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Boston Olympics would bring billions, study says

UMass analysis cites jobs, warns of pitfalls

A conceptual drawing of the Olympic Stadium at Widett Circle.Boston 2024

A Boston Olympics in 2024 would pump billions of new dollars into the Massachusetts economy, potentially creating 4,000 construction jobs annually for six years and tens of thousands of temporary jobs the year of the event, according to a new analysis of Boston’s Olympic bid by researchers at the UMass Donahue Institute.

Caution flags are scattered throughout the report’s eye-catching predictions, suggesting the ultimate success or failure of a Boston-area Olympics would depend on how well organizers stick to their private-funding plan, control their costs, and protect public tax dollars from risk.

The analysis, commissioned by The Boston Foundation and scheduled to be released Wednesday, is the first extensive independent study of the preliminary plans for Boston’s bid for the 2024 Games.


The study predicts a Boston Olympics would generate roughly $4 billion in new construction from 2018 to 2023, $5 billion in economic activity from the operations of the Games in 2024, and $514 million in additional tourism-related activity the year of the event. Researchers figure $2.1 billion of the construction spending and $2.9 billion in operational spending would be new money coming into the state from outside the region and directly benefiting Massachusetts companies.

“It is clear that Olympic construction and spending activity will likely have a significant economic impact on the state, especially as it draws on otherwise untapped sources of funding from the private sector or external sources,” the researchers said in their report.

But for economic benefits to be fully realized, the study underscored, the Games must go right — despite all that can go wrong, beginning with potentially rising costs.

“Community leaders need to be mindful about the real possibility of cost overruns and what they may mean to the public sector,” the report states.

The Boston Foundation commissioned the study last fall, when Boston was one of four US cities vying for the chance to host the 2024 Games.


“We thought there was a role for a completely independent look at a crucial dimension of this debate, which is the economic impact,” said Paul S. Grogan, the foundation’s president and chief executive. He said the foundation, which has not taken a position on the city’s bid for the Games, may commission additional research as the bid is developed.

The US Olympic Committee in January chose Boston to represent the United States in the worldwide contest for the Games, which could also include Rome, Hamburg, and Paris. The International Olympic Committee will choose the host city in 2017.

The Donahue study was led by Daniel Hodge, director of economic and public policy research at the institute, and senior research manager Mark Melnik, a former deputy director for research at the Boston Redevelopment Authority.

UMass’s Boston campus is key to the bid committee’s plans, as a potential home of the Olympic village. Hodge said the location of the village plan had no bearing on the analysis. The researchers work under the UMass president’s office and are not affiliated with any campus, he said.

In their analysis, the researchers focused on estimating the net short-term economic effects of the Olympics, they said. They tried to account for the possibility that the Olympics could crowd out other economic activity. For instance, some local people may buy tickets to Olympic badminton instead of seeing a local play. And while the Games will attract tourists who love gymnastics, history-minded visitors who just want a selfie at Old North Church might avoid Boston altogether during the festival.


Still, the study predicts the actual running of the Olympics in 2024 and the additional tourist spending generated by the Games would create more than 54,000 temporary jobs at the Games and throughout the economy.

Olympic-related building would create an average of 4,100 jobs each year from 2018 to 2023, they say.

The local bid committee, Boston 2024, has proposed a $4.7 billion Olympic operating budget, funded from corporate sponsorships, broadcast fees, and ticket sales. Another $3.4 billion in construction costs, under the bid committee’s plan, would come from private developers who would build Olympic facilities, lease them to Boston 2024 for use during the Games, and then run them afterward as commercial ventures.

Olympic backers pledge no local tax money will be used to build or run the Games, though they expect the federal government to pick up $1 billion or more in security costs, without which the city could not host.

The Donahue study warns that the final costs of modern Olympics are historically well above initial estimates, an issue Olympic critics have raised in opposition to Boston’s bid.

“Unplanned increases in the total Olympic budget over time . . . could directly put the public sector at risk of having to cover budgetary shortfalls,” the researchers wrote.

The IOC is expected to require a host city to guarantee the Games will be built as promised, or to a level equal to what was promised, and to cover potential shortfalls in the Olympic operating budget.


Boston 2024’s early budget sets aside 10 percent of the construction and venue operations costs — about $430 million — as a contingency against shortfalls or overruns, according to the report. The researchers found that the operating budget has additional built-in cushions, though “it is unclear if the earmarked contingency could cover the full scope of possible cost overruns, as recent Olympic Games have seen overruns in the multiple billions of dollars,” the report states.

The bid committee has also promised to indemnify city taxpayers against possible loss by buying multiple layers of private insurance for the city, a strategy that is a “fairly novel concept” in the Olympic movement, the report states, and which Boston 2024 needs to work out in much more detail.

“This insurance issue is an important point in planning the Games and protecting the public sector from unforeseen costs,” the researchers wrote. “It will be important for local officials to understand the full extent of insurance coverage and public sector liabilities as it relates to cost overruns.”

One element working in Boston’s favor, the researchers said, is that IOC reforms approved last year encourage bid cities to use existing and temporary sports venues to control costs.

“This shift in IOC priorities in evaluating Olympic proposals appears to place the Boston 2024 bid in a stronger competitive position and may help to keep costs down compared to previous Games,” they wrote.


Cost overruns will not always lead to operating deficits, they said, if revenues raised from private sources also exceed expectations. They noted that the United States has a good recent track record avoiding Olympic operating deficits: the Summer Games in Los Angeles in 1984 and in Atlanta in 1996, and the 2002 Winter Olympics in Salt Lake City ended with operating surpluses.

The researchers say Boston 2024’s plans need more refinement before they could evaluate the long-term economic development potential of venue sites. And whether hosting the Olympics brings a long-term benefit to tourism — by raising the city’s international profile — is a contentious issue that specialists in the field continue to debate, they said.

The researchers also raised substantial questions about how public officials will address public infrastructure projects, if Boston is selected to host. Will the Olympics cause state leaders to prioritize Boston-area projects over the rest of the state? Will pressure to win the Games force public officials to become more ambitious with transit plans, requiring more public money? “Each of these risks,” they wrote, “needs to be monitored over time.”

Mark Arsenault can be reached at mark.arsenault@globe.com. Follow him on Twitter @bostonglobemark.