Olympic Caveats: Host Cities Risk Debt, Scandal The Obama administration says Chicago winning its bid for the 2016 Olympics would be good for the city's economy. The same argument has been made by many Olympic bidders — but the proof is sketchy.

Olympic Caveats: Host Cities Risk Debt, Scandal

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Now the president's direct involvement in Chicago's Olympic bid has raised some questions. Earlier this week, White House Spokesman Robert Gibbs was asked to justify the president's trip to Copenhagen.

Mr. ROBERT GIBBS (White House Spokesman): Obviously, any Olympics showcases the country that those Olympics are in, and there's a tangible economic benefit to those games being here. And the president wants to help out America's bid.

INSKEEP: Sounds automatic, but there is actually some question about whether hosting an Olympics provides measurable benefits, as NPR's Howard Berkes reports.

HOWARD BERKES: Every Olympics begins with a magic moment seven years before any athlete marches in an opening ceremony.

Unidentified Man: The International Olympic Committee has decided to award the organization of the 19th Olympics Winter Games in 2002 to the city of Salt Lake City.

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BERKES: And this moment only comes after Olympic boosters promise great economic benefit for cities hosting the games. We'll reap more than we spend, they say. But those who've looked at the numbers say the promise is almost never fulfilled.

Mr. ROBERT BARNEY (Director, International Centre for Olympic Studies, University of Western Ontario): There has never been an Olympic Games that has made a profit, when you fold all the costs in against all the revenues.

BERKES: Robert Barney directs the International Centre for Olympic Studies at the University of Western Ontario. And he includes in his assessment the 1984 Summer Games in Los Angeles, which is widely hailed for its $233 million surplus. But that only includes the direct costs of staging the Olympics. There were also indirect costs for security and infrastructure paid by city, state and federal governments.

Mr. BARNEY: Fold all the monies, including federal allotments, municipal allotments, provincial or state allotments, it's always been that a debt has to be paid somewhere.

BERKES: It took Montreal 30 years to pay off its Olympic debts from the 1976 games. Nagano, Japan spent so much for the 1998 Winter Games and that spending triggered so much suspension, organizers destroyed their financial records.

Economist Andrew Rose at Berkeley's Haas School of Business has combed Olympic records and economic data for evidence of benefits.

Professor ANDREW ROSE (Economist, Berkeley Haas School of Business): No reasonable person thinks that the direct benefits of hosting the Olympic Games or any other mega event cover the costs. You have to have some enormous indirect benefit, and that's what we have been focusing on in our research.

BERKES: The one demonstrable and sustained, indirect economic benefit Rose and his colleagues found is an increase in international trade - not more tourism or new industries, the kinds of things Olympic boosters promote. Olympic host cities have seen, on average, a 30 percent rise in exports. That also applies to cities bidding for but not winning the games. So even the losers benefit.

Mr. ROSE: When a country submits a serious bid to host the Olympics, what they're really doing is signaling that they're open for business and they're going to become internationally integrated and a serious member of the international community.

BERKES: Rose found significant exceptions: wealthy countries like the United States and nations that have hosted multiple Olympics. Cities hoping to host the games also seek to boost what might be a sagging self image, as well as an international profile. Chicago is a prime example, says economist Allen Sanderson at the University of Chicago.

Professor ALLEN SANDERSON: (Economist, University of Chicago): I was in Tokyo recently giving some lectures and walked into small neighborhood bars and somebody asked where we're from, and we said Chicago. And he said, oh, Al Capone. This will be a chance to turn away from the Al Capone image of Chicago.

BERKES: Or reinforce the image of political corruption and patronage if Chicago becomes the host city and resorts to its traditional way of doing things. Olympic bidding could come with this warning: satisfaction not guaranteed.

Howard Berkes, NPR News.

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