Risky Business: A Q&A with Andrew Zimbalist About Hosting the Olympics

Andrew Zimbalist, Robert A. Woods Professor of Economics at Smith, has spent years studying the financing of big-league sports events, construction projects and team organizations. In his newest book, Circus Maximus,  Zimbalist explores the economic impact of hosting the Olympics and the World Cup, concluding that in most cases, host cities have reaped no economic benefits from accommodating those events.

As debate over Boston’s potential bid for the 2024 Summer Games has heated up, Zimbalist has been interviewed on the subject by numerous national media outlets and has spoken at public events.

In an op-ed he published in The Boston Globe earlier this month, Zimbalist noted that even cities that have reported modest operating surpluses from hosting the Olympics—Salt Lake City and Atlanta—have failed to account for capital costs, cost overruns and public subsidies involved in staging the Games.

On Thursday, April 30, Zimbalist will testify before a joint session of the Massachusetts legislature about Boston’s potential $4.5-$5 billion bid to host the 2024 Summer Games.

Here’s what he had to say about the issues involved.

What sparked your interest in studying mega-sports events?

Zimbalist: “I’ve been thinking about these issues for some time. In 2004, I got a call from Gerald Schoenfeld, the Broadway theater producer. New York City at the time was considering bidding for the 2012 Olympics and building a stadium for the Games and the New York Jets at the rail yards on 33^rd Street for $44 million. Schoenfeld didn’t like the idea because he felt it would interfere with Broadway, with Jets games interrupting Sunday theater matinees. He asked me to look into the economics of the proposal and when I did, I found I agreed with him. So that was my first involvement.”

How did you come to be testifying before the state legislature about Boston’s bid for the Olympics, and what will be your message to state lawmakers?

Zimbalist: “The chief of staff for Senate President Stanley Rosenberg emailed me and asked if I could testify before the legislature. My message will be that it is economically not feasible for Boston to host the Olympics. It’s going to end up costing a lot of public money, and there will be no appreciable public benefits.”

Has there ever been a situation where a host city did benefit from the Olympics?

Zimbalist: “In theory, it can work under two basic conditions. One is that all of the infrastructure is already in place. That’s what happened in Los Angeles in 1984. The second is that the host city has a vision and a plan for altering the landscape of the city prior to being engaged in bidding for the Games. So the Olympics is part of a plan already in place, not one imposed on the city. Barcelona did that in 1992. In all of the other cases I’ve looked at, there wasn’t a vision or a plan by the host city, and so, the city’s spending was structured around meeting the International Olympic Committee’s (IOC) demands.”

What’s important to know about Boston’s bid for the 2024 Summer Olympics?

Zimbalist: “In Boston, industry executives started the process to be a host city and have taken control of it. Up to this moment, neither the Boston City Council nor the (state) legislature has endorsed the project. John Fish, the head of Suffolk Construction, is also the head of the Boston 2024 group, which is promoting the idea of hosting the Games. By contrast, in Paris, another potential host city, individuals interested in hosting are not allowed to bid until they get approval from the City Council—which has just happened—and the central government parliament, which is scheduled for June. So at least there is some political vetting going on there.”

Will Boston’s bid be a hard sell in the legislature?

Zimbalist: “The problem here is that Senator Rosenberg, Governor Charlie Baker and other politicians are cautious about crossing big-money interests. It’s hard for them to come out and say the proposals from those guys don’t make sense. What could happen is that they’ll find some back door way of supplying money for the bid. Part of the issue is that Boston will have to compete against Paris, Rome, Hamburg, Istanbul and other world cities that want to host the 2024 Games. There will be a period of two years while the IOC makes its decision. During that time, there will be competitive interactions. Paris has a stadium that can seat 80,000, while Boston’s seats 60,000, for instance. Supporters of Boston’s bid claim—and to a degree they are correct—that the largest TV contract for the Olympics is with NBC, which would rather have the games in the United States. So that’s one advantage.”

Why do cities keep bidding for the Olympics when studies show they don’t gain economically?

Zimbalist: “The situation is similar to climate change. Why do we keep emitting hydrocarbons when we know it’s harmful? There are powerful interests involved in the Olympics. Sports are also very popular, and people get excited about their city being on a world stage. Boston 2024 is saying there is a new opportunity now with hosting. There are new policies at the IOC, and they are looking for frugality because they got so much bad PR about waste with the Beijing and Sochi Olympics. Most places approach the idea of hosting by saying, ‘We’ve learned our lessons, and we’ll do better.’”

There are people who make money on hosting the Olympics. Who are they?

Zimbalist: “Investment bankers who issue the bonds, lawyers, insurance companies, hotel and restaurants that think they will make money, architectural firms, local media companies—a lot of interests. The main group is the construction industry, because that’s where the public money ends up going.”

What do you hope to see happen with Boston’s Olympics-hosting bid?

Zimbalist: “I think the hope that we won’t spend public money on that bid is unrealistic. What I’d like to see is politicians being persuaded not to do this. I think it’s possible that the U.S. Olympic Committee will decide that Boston is not viable and supporters will move efforts to have an American host city to Los Angeles. I’d like that. Failing that, the IOC should pick somewhere else to host!”