Do Calgarians Have Anything to Gain from Hosting Another Olympics?

Do Calgarians Have Anything to Gain from Hosting Another Olympics?

Last updated on February 6, 2018 Views: 3484 Comments: 0

February 28, 2010. I nervously rock back and forth on the living room couch of the Surrey, B.C. home I grew up in.

Canada’s nursing a tenuous 2-1 lead when Zach Parise of the U.S. sends the gold medal hockey game into overtime with only 24.4 seconds left. I’m crushed. Destroyed. A wreck. And I have every reason to be! The U.S. has already shocked the Canucks once, beating us in the preliminary round 5-3 before drubbing Finland 6-1 in the semifinal, while Canada barely eeked into the gold medal game with a 3-2 win over Slovakia. Needless to say, I enter OT wracked with fear that our boys might blow it completely on home soil.

And then it happens. A glorious give-and-go from Canadian Jarome Iginla to Captain Sidney Crosby. American goaltender Ryan Miller aggressively challenges Crosby’s shot before the puck finds its way to the back of the net. With that, the “Golden Goal” is forever etched in Canadian sports history.

Following the game, I remember riding the Canada Line—the shiny new SkyTrain line built specifically for these Games that, for the first time, ferried commuters from downtown Vancouver directly into the airport. At some point, the people in the packed train spontaneously erupted into an unprompted rendition of ‘O Canada.’

Canada’s fortunes had obviously changed from four years prior. The Canadian Olympic Committee’s “Own the Podium” campaign worked, boosting Canada from 5th in the medal tally at the previous Turin Olympics to comfortably leading the 2010 pack with 14 golds. And perhaps less overtly, Canadians seemed to have changed as well. At the risk of sounding jingoistic (how Canadian was that preemptive apology?), we were no longer content to stand in the background. We’d found a new pride in our accomplishments and a confidence in our country that wasn’t there before and wasn’t going away.

Celebrating Canadian gold

That observation, of course, is largely speculative, personal, and intangible. It’s hard to quantify the value of some perceived boost to a country’s sense of spirit and community, at least compared to the more measurable impacts of hosting such a massive event.

Now Calgary is debating the possibility of bidding for the Winter Games again in 2026, having previously hosted 30 years ago. Calgary’s Bid Exploration Committee is asking its residents, “Should Calgary Bid?

Good question! But unfortunately, a very complex one. Warm memories and spontaneous public singing aside, are there any tangible benefits to hosting the Olympics for the resident of the host city? Will the average Calgarian see any meaningful return on their investment?

No Olympic Games Has Made a Significant Profit…Except One

It figures that the only city to ever make bank on its Games is the world capital of entertainment: LA in 1984 brought in a cool $250 million.

Sure, there are other Olympics that have claimed a small profit, including Calgary’s own turn in 88 ($32 million) and even ‘my’ Vancouver Games ($1.9 million). But what’s so impressive about the LA Games is that they pulled it all off without spending a dime of taxpayer money. After the staggering losses posted by Montreal in 1976, LA became the only city even willing to host the Games, and gained all kinds of concessions from the IOC because of that. LA was not financially responsible for any cost overruns it incurred, motivated by a city charter amendment that no taxpayer money would go toward the Games without reimbursement.

The IOC also agreed that no new venues would need to be built for the event and only existing venues, some left over from the last time LA hosted in 1932, would be used. But the real key to the 1984 Olympics’ profitability came in the way it was marketed—a guarantee that LA could sell the Olympic rings and the Games’ branding to any corporation they saw fit.

“They were the McDonald’s Games. LA put those Olympic rings on Coca-Cola, blue jeans and anything they could possibly brand,” says Moshe Lander, a professor of economics at Concordia University.

“That’s what made them profitable, just by the sheer willingness to turn it into a business where everything is for sale. They sold those rings for anything they could possibly get.”

Though corporate sponsorship of the Olympics has become even more ubiquitous than it was in 1984, the cost of hosting the Games has increased as well. Now, the average sports-related outturn cost is $5.2 billion for the Summer Games and $3.1 billion for Winter. Meanwhile, no Olympic Games has ever come in under or on budget. The cost overrun typically averaged 230% before falling to 75% in the 2000s, with the last Winter Games in Sochi completely breaking the bank at 289%.

The number of countries willing to host the Olympics is dwindling because the democratic ones can’t go back to their citizens saying, ‘We need $2 billion in taxpayer money to cover, in essence, a two-week block party.

Though Calgary doesn’t suffer from the rampant corruption that is speculated to have ballooned Sochi’s production costs, recent historical precedent nonetheless makes it unlikely that Calgary 2.0 will bring significant financial returns to its residents. And if a host city can’t benefit its inhabitants by putting cash back in their hands, is there any other selling point to take on such a massive pageant?

Status. And Tourism. But Mostly Status.

One of the reasons cities bid on the Winter Olympics is to get their names in front of the global audience. This may seem counterintuitive as—barring the odd skater-on-skater crime story—the Winter Games have a substantially smaller audience than their warm-weather cousins. But, as they are typically hosted by smaller, lesser-known cities, they also have a lot more to gain from whatever exposure they get.

“I loved Lillehammer. I loved watching Lillehammer, but it’s an obscure little town in Norway. Turin in Italy is a large city in Italy, but it’s not Rome or Milan. It’s a second-tier city, a city you would have never heard of otherwise,” says Lander.

“Hosting is motivated by status for some smaller democracies, and when it comes to autocratic countries like China or Russia, who don’t care how much it costs and what burdens get passed to their people, the Olympics is a metaphor for war—it’s prowess, it’s power and it’s the opportunity to project world politics into sport,” he adds.

A report from PricewaterhouseCoopers (PWC) released in 2011 revealed that the 2010 Winter Olympics pumped $2.3 billion in GDP into the B.C. economy, creating more than 45,000 jobs, entertaining 650,000 visitors and increasing tourism revenue by $226 million in the province between 2003 and 2010. In 2002, former B.C. Premier Glen Campbell promised the Olympics would do more for the B.C. economy and tourism than Expo ’86 did, but by the time the final impact report was released in 2014, the tourism impact was determined to be insubstantial compared to the event’s $6 billion price tag. A record 547,357 tourists came into the Vancouver area while the Games were held—an increase of 99,318 compared to the year prior—but the honeymoon was rather short lived, and the number of tourists dropped back to normal rates after only a month. A year later, Vancouver tourism was at its lowest level in 12 years, with the Olympic afterglow failing to overcome a strong Canadian dollar, a weak marketing campaign and the residual impact of the 2008 financial crisis.

And even the brief crush of tourists that a Games gets during its proverbial 15 Minutes can be economically deceptive.

“For every tourist that comes to town there’s probably a local who’s taking off, so the true amount of spending wouldn’t be as much as you’d believe. Not only will you be left with the taxpayer holding a bill for a party they may not even attend, but during those two weeks there could be economic disruptions,” says Lander.

As much as the Olympics attracted people like me to come back to B.C. (I now live in Toronto), many of my Vancouverite chums fled the city because they didn’t want to deal with the enormous crowds, nightmarish traffic and hyper-restrictive security measures.

Infrastructure

Skytrain Canada Line

An oft-lauded benefit of the Olympics is that the projects built to accommodate the massive event leave a lasting infrastructural legacy. The 2010 Winter Games motivated the desperately-needed widening of the Sea-to-Sky Highway from Vancouver to Whistler, the aforementioned expansion of the Skytrain to the Vancouver International Airport, and the conversion of the athletes village into a mix of market and social housing.

These venues and infrastructure improvements have avoided the depressing fate of similar projects built for Rio 2016 or Beijing 2008 (sitting abandoned or falling into disrepair), but it’s important to note that most of the direct and indirect costs of the 2010 Games fell to the taxpayers at all levels of government.

“The taxpayer certainly benefits from the legacy of public infrastructure, but given that the costs are still greater than those benefits, you’re still hitting up the taxpayer for an amount in addition to the infrastructure cost itself,” says Lander.

A study from Oxford’s Saïd Business School showed that the Olympics have the highest average cost overrun of any mega-event at 156%. The same study found that 10 to 20% of other large infrastructure projects—like bridges, rail lines and road construction—do finish on or under budget. And when they go over budget, the overruns are relatively consistent and predictable (rail 45%, bridge/tunnel 34%, and roads 20%). So if a host city has a need for these kinds of improvements, it’s cheaper to just do it for the sake of the infrastructure itself rather than as a pretext to hosting the Games.

Meanwhile, research shows Olympic infrastructure legacies often displace the very people they were intended to benefit, as living in proximity to these projects raises housing prices and makes the host city unaffordable for all but the wealthy.

Sometimes the taxpayers’ portion of these projects can be spread over the intervening years between winning the bid and hosting (as it was in Vancouver), making it sting a bit less. But the general public is nonetheless catching on to the checkered profit/loss history of host cities, which tempers enthusiasm to even bid. With a $50 million price tag for the privilege (kind of?) of merely bidding for the Games, plus the ever-increasing requirements for the security and infrastructure needed to pull them off, Democratic countries are now backing away from putting their cities up for consideration.

All hosts of the upcoming Games—Tokyo (2020), Beijing (2022), Paris (2024) and Los Angeles (2028)—have had at least one Olympics previously. Calgary has hosted as well, but their infrastructure from 1988 is crumbling to the point where, by the end of 2017, they considered adding Whistler, Edmonton and Vancouver to their bid, which complicates the hosting budget even more.

The Prestige of Losing Money

“The number of countries willing to host the Olympics is dwindling because the democratic ones can’t go back to their citizens saying, ‘We need $2 billion in taxpayer money to cover, in essence, a two-week block party.” says Lander.

I enjoy replaying my exhilarating memories of the 2010 Games, but I have to admit that no amount of nostalgia will hold up against the prospect of taxpayers ending up in the red. The 2018 Winter Olympics in PyeongChang is already bringing the world a much-needed dose of warm, fuzziness: mortal enemies North and South Korea will participate as one athletic delegation, in an emotionally stirring testament to the power that the Games historically has carried.

But as much as Calgarians value peace, pride and patriotism, they might not value these ideals enough to hand over their money with no guaranteed return. Time will tell.

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