Wednesday, February 19, 2014

The ROI on mega sporting events isn't Olympian

My weekly book post on the s+b blogs wonders how Russia will benefit from hosting the Winter Olympics.

A Sucker’s Bet in Sochi

Truth be told, Olympic medal counts aren’t all that interesting anymore. Before the Cold War ended, medals were a leading indicator of global might: If one country’s hockey team beat another one’s hockey team, that meant the winner’s political and economic ideologies were righteous. But these days, it’s less about how many gold medals a nation wins and more about how many gold bars it spends. And hey, by that measure, Russia is back on top! The Winter Olympics in Sochi are the most expensive in history, reportedly costing US$51 billion—more than every other Winter Olympics Games combined.

That’s impressive, and so are some of the stories that have dug into the breathtaking scale of “waste and corruption” at Sochi, like Joshua Yaffa’s cover story in Businessweek. But countries and cities have been going on Olympic-sized spending sprees to land mega sporting events for a long time. The perennial question remains: Is it worth it? For the answer, I turned to the International Handbook on the Economics of Mega Sporting Events (Edward Elgar Publishing, 2012), edited by professors Wolfgang Maennig (an Olympic rowing champion himself) and Andrew Zimbalist, and reissued in paperback in December 2013.

I can’t follow all the economic analysis in this book, mainly because the use of letters and other non-numeric symbols in the equations marks the border of my mathematical nether regions. But the conclusions of the impressively credentialed group of academicians and researchers who contributed to the thick—and rather daunting—collection are clear: “Most studies have found no statistically significant economic effect from hosting [the Olympics and other mega sporting events] and a few have found a negative effect” the rest here

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