This summer, a crack team of independent consultants will have a shot at the Olympics. Leaders on Beacon Hill have hired the Brattle Group, a Cambridge-based consulting firm, to assess the viability of Boston’s Olympic bid.
Chief among the firm’s tasks is to figure out whether Massachusetts can pay for an Olympics with the money generated by ticket sales, sponsorship, and private investments, or whether some big chunk will come from taxpayers.
If you’re a taxpayer hoping someone else will pick up the bill, here’s the problem: Even a frugal Olympics could easily cost $12 billion to $15 billion, and it’s hard to raise a sum like that without public dollars.
How much do the Olympics cost?
Between the venues and the pageantry, the Olympics don’t come cheap. In authoritarian states, like Russia and China, the price tag has reached $40 billion to $50 billion. But even in democratic states, like England and Greece, recent Olympic Games have cost over $15 billion, according to numbers collected by mega-sports economist Andrew Zimbalist.
Boston’s initial bid includes a much lower cost estimate, less than $10 billion for construction and operations. The hope, presumably, is to run a tighter ship and follow the example of small-budget Games like the 1984 Los Angeles Olympics. Trouble is, inexpensive games tend to involve some unusual circumstances — like the fact that no one else even wanted the Olympics in 1984.
Some of the concrete numbers in the Boston 2024 bid documents seem low. For instance, boosters expect to spend about $500 million for a new Olympic stadium. That’s just over half of what London ended up spending on its stadium, after cost overruns. And while the London stadium was bigger and more elaborate than the current Boston plan, hundreds of millions in savings seems optimistic.
Won’t some of this money support Boston’s long-term needs?
When done right, the Olympics can spur much-needed investments in transportation and infrastructure. But Boston’s plan doesn’t include that many long-term investments.
Organizers have said that they don’t actually need any transportation changes, apart from what’s scheduled to occur anyway.
And while they envision tearing down the big Olympic stadium soon after the Games are over to make room for a thriving new neighborhood, it’s not clear what the neighborhood would look like or how it would be integrated into the city.
This is all quite different from the classic example of Olympic-related long-term development, which is the 1992 Barcelona Games. In Barcelona, the urban planning came first, with the Olympics merely a reason to push forward.
Do the current plans add up?
Yes and no.
If you look at the cost and revenue estimates in the original bid documents, they match up. So if everything goes exactly to plan, the Olympics will be compact, relatively inexpensive, and mostly paid for with private money (Boston 2024 is in the process of developing a new plan — bid 2.0 — which could upend much of what we know today, but any talk of what’s in those documents would be purely speculative.)
But what if things don’t go to plan? There are a lot of ways for costs to rise during construction. In fact, cost overruns of well over 100 percent are common in Olympic history.
By contrast, there’s basically no such thing as a large revenue-overrun.
At the same time, it’s easy to imagine revenue shortfalls, if the money from universities, developers, and other private partners doesn’t materialize.
What happens if the budget breaks?
Should a hole open up in the Olympic budget, taxpayers would have to fill it.
That’s simply what the International Olympic Committee demands. Before it will award the Olympics to Boston, some government entity — the city or the state — has to sign a guarantee, promising that the Games will go on, whatever the obstacles, and that all necessary costs will be covered.
Does this mean we should give up on the Olympics?
Not at all. Say the Brattle Group finds that taxpayers will likely have to foot part of the bill. That shouldn’t necessarily be a deal-breaker. It all depends on what you think the Olympics are worth.