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.
