Olympic season is upon us. But while many get excited to watch the games, there are many genuine concerns about the economic consequences of the Olympic games.
Podcast: Play in new window | Download
Here’s a transcript of our conversation:
Brittany: Hi, Connor.
Connor: Hey, Brittany.
Brittany: So we record these a little bit in advance, as we’ve said before, but by the time our listeners, listen to this episode, the Olympics will just have started. And I am going to be a party pooper, and I’m gonna reign on everyone’s parade today. I like being a contrarian because, the Olympics are literally my least favorite two weeks of whatever, you know, every four years, every two years, whatever it is now. So everyone loves the Olympics. Everyone, Phil is filled with national pride, whatever it is. but you know, I’m not a big fan. I’m not a big sports fan, but part of the reason I don’t like the Olympics or the main reason is that it is an economic disaster. I mean, the repercussions of` it are so bad, but a lot of people like to say it’s the opposite. Everyone likes to call this, you know, an economic booster. This is the same reason a lot of cities will say, we should build a new soccer stadium and have the taxpayers pay for it, because we’re gonna make all this money, and it never happened. So to kind of get this conversation started, Connor, you and I both lived in Utah in 2002. Well, wait, did you live in Utah then?
Connor: I did actually, yeah. Utah at the time.
Brittany: Okay. I didn’t, I wasn’t sure. I knew you went to high school but you already graduated. But anyway, okay, so that was the 2002 Salt Lake Coast at the Olympics. And I don’t know if you remember Connor, but I remember turning on the news and all these politicians were promising everybody that, you know, this was gonna be the best idea that we were gonna make all this money. Do you remember some of what they were promising?
Connor: Yeah, no, it’s, a lot of it was, you know, all these facilities have to be built and, some of the existing facilities had to be upgraded. And so it was this idea of, oh, you know, it’s going to have all these jobs. We’re gonna have all this construction work, it’ll be great. We’ll need to employ people for the Olympics themselves. Th this is like a job creation thing, right? Like, so there’s definitely a lot of that. And, you know, that this isn’t what actually happens though. Like, so there was a study of the Salt Lake Olympics, and they found that at most, one-quarter of the number of jobs that officials had claimed would be created were actually created one-fourth. And there’s actually, yeah, there’s actually a quote, from this article that says, the study found no identifiable increase in employment either before or after the Olympics. And while they find a statistically significant bump, meaning like a realistic bump in employment during the actual games themselves, the increase was from 4,000 to 7,000. So.
Brittany: Which isn’t that much.
Connor: Not very much at all. And this isn’t a one-off case, like, you know, promises of job growth is I feel like not the only negative aspect of the Olympics. You know, there’s this idea of general economic growth. We’re gonna help all these people create all these jobs. Again, studies find little to no impact, positive impact from hosting the Olympic games. It just does not happen. And yet, over and over again, it’s like, let’s spend all this money, let’s do all this grant thing. It’s gonna be this wonderful economic development utopia. And it would be nice if we would look to history and say, guys, this doesn’t really happen. So why do we keep, like letting people claim that it happens when we know it doesn’t happen? And yet, over and over again, they still talk about this being a great thing for the economy.
Brittany: And we don’t even have to look that far into history. And, it’s not even that there’s no economic bump, it’s that there’s decline. So Brazil, I think Brazil was in 2016, and this was supposed to be a game changer for the country. I mean, they were so excited for this. They had been going through their own, you know, economic downturn and it was gonna be the thing, right? The Olympics were gonna help them rebuild. So they build all these facilities and of course, that’s really expensive. And who’s paying for these? You know, we are taxpayers are. and so after the games end, it turned out that the stadiums and everything that they ended up paying for cost more than the money they brought in. So like, they’re thinking like, oh my goodness. Like, we’re gonna, this is gonna be huge for us. We’re gonna create jobs. And as it turned out, they actually lost jobs and they lost money.
Connor: I’m shaking my head, you can’t see it. You know, like to me, the tragedy here is that these promises just don’t come true. And, you know, no one can prove that like tourism increases or that, you know, money that was poured into some new facility resulted in, you know, an increase in economic increase during the games. it’s not just that the economic boost wore off after time, it’s that it never really happened to begin with. There was this one article, over at fee, and we’ll link to it on our show notes page where it says that Great Britain received about 5% fewer foreign visitors during the month that it hosted the 2012 summer Olympics. Then during the same month, the year before, I mean Greece, they lost 70,000 jobs, mostly in the construction industry in the three months, immediately after their 2004 game. So if you remember like Bo yet, right, that which is seen and that which is unseen. Yeah. It’s so easy to focus on, oh look, you know, right before the Olympics we’re creating all these jobs, and yet, you know, it’s very temporary, or those people would be working elsewhere. You’re not really creating jobs. You’re just, you know, diverting people to work on this pork project, this taxpayer-funded project, but then, you know, they return back to their unemployment or their job elsewhere. And I feel like, you know, it’s very important to know something about the free market when there’s real demand, you know, it delivers. And for those who really want the Olympics, there’s been one attempt to at least partially privatize the Olympics. And I think we should learn a little bit from this example.
Brittany: I’m so glad you brought this up. Cause I actually wrote about this a handful of years ago, but it’s such a good story, Connor. So I’m excited to talk about it. In the eighties, which was our time, that’s when, Connor and Brittany came into the world on the same day, by the way, different people, a different year, a different year. I’m younger. but people recognize that the Olympics were financially risky. I don’t know why they forgotten this all of a sudden, but when it came time for so host cities, when they want to host the Olympics, they have to bid for it. So they make all these promises, like, we’ll do this if you let us host, or we’ll do this, it’s actually very expensive to bid to host the games. But get this, in 1984, no one wanted it. No one wanted it. Only two cities made a bid. And that was New York and LA nobody wanted it. And that’s because in 1976, Montreal and Canada, they hosted the games and they found themselves in 1.5 billion in debt. Whoa. Yes. And they didn’t even pay that off until 2006. So several decades. Yes, yes. For them to pay it off. So Los Angeles ends up winning the bid in 1984, but the residents were actually like, no, we’re not having this. We are not going to foot the bill. We’re not gonna do what Montreal did. So the people, Los Angeles put their foot down, they’re like, we’re not gonna do it. so the city now had this great honor, you know, air quotes of hosting the Olympics, but they had no way to pay for it.
Connor: That’s crazy. And Los Angeles of all places.
Brittany: I know, right?
Connor: You know, I mean, for me, like this is where the market comes into play there. I remember there, was a, like a local businessman who was this guy that was good with money and he wanted the game. So he stepped up and became kind of like this Olympic entrepreneur you might say. So, he spearheads, he’s in charge of this, Olympic organizing committee. And it’s made up of others, like entrepreneurs and business-savvy individuals. And they had this goal. They said we wanna find private funding for the Olympic Games. And this was something that like hadn’t been done before. And you know, understandably for that reason, since it was different, critics weren’t initially sold on the idea of leaving the fate of the Olympic games to this committee of just, you know, businessmen. But, the 1984 Olympics would go on to be remembered as like one of the most successful Olympic games in history. Not only did this committee of businessmen come under budget, meaning they didn’t spend as much as they had planned. They also managed to generate a profit, which I think had only happened once before. And so they, you know, they did private fundraising, they had corporate sponsorships. you know, I mean, we see this with like NFL and soccer and like of course, you know, Nike and Adidas and whatever, like the logos are everywhere. These companies are Coca-Cola, right? They’re paying tons of money. And that’s how sports can be, you know, paid for because it’s very expensive. and these guys manage their money well. So this committee pulled off, I think at the time what was unthinkable, instead of throwing away millions if not billions of dollars on new infrastructure, you know, they made use of existing arenas, college sports facilities, and they made history by selling the exclusive television rights to just one network, ABC. They paid, I think it was like a quarter of a billion dollars to be America’s only source for viewing the Olympic games. Which, you know, that’s a very business savvy thing to do cuz ABC would want all those people watching the Olympics on their channel that’s gonna let them sell more costly commercials, right? Because everyone will be on their channel like Super Bowl, right? And so, they’d be able to make their money back, they’d be able to have good branding. And so then it helped fund the Olympics by saying, you know, if you want exclusivity, you’re gonna have to pay more. And it just shows what, you know, the private market can do when you, when you let it work, rather than these bloated bureaucracies.
Brittany: Yeah. And I think that’s is say ABC still, again, I don’t watch the Olympics. I wanna say it’s, the last time I watched it was Kerri strug in 1996. So I don’t know. But the other cool thing about this is, you know, a lot of times they use the Olympics host cities to build new hotels, to build all this infrastructure. In fact, in Utah, there’s so many like buildings they have to pretend have use now cause they just don’t have use. But instead of building new hotels and new places to host everybody, they used college dormitories and they used other housing facilities spread throughout the city instead of building. So Olympic villages are what they’re called. That’s where all the actual talent, the athletes and everyone stay. And usually they build them these, you know, grandiose, expensive places to stay. And LA was like, nah, like we’ve got college dormitories, we’ve got places to put you. And so this was completely unorthodox unheard of for this time. And when all was said and done, the Los Angeles Summer Olympic Games cost a total of 546 million. Now that’s a lot of money. I know you and I are thinking like, all right, I don’t have that much money. Yeah, right. But let’s compare this to, in 2013, was it the, Sochi Sochi, the one in Russia, winter games, that was 50 billion. Whoa. Yes. So I mean, that’s nothing, I don’t know if you guys remembered go on.
Connor: And to be fair, Britney, I mean, there was inflation between 1984 and 2013, but even if, like you tripled the money from 1984, that’s 1.5 billion. And so compared to the 50 billion, like that’s crazy.
Brittany: It’s crazy. And I don’t know if you guys remember seeing pictures from, the Russia games. Like everything was like dilapidated. Like it became kind of comical cause it was like, wait a second, where is this money going? Because this is all like, just disgusting. So the pictures were hilarious if you can go back and look at ’em. But like we mentioned, to call the LA games solely private would be a little misleading. the silly, the city did receive, public funds, they did get some federal funds, but nothing has ever come close to being this private when we talk about the Olympics. And nobody thought it could be done. And the funny thing is, even though the 1984 games proved that there was a way to do this with limited government intervention, we’ve forgotten that. And it wasn’t that long ago. I know, cause I was born around that time, but like, it’s like we’ve forgotten that we can do it, right? And now it becomes this thing again where it’s like, no, we need this, you know, we need global unity or patriotism, whatever it is we’re claiming, but we don’t need to do it with taxpayer dollars. we’ve already seen it. We don’t need to do it with taxpayer dollars.
Connor: And I just don’t get why, I mean, like, what, maybe it’s because politics is tribal and sports is tribal, right? It’s like you vote for the home team and oh, our home team is also our government go USA. And so they’re kind of one on the same. So let’s then use government money for sports. Cuz it’s the same tribe. Like I don’t know if it’s that type of simple thinking that leads politicians to spend money on the Olympics. I think a lot of it boils down to this idea of, oh hey, if we get the people to come here, then we’re gonna have all this tourism dollars cuz they’re gonna stay in hotels and eat at restaurants and buy things here. And so it’s an investment, right? If we pay, you know, a billion dollars to have them come to our city, then, you know, if we make back this much money cuz people are buying things, then they pay taxes, you know, sales, taxes, things like that, then we’re gonna make our money back and it’s gonna be great publicity. But as the story, you’ve shared, like it doesn’t really always, maybe ever materialize that way. And they’re playing games with taxpayer dollars. And I don’t think if you read the Declaration of Independence, it says anything about like funding sports teams or there’s nothing in the constitution about, you know, thou shalt, you know, tax Connor and Britney and you know, all their family.
Brittany: You gonna confuse the commandment there for a second, Connor?
Connor: Yeah, Well yeah. all one in the same God certainly has never said, you know, pay taxes for and so why is it that we do this? And I don’t know, it scratches my head. It’s maybe it’s cuz it’s tradition.
Brittany: I think that’s what it is. Yeah, yeah. And especially now people think like, oh, COVID, like we need to, you know, reunify people, which is also funny to me. Cause a year ago it was don’t leave your house. And now it’s like, well let’s go ahead and have the Olympics. Let’s do it.
Connor: Although I just saw, well not just at the time we’re recording, you know, they’re having another COVID outbreak in Japan. And so now they’re saying no audience. So now, so the day that this recording is live, guys, the Olympics is starting. So we’re all now gonna be able to see like, what is actually this gonna be like, will there not be an audience? What will it be like for the athletes to perform in front of like zoom, you know? Oh my goodness. People watching online. It’s just weird. And so much money’s been spent and why you know like I’m with you Brittany. I’m not really a sportsperson. I can appreciate athleticism, like people who are really talented, put in the hard work. Yes. Like, I think that’s awesome. and that applies outside just sports. That’s just, you know, working hard and really, you know.
Brittany: Being determined and committed to something.
Connor: Absolutely. Absolutely. You know, that could be a musical instrument, it could be academics, you know, underwater basket weaving. I don’t know. But like, I can appreciate the talent, but you know, I’m not, why should I pay for underwater basket weaving? If you wanna do it, you go pay for it. If you want to do a sport, you go, I dunno, it’s weird. So I’m with you.
Brittany: The moral story here is don’t become an underwater basket weaver. I think.
Connor: Yeah. that’s what you take away from this episode. We’ll have succeeded. Alright, with that guys show notes for today, as Brittany said, you know, the article that she wrote and other resources, we will link to Tuttletwins.com/podcast. Go check that out. As always, share, the podcast with friends and family. really appreciate you guys spreading the word and getting a lot more people to learn about these ideas and little bites and pieces so that we can all appreciate the ideas of freedom and learn more together. Brittany, as always, thank you and we’ll talk to you next time.
Brittany: Talk to you next time.
Podcast: Play in new window | Download