Quotation of the Day: Sports Socialism
"The Olympics are a giant exercise in sports socialism—or crony
capitalism, if you prefer—where the profits are privatized and the
costs socialized. The games never pay for themselves because they
are designed not to. That’s because the International Olympic
Committee (an opaque “nongovernmental” bureaucracy made up of fat
cats from various countries) pockets most of the revenue from
sponsorships and media rights (allegedly to promote global sports),
requiring the host country to pay the bulk of the costs. Among the
very few times the games haven’t left a city swimming in red ink
was after the 1984 Los Angeles Olympics, when voters, having
learned from Montreal’s experience, barred the use of public funds,
forcing the IOC to use existing facilities and pick up most of the
tab for new ones.
Even that’s far from fair. If anything, the Olympics should be
compensating the host city for the hassle and inconvenience, not
the other way around. The only reason they don’t is because the
Cold War once stirred retrograde nationalistic passions, blinding
the world to the ass-backwardness of the existing arrangement.
Londoners are signaling that this can’t go on.
~Shikha Dalmia writing in Reason, "Why London Is Yawning Over the Olympics"
67 Comments:
I cheered when Obama went to Europe and lost the Olympics for Chicago.
Not just for the slap in the face for our Nobel-Peace-Prize-winning warmonger-in-chief, but also to save our country the boondoggle.
Well, OK, mostly for the slap in the face.
The Economics of the Olympics
"A comprehensive report released by Goldman Sachs titled “The Olympics and Economics 2012”...According to the report, the actual London Games will be profitable, inasmuch as revenues will exceed the direct cost of running the games. Tickets sales alone are expected to reach 500 million pounds ($785 million).
In addition, Goldman Sachs expects a short-term economic boost in the third quarter of 1.2–1.6 percent of GDP at an annualized rate. This boost will come from the outlays of the organizers on staff, security, and other equipment needed to run the games. In addition, hotels, restaurants, and retailers will see an increase in demand from tourists.
This short-term cost/benefit analysis excludes outlays for infrastructure and security spending totaling 8.5 billion pounds ($13.4 billion). Those might be recouped by selling land and facilities, but that will take time and the overall economic impact is much harder to quantify, according to the report."
Olympionomics
"The host nation tends to win more medals than it does at any other time...an economist at Goldman Sachs...calculates that on average the host nation of an Olympics wins 54% more medals than usual."
The Olympics is just an extension of USA sports in general where for both professional and college sports, taxpayers often pick up the direct and related infrastructure costs.
Crony Capitalism at it's BEST!
You mentioned the LA Olympics' financial success. Did the Salt Lake Winter Olympics burden Salt Lake or Utah sponsors or was it like the "normal" events and a financial debacle?
As long as the IOC is in business and politicians make the decisions and pay the bills host cities will continue to lose money while the bureaucrats will keep getting richer.
Amen(!) on the Olympics and crony capitalism.
After Coors Field (pro baseball) in lower downtown Denver was built, residential and commercial property values went up, which led to a renovation boom of almost the entire area in lower downtown.
In addition, Goldman Sachs expects a short-term economic boost in the third quarter of 1.2–1.6 percent of GDP at an annualized rate.
Really? Huh. That number is a little higher than I would expect.
After Coors Field (pro baseball) in lower downtown Denver was built, residential and commercial property values went up, which led to a renovation boom of almost the entire area in lower downtown.
The city of Foxboro, MA saw a similar thing when Bob Kraft (owner of the New England Patriots) came in and built a new stadium and surrounding area for the Patriots. I might also add that he did this with no money from the city or state.
If you are ever in the Boston area, go check out Patriots Place at Gillette Stadium. It's about a half-hour to forty minutes (depending on traffic) outside Boston. The stadium itself is a sight to behold, but Patriots Place is a great place to go if you like shopping, eating, and sporting. Be sure to check out the Patriots Hall of Fame, too!
If the Olympics is such a hassle and undue expense why do 10 - 12 cities bid for them every 4 years?? -- plus the Winter Olympics.
And, BTW: The Salt Lake Olympics turned a profit, showing a $56-million surplus, according to: http://dailyuw.com/news/2002/apr/24/salt-lake-olympics-turn-a-profit-showing-a-56/
Of course, there will be naysayers who will find some negative in everything.
Jon, Boston is a big center for high-technology.
I think, the explosive growth in high-technology caused a positive cycle in Denver.
In the late '80s and '90s, the Denver Tech Center and surrounding area had explosive growth, e.g. a hundred new tech buildings, new (upper middle class) housing tracts (to the mountains in the West and Castle Rock in the South), and impressive new malls.
Many people from California moved to Colorado, and more taxes were generated and bonds sold to rebuild and renovate downtown Denver (about ten miles north of the Denver Tech Center).
If the Olympics is such a hassle and undue expense why do 10 - 12 cities bid for them every 4 years??
The glory, of course. It's a chance for countries to demonstrate pride and themselves.
You are probably right, Peak.
Boston is high tech and Framingham, MA has many corporate headquarters (Staples, TJX, CSX, Mathworks, International Paper, Genzyme, EMC, and BJ's Wholesale, to name a few). Foxboro is about equidistant between the two (maybe a little closer to Boston).
ed-
that profit figure is a total fiction.
it includes the $1.5 billion in federal funds romney choked loose and poured in to "save" the games.
lots of projects can look good if you get a free $1.5bn.
the reason cities host is is simple: triumphalism and concentrated benefits with diffused losses.
politically connected hotels and business associations benefit from he huge influx out tourists. they donate and win. the average taxpayer gets soaked, but does not notice enough to really get pissed until it's too late.
even the networks are starting to lose money. nbc is talking about losing money on london just as they got crushed on vancouver etc.
http://articles.latimes.com/2012/jun/27/entertainment/la-et-ct-nbcuniversal-expects-to-lose-money-on-london-olympics--20120627
hosting the olympics is a pure vanity project that mayors love as they get to be BMOC, but it's a huge loser for the host city.
i do not think anyone has made money since LA.
now, what might make sense is to host them again. if you already have the infrastructure, then it might be a real winner. i know salt lake is thinking this way.
People WANT the Olympics. As long as people want the Olympics (and sports in general), the politicians support the Olympics.
It's an institution that enjoys enormous worldwide support.
If you designed the Olympics from the fundamentals, what would they look like?
Many sports - archery, javelin, shooting, dressage - are martial arts. Other events, while aesthetically pleasing, beg justification. Water ballet, rhythm gymnastics. Water polo and beach volley ball are also difficult to justify as proving anything about "higher, faster, farther" in human athletic ability.
Rather than have all events in one city every four years, why not put all events across many cities continuously for real-time rankings? Many cities now have Olympic facilities that can serve one or more events or classes at any time.
If a World Athletics Series is necessary, then build a World Olympic Village and make it permanent.
Of course, no funding for any of this should come from taxes, but that does raise a political problem for any nation whose citizens apparently enjoy the opportunity to pay taxes, the Danes, for example.
From Ed R's U Dub Daily link above:
"Salt Lake Organizing Committee (SLOC) officials also intend to spend $6 million on local park-related projects, and Mitt Romney, the outgoing chief executive officer, recently ordered the committee not to draw down $10 million in federal funds long ago appropriated -- in effect giving that money back to the U.S. government."
Thank you to Mitt Romney.Federal funds should not be used for the Olympics and few others would have returned federal largesse.
When I throw a party, I don't expect to make money.
It brings in tourists for the businesses of the city. You may argue that it soaks a majority of the tax payers, but a majority of the taxes may be coming from those businesses that are finally being wined and dined.
The Olympics are supposed to be an honor and a tradition, not a business model. And even more depressingly, they have become a podium for NBC to try to extort the most tear jerking stories they can muster. I DON'T WANT REALITY SHOWS!! Just show some damn competition. That, NBC, is why you suck.
michael-
but that misses the whole point of the olympics. it's a convocation, a coming together.
there are already tournaments and world championships and world cups in most sports, many annually.
the olympics is something separate, a traditional time to come together in peace and showcase athletes in an international spectacle.
this was the original intent in ancient greece and the purpose remains today.
i have a number of friends who have competed. they say the grandeur and excitement of it dwarfs world cup skiing or a rowing championship.
that's why we have it.
to take it apart would be to lose that. to my mind, that would be a tragedy.
Nice try pt in your attempt to push socialist crony capitalism...
I got ask you pt if the Olympics were such a good idea why wouldn't the local businesses that might benefit from the Olympics set up their own panel to procure the Olympics instead of a few heavy hitters pushing/depending on government to do it for them?
Note the following from Andrew Zimbalist, economics professor at Smith College writing in the Atlantic: 3 Reasons Why Hosting the Olympics Is a Loser's Game
(1) The bidding process is hijacked by private interests; (2) It creates massive over-building; (3) There's little evidence that it meaningfully increases tourism
Juandos, obviously, the demand for the Olympics is there, e.g. reflected in ticket sales and TV advertising.
Are you saying the Olympics should be eliminated?
"People WANT the Olympics. As long as people want the Olympics (and sports in general), the politicians support the Olympics."
What a naive statement. Do you still get toys from Santa?
People want Olympics at someone else's expense. Assuming you, like most people, watch Olympic events on TV, ask yourself how much you would be willing to pay to watch them if they were pay-per-view.
If the Olympics is such a hassle and undue expense why do 10 - 12 cities bid for them every 4 years?? -- plus the Winter Olympics.
Because politicians and consultants profit while the taxpayers pick up the tab.
And, BTW: The Salt Lake Olympics turned a profit, showing a $56-million surplus, according to: http://dailyuw.com/news/2002/apr/24/salt-lake-olympics-turn-a-profit-showing-a-56/
Of course, there will be naysayers who will find some negative in everything.
Most games lose money for the cities that host them. Taxpayers wind up paying for those two weeks for a generation or more. And there is nothing positive in theft. When people are taxed because some self interested morons want to put on a show it cannot be justified no matter how good you feel about it. If you want to put up the money for a bid and host the games using private capital all the power to you. But as soon as you start using taxes to fund them you are crossing the line.
The glory, of course. It's a chance for countries to demonstrate pride and themselves.
Countries have no pride and do not celebrate. People do.
People WANT the Olympics.
Wonderful. They should pay for them with their own money and keep their hands out of the pockets of others.
Many sports - archery, javelin, shooting, dressage - are martial arts. Other events, while aesthetically pleasing, beg justification. Water ballet, rhythm gymnastics. Water polo and beach volley ball are also difficult to justify as proving anything about "higher, faster, farther" in human athletic ability.
Value is subjective and the best judge is the market. I doubt that many people are willing to pay to see archery or shooting contests. Far more are attracted to syncro, rhythm gymnastics, or beach volleyball.
Rather than have all events in one city every four years, why not put all events across many cities continuously for real-time rankings? Many cities now have Olympic facilities that can serve one or more events or classes at any time.
If the market demand is there it is possible to have many sporting events. In fact, there are many such events and most of the athletes that you see participate in them. Bolt runs many races each year because he gets a lot of money to do so. The swimmers and gymnasts participate in a number of local, national, and international events every year.
If a World Athletics Series is necessary, then build a World Olympic Village and make it permanent.
Why? Instead of giving the IOC monopoly power to hold the games let the athletes participate in events that pay them the most and get the best ratings possible.
When I throw a party, I don't expect to make money.
But why do you expect others to pay for it?
the olympics is something separate, a traditional time to come together in peace and showcase athletes in an international spectacle.
this was the original intent in ancient greece and the purpose remains today.
Really? I thought that it was all about making the IOC rich.
"Are you saying the Olympics should be eliminated?"...
Well personally pt I could care less about the Olympics and since '68 (Mexico City) have basically ignored them since I consider them a charade...
I don't think the Olympics should be eliminated, I think governments using extorted tax dollars to float these shams should be elminated...
I think that if the Olympics are every bit as popular as you and some in the media claim then individuals and private companies would push for them sans any national government intervention...
Local/city government would handle the needed improvements in infrastructure if the people voted to pay for it...
well you could develop your own version - the Libertarian Olympics!
no govt money - none.
no stadiums or other venues that are owned by the govt, none!
athletes will pay their own way and will bid with supply/demand to get their medals.
if you win a Gold and want an extra, no problem, just pay extra shipping and handling. :-)
re: the "glory" and "coming together".
OTOH - some feel that the Olympics is little more than a self-aggrandizing nationalist pissing contest to be paid for by the clueless fawning.
Peak
"Juandos, obviously, the demand for the Olympics is there, e.g. reflected in ticket sales and TV advertising.
Are you saying the Olympics should be eliminated?"
Considering that the IOC is a private organization what does "eliminate" mean?
While I can't speak for juandos, he may be saying that those who stand to benefit and those who enjoy the Olympics should bear the costs. Seems simple enough - no taxpayer money at any level should be involved. That shouldn't be a problem considering how wildly popular the Olympics are.
Zimbalist's 3 reasons:
(1) The bidding process is hijacked by private interests;
- The bidding process should include ONLY private interests.
(2) It creates massive over-building;
- Oh well, it's private money.
(3) There's little evidence that it meaningfully increases tourism;
- Same as #2
2 remedies:
(1) private donations in place of taxpayer funding.
(2) pay per view if commercial sponsership is insufficient.
"OTOH - some feel that the Olympics is little more than a self-aggrandizing nationalist pissing contest to be paid for by the clueless fawning."
And that would be fine if they were in fact paid for only by the clueless fawning.
The London Olympic Games and the cost to small businesses and taxpayers
Can't we just enjoy the sports competition? Is there a more entertaining way to teach your kids about hope, courage, temperance, justice, faith and the sweet joy that follows the unseen hours of effort, hard falls, painful injuries and sacrifice?
This isn't to deny any of the truths in the Reason post or comments here, but you might be missing out on some great viewing.
Most are criticizing the Olympics funding, but I've never understood the appeal of the event itself. To me, sport is all about competition and collaboration, yet most of these sports are isolated, with the competition mostly determined by having prepared for years alone in a gym rather than collaboratively improvising against an opponent. Who cares who the fastest swimmer or runner in the world is? Almost all of the events strike me as relics of centuries ago, when merely competing in these antiquated sports shot a brief moment of athletic glory into a short, squalid life. Now that competing has been turned into a monument of self-absorption, with years or decades spent in isolation repeating worthless skills for a moment of gawking by an audience largely interested only because the physical wizardry is accompanied by trumped-up media "backstories," it is fitting that this event only survives because of similarly oblivious media dinosaurs that desperately trot it out ever year in the hope that they can peddle the same crap again and again. Ditching this relic would be a sign of progress, that we have finally left the brutish times in which they meant something, and I suspect the event will die along with the media dinosaurs that currently keep it on life support.
Sprewell,
You make a good point about all the people who spend countless hours, years, preparing for an event that may last a couple minutes. What's the backup plan if you come in last? No Wheaties box for you. Perhaps there will be an open janitorial slot at the company run by the nerdy kid who spent those same hours studying.
People should be free to choose whatever path in life they desire, but I don't see why we should be subsidizing personal journeys that likely will end up at a dead-end.
Larry,
well you could develop your own version
This is infuriating to say the least. You support wealth transfers AWAY from those who don't want the Olympics. It's pointed out to you that this is morally wrong to forcibly take from others to give to yourself. Your response is "develop your own version"? Seriously?
sprewell,
Who cares who the fastest swimmer or runner in the world is?
I'm pretty sure that's the point. Many DON'T care about the Olympics, but are forced to pay for them anyway because the people who do care about them know a lot of people with guns.
A new sports stadium is typically financed by all taxpayers or city bonds.
Not everyone is interested in sports or will see their property values increase from the new stadium.
So, does that mean new sports stadiums shouldn't be financed by taxpayers?
What about the city building new sidewalks and lamps that half the people in the city will never use?
Can't we just enjoy the sports competition?
Of course we can. But let us try not to force others to pay for our enjoyment.
Is there a more entertaining way to teach your kids about hope, courage, temperance, justice, faith and the sweet joy that follows the unseen hours of effort, hard falls, painful injuries and sacrifice?
Yes there is. You can take your own kids to their own competitions where they learn the lessons far more effectively. Of course, when government robs taxpayers of earnings to pay for circuses they may have less money left for such things and have to resort to sitting in front of a TV in the hopes that the kids can learn those lessons by watching rather than doing. Sadly, that teaches them to be passive.
Vangel:
"Yes there is. You can take your own kids to their own competitions where they learn the lessons far more effectively. Of course, when government robs taxpayers of earnings to pay for circuses they may have less money left for such things and have to resort to sitting in front of a TV in the hopes that the kids can learn those lessons by watching rather than doing. Sadly, that teaches them to be passive."
*Like*
Peak:
"So, does that mean new sports stadiums shouldn't be financed by taxpayers?"
Bingo!! That's EXACTLY what that means. Those who want a new sports stadium should pay for it. Then they can reap all the marvelous benefits from it.
"What about the city building new sidewalks and lamps that half the people in the city will never use?"
Same as above.
Ron, so, taxpayer money shouldn't be used to build a new international airport, because some taxpayers are afraid of flying.
Or a light rail system shouldn't be built, with taxpayer money, because most taxpayers will never use it.
Peak:
"Ron, so, taxpayer money shouldn't be used to build a new international airport, because some taxpayers are afraid of flying."
That's correct, except fear of flying isn't the issue.
"Or a light rail system shouldn't be built, with taxpayer money, because most taxpayers will never use it."
Bingo! You got it right again! You are finally catching on. Good work.
People who want or use something should pay for it. Why should money be stolen from me or any other taxpayer for a light rail system or international airport we will never use?
User pays, Peak, that's the only equitable system.
Actually, sometimes those sidewalks are paid for by the homeowners. They blackmail the owner, but not approving renovations unless they put one in. Also the city ends up owning the sidewalks in some new developments as they are separate lots that never get taxes paid on and are the subject of misleading infomercials as tax auctions. But in general I don't mind paying for reasonable sidewalks that keep annoying peds and cyclists off my frickin' bumper. I completely oppose stupid things like bike boxes. I wonder if they are another form of traffic calming.
http://bikeportland.org/cats/infrastructure/bike-boxes
"Or a light rail system shouldn't be built, with taxpayer money, because most taxpayers will never use it."
Think about what you're saying. MOST taxpayers will never use it, but you STILL think they should should be forced to pay for it?
That's tyranny of a minority, even worse than tyranny of a majority. Who can decide that most people should pay for something only a few will benefit from?
A slightly less important point is that there are virtually no light rail systems in the US that are economic. Most cost more than they will ever recover, and maintenance and operating costs are higher than any possible fare that passengers would accept.
Warren Meyer at Coyote Blog did a study of his local Phoenix light rail system and determined that for the cost of the system he could have bought each regular rider a new Prius, and for the operating costs he could provide them all with free gas.
Ian:
"But in general I don't mind paying for reasonable sidewalks that keep annoying peds and cyclists off my frickin' bumper. I completely oppose stupid things like bike boxes. I wonder if they are another form of traffic calming."
I know what you mean. I get really tired of having to wash blood off my bumper every day when I get home. Why won't those people stay out of the way?
Ron, so, taxpayer money shouldn't be used to build a new international airport, because some taxpayers are afraid of flying.
Correct. Airports should be built by companies that serve those that fly, not out of general taxes.
Or a light rail system shouldn't be built, with taxpayer money, because most taxpayers will never use it.
Also correct. Let the riders pay for light rail systems that are built by companies in the mass transit space.
Actually, sometimes those sidewalks are paid for by the homeowners. They blackmail the owner, but not approving renovations unless they put one in. Also the city ends up owning the sidewalks in some new developments as they are separate lots that never get taxes paid on and are the subject of misleading infomercials as tax auctions. But in general I don't mind paying for reasonable sidewalks that keep annoying peds and cyclists off my frickin' bumper. I completely oppose stupid things like bike boxes. I wonder if they are another form of traffic calming.
The roads, sewers, and sidewalks are built by the developers who build the neighbourhoods. The costs are passed on to the purchasers when the homes are sold.
$9 billion says: "Is there a more entertaining way to teach your kids about hope, courage, temperance, justice, faith and the sweet joy that follows the unseen hours of effort, hard falls, painful injuries and sacrifice?"...
Yes, there are many ways that don't need extorted tax dollars to accomplish it either...
Ron H,
"Warren Meyer at Coyote Blog did a study of his local Phoenix light rail system and determined that for the cost of the system he could have bought each regular rider a new Prius, and for the operating costs he could provide them all with free gas."
I live here in Phoenix, and have never knowingly met anyone who has ridden the rail system.
paul says: "I live here in Phoenix, and have never knowingly met anyone who has ridden the rail system"...
Well just because people don't ride it doesn't mean governments (and the stupids that vote for it) won't keep building it...
Taxpayers in every state are going to help California build their new and thoroughly expensive ghetto to ghetto flyer...
Previous lessons on wasted government largesse be damned...
"Also correct. Let the riders pay for light rail systems that are built by companies in the mass transit space."
The trouble with the Phoenix system is that few riders would be willing to pay the actual cost of $3.82/mile. Ridiculous costs appears to be the problem with virtually all commuter rail systems in the US.
Randall O'Toole at The Antiplanner has some interesting takes on what he calls "rail disasters".
In addition I doubt there are any self supporting companies in the mass transit space.
Worse yet rail system deficits are often made up from cuts to local bus systems, the only viable public transportation there is.
juandos
"Taxpayers in every state are going to help California build their new and thoroughly expensive ghetto to ghetto flyer..."
Thanks for the links. Gotta love that idiot Ray LaHood. A big win? What a laugh. Travel between L. A. and the bay area is already completely covered by highways, airlines, and rail freight.
LaHood of course doesn't mention that high speed rail traffic, if there is any, will come almost entirely at the expense of existing airlines.
And of course it's pointless to question the wisdom of a state that is bankrupt spending tens of billions of dollars on such a boondoggle.
Paul
"I live here in Phoenix, and have never knowingly met anyone who has ridden the rail system."
I wonder if anyone has actually ridden on it? Or even seen it. Does it even exist? :)
The trouble with the Phoenix system is that few riders would be willing to pay the actual cost of $3.82/mile. Ridiculous costs appears to be the problem with virtually all commuter rail systems in the US.
Sorry for not being clear. What I mean is that if the riders are not there the system will not be built. That is the way things should be.
Randall O'Toole at The Antiplanner has some interesting takes on what he calls "rail disasters".
In addition I doubt there are any self supporting companies in the mass transit space.
Worse yet rail system deficits are often made up from cuts to local bus systems, the only viable public transportation there is.
The problem that I see is the confusion of the difference between mass transit and public transit. Mass transit does not mean a government owned service that runs large but empty busses or trains because some politician needs his ward to have transit service. It means competition where the best companies fight for customers who need a transit option.
After Coors Field (pro baseball) in lower downtown Denver was built, residential and commercial property values went up, which led to a renovation boom of almost the entire area in lower downtown.
Post hoc ergo propter hoc.
Same was true around national stadium. Question, how long before the city breaks even on its investment?
Next question: if one public investment pays off, are all public investments bad?
If we relied on mass transit by your definition, there would be almost none. Winston and Shirley calculate that 98% of public transit would halt if privatized.
If we relied on mass transit by your definition, there would be almost none. Winston and Shirley calculate that 98% of public transit would halt if privatized.
That is not true. Go to China and look at all those private busses that compete with the city transit even though they have fewer resources. The private sector is good at delivering goods and services if there is a demand for them. If there isn't then there is no need to waste resources by having inefficient governments provide them.
"The problem that I see is the confusion of the difference between mass transit and public transit. Mass transit does not mean a government owned service that runs large but empty busses or trains because some politician needs his ward to have transit service". It means competition where the best companies fight for customers who need a transit option."
How else would they get to the polls on election day? :)
Ray
"Next question: if one public investment pays off, are all public investments bad?"
Yes.
"If we relied on mass transit by your definition, there would be almost none. Winston and Shirley calculate that 98% of public transit would halt if privatized."
If that were true, and I doubt that it is, that would be a clue to you that the need for mass transit is almost none existent.
Since that's probably not true, and that there is, in fact, a great demand for mass transit, the private sector would meet that demand if allowed to do so, just as it does any other demand.
To beleive Winston and Shirley you must believe that There is little demand for mass transit, and that what little there is, is only due to very low fares below actual cost because of taxpayer subsidies, and therefore everyone must be made to pay for something few want or need.
Is that what you beleive?
"And of course it's pointless to question the wisdom of a state that is bankrupt spending tens of billions of dollars on such a boondoggle"...
You know ron h I sometimes wonder if these moonbats who push for mass transit like these bullet trains are 'romantics'...
Is almost like they're going to be riding the Wizzards' Express to Hogwarts...
juandos
"Is almost like they're going to be riding the Wizzards' Express to Hogwarts..."
Now THAT is a seriously cool train.
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