THE PROBLEM with drawing conclusions from an exercise like the Olympic report issued by the Brattle Group on Tuesday is that the report was designed to focus on risks far more than rewards. Predictably, it was very good at showing the financial exposure for taxpayers, but not as good at estimating the potential economic benefits that might have come from marketing the region globally, building more affordable housing, creating thousands of construction jobs in a potentially down economy, and continuing the region-wide planning that was spurring new thinking on old neighborhoods. It’s a moot point now, since the bid collapsed last month. But voters should have been able to make a decision on pursuing the bid with enough time to evaluate not just the costs and risks, but also the potentially major benefits in jobs, new construction, and civic legacy.
The Brattle Group’s job was to focus on the financing, providing an independent analysis of exactly what those risks would have been. Its analysis was troubling — and underscores how badly the Olympics need to reform their financial structure to relieve host cities of some of the risk.
As anticipated, the report concluded that Massachusetts taxpayers could have been in significant financial jeopardy, even under Boston 2024’s improved “Bid 2.0” plan. Veterans of Boston 2024 persuasively dispute some aspects of the report’s analysis. But one of the fundamental problems that the Brattle Group identified was outside Boston 2024’s control all along: the insistence by the International Olympic Committee that host cities promise to cover all cost overruns. Olympic bills often spiral upward, the report said, and if they did, “the taxpayers of the Commonwealth of Massachusetts would be the ultimate risk bearers.”
The open-ended promise to cover shortfalls has become increasingly difficult for any elected official to make; the guarantee ultimately doomed Boston’s bid, and it’s now raising questions for Los Angeles Mayor Eric Garcetti. Boston and Los Angeles don’t write blank checks even for universally accepted goods like public education, so how can they be expected to promise to pay whatever it takes for an Olympics? It doesn’t help that since the IOC has no financial exposure to overruns, the organization has no disincentive to demand ever-costlier Olympics.
The cost overrun guarantee should go. In its place, the IOC must assume some shared risk, so that both host cities and the international organization have a mutual interest in an affordable Olympics. And the USOC — which too often seemed to view itself as a local enforcer of the IOC’s demands when it came to the Boston bid — should work with other Olympic committees in democratic states to change that policy.
The Olympics can do wonders for cities. But as long as the Olympic committees continue to ask cities to make unlimited financial commitments — and rush them to sign on the dotted line before they can work through the figures — they’re going to remain a tough sell in the United States and anywhere else officials run for reelection. In recent years, Boston is hardly the only city to balk at bidding for the Olympics. Oslo, Stockholm, and Krakow have all dropped Olympic bids too, mainly out of cost concerns.
Those cities all knew they were passing up their chance for a moment on the world stage, and the opportunity for the kind of transformative legacies that Olympic boosters promise. For the IOC, the withdrawn bids in Boston and across the world should be a wake-up call that as long as it demands blank checks from cities, the Games are going to face skeptical electorates — no matter what else they have to offer.