Monday, October 05, 2009
- Rio was selected to host the 2016 Summer Olympic Games. Despite lobbying by President Obama, First Lady Obama, and mega-star Oprah, Chicago's bid was eliminated in the first round of voting. The aftermath of the decision has been quite interesting. President Obama's critics immediately seized this opportunity to criticize the president. The blame game started immediately in the USOC, and the fall out there may include a purge of executives. In my opinion, now would be a good time to re-examine the whole Olympic bid process. The IOC awards the Games in a way that extracts maximum rents from the host city and country. Chicago reportedly spend $50 million on their bid, and Tokyo and Madrid probably spent that much. The money for the Chicago bid came from donations, but that doesn't mean that there was no opportunity cost. Why do we continue to allow the IOC to operate this kind of rent extraction scheme? Here are two Canadian takes (link two) on the bid process.
- Meanwhile, down in Rio, the first estimate of the cost of new facilities for the 2016 games: $1.1 billion. I'm sure Brazil really needs a billion dollars worth of oversized new sports venues.
- Speaking of initial cost estimates, TSE co-blogger Stefan Szymanski points out that losing the Olympic bid may not be such a bad thing, based on recent events in London. Stefan does a great job of shooting down a number of myths about hosting the Olympic Games.
- Finally, in an interesting development, the IOC is going to set up a program to monitor betting on Olympic events to help detect any fixing. Good to see that the IOC recognizes the power of prediction markets.
Monday, April 28, 2008
Allan Sanderson tells his readers that TANSTAAFO (Olympics, not lunch).
Via Stephen Karlson.
Whether to support the Games themselves or merely the city's official bid, the latter carrying a price tag of $50 million to $100 million, one hears that "only private money" is underwriting those activities; no tax dollars will be spent. "Private" implicitly refers to donations from corporations and wealthy citizens. However, in jargon that students learn on the first day of Economics 101, virtually all expenditures or allocations have an opportunity cost, whether it be for a firm or family.
If Boeing, Sears, Motorola or McDonald's gives $1 million to help finance our Olympic bid, that is $1 million that does not get returned to stockholders as dividends or plowed back into the company for new projects and production. In addition, that is $1 million that does not, then, support an exhibition at the Field Museum, a new gallery at the Art Institute, or an after-school youth program.
When I sit down each December to write out checks to local, national and international charities and other non-profit organizations, I am implicitly choosing how to allocate, say, $2,000 among various groups and activities. The slice that goes to WTTW Ch. 11 doesn't go to the Chicago Coalition for the Homeless or the American Cancer Society—or to the University of Chicago. It's still just $1 million or $2,000 no matter how a corporation, a wealthy benefactor or I cut it.
There is no free lunch in this world and no free Olympic Games either.
Via Stephen Karlson.