tokyo Olympics cost $15.4 billion — anbsp;tab largely borne by Japanese taxpayers and more than double the forecast when the city bid for the Games. Japanese government auditors have estimated that the true cost is at least $25 billion, which includes projects related to the Games. [Another Post article a href=https://www.washingtonpost.com/sports/olympics/2021/08/08/ioc-olympic-host-cities/reveals/a that Tokyo’s original budget was $7.4 billion.]/p pThe official $15.4 billion tab is on par with the past two Summer Games: in Rio de Janeiro in 2016 ($13.7 billion) and in London in 2012 ($15 billion)./p /blockquote pOf course, the Rio Games would be nothing to emulate. In early 2017 a href=http://www.usatoday.com/story/sports/columnist/nancy-armour/2017/02/21/rio-olympics-venues-disrepair-wasteland/98220698/ target=_blanksports columnist Nancy Armour/a wrote in emUSA Today, /em“The legacy of the Rio Olympics is anbsp;farce.” She continued:/p blockquotepThe closing ceremony was six months ago Tuesday, and already several of the venues are abandoned and falling apart. The Olympic Park is anbsp;ghost town, the lights have been turned off at the Maracana and the athlete village sits empty…. the billions that were wasted, the venues that so quickly became white elephants, the crippling bills for anbsp;city and country already struggling to make ends meet…/p /blockquote pIn 2017 the world’s leading expert on megaprojects, Bent Flyvbjerg, examined a href=https://www.cato.org/policy-report/januaryfebruary-2017/megaprojects-over-budget-over-time-over-overin emCato Policy Report/em/a “the ‘iron law of megaprojects’: emover budget, over time, over and over again/em.” In 2020, according to the Post, anbsp;study he coauthored found that every Olympics since 1960nbsp;in Rome has run over budget:/p blockquotep“This is like having anbsp;tiger by the tail, you know, when you say yes to hosting the Games. You actually have very limited possibilities of stripping down cost” because the majority of the business decisions are made by the IOC and international athletics organizations, Flyvbjerg said./p /blockquote pMore and more cities are realizing that Olympic games are glamorous but not economically sound. Inbsp;a href=https://www.cato.org/publications/commentary/modern-tea-party-tosses-olympicsmade that point/a in 2015 when Boston withdrew its bid to host the 2024 Summer Olympics:/p blockquotepThe [Boston] critics knew something that the Olympic enthusiasts tried to forget: Megaprojects like the Olympics are enormously expensive, always over budget, and disruptive. They leave cities with unused stadiums and other waste.brbr E.M. Swift, who covered the Olympics for Sports Illustrated for more than 30nbsp;years, a href=https://www.wbur.org/cognoscenti/2012/07/18/hosting-the-olympics-in-uncertain-economic-timeswrote on the Cognoscenti blog/a anbsp;few years ago that Olympic budgets “always soar.”brbr “Montreal is the poster child for cost overruns, running anbsp;whopping 796 percent over budget in 1976, accumulating anbsp;deficit that took 30nbsp;years to repay. In 1996 the Atlanta Games came in 147 percent over budget. Sydney was 90 percent over its projected budget in 2000. And the Athens Games cost $12.8 billion, 60 percent over what the government projected.”/p /blockquote pCities and their citizens are beginning to recognize this problem. Brisbane, Australia, was just awarded the 2032 Summer Olympics, which wasn’t anbsp;tough choice because no other city bid. To conceal this declining interest, the International Olympic Committee a href=https://www.washingtonpost.com/sports/olympics/2021/08/08/ioc-olympic-host-cities/no longer releases the names of bidders/a./p pFlyvbjerg and coauthor Allison Stewart have a href=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2238053found/a that “the Games stand out in two distinct ways compared to other megaprojects”: They emalways/emnbsp;run over their projected costs, and their average cost overrun of 179 percent in real terms is significantly larger than that of other megaprojects. Even by that standard, Tokyo’s experience is bleak: its cost overrun, from anbsp;projected $7.4 billion to $25 billion, is 238 percent./p pCondolences to the taxpayers of Beijing, Paris, Milan, Los Angeles, and Brisbane, host cities for upcoming Olympic Games. /p