For Chicago's 2016 Olympics Bid It is Lose Small Now or Lose Bigger Later

A native Chicagoan believes that the best outcome for the city is for another city to host the 2016 Olympics.

This Friday, the International Olympic Committee is meeting in Copenhagen to select the location of the next Olympics.  There are 4 finalists – Madrid, Tokyo, Rio de Janeiro and Chicago.  Whereas Madrid and Tokyo boost infrastructures that could easily host the Olympics with a minimal build, Rio was recently reported to be the leading candidate as the IOC is eager bring the Olympics to South America for the first time.  RIo also has a real crime risk, and it is technically the Americas' turn to host.  Therefore, Chicago may take the prize, especially as it is fielding President Obama, Michelle Obama and Oprah Winfrey.

Chicago is the US’s third largest city.  It has fallen on significant hard times during the recession with both of its newspapers filing for bankruptcy, and an overbuilt housing market that has left the Calatrava Spire, which two years ago was slated to be the largest building in the world, a huge hole next to Lake Michigan.  Conventional wisdom is that winning the Olympics would not only confirm its status as a global city (which is not necessary in the view of this author), but also would serve as an opportunity to fix the dilapidated infrastructure and improve some of its poorer neighborhoods.  Were Chicago to lose, the risk is that the economy may remain anemic and plans to improve the infrastructure would not be realized for decades or generations.

Chicago is also the US's most corrupt large city.  Mayor Richard Daley runs the city like a corrupt dictator, requiring that his proponents and supporters benefit enormously from the city’s activities.  In April, a $2.5 billion deal to privatize Midway airport fell apart.   Last year, the city privatized its parking meters which enraged motorists after parking prices rose and all of the machines malfunctioned.    Were Chicago to win, Mayor Daley popularity would be increased and he would be able to easily force corrupt deals down the throats of his opponents.

Perhaps more importantly, the city and Mr. Daley, under pressure from the IOC, have already signed an unlimited financial guarantee to cover the $4.8 billion for the Olympics.  (Washington is unable under US law to give financial backing to the Olympics.)  The use of public funds to cover shortfalls in the Olympics’ budget will certainly lead to a misallocation of public funds to benefit a few and deprive the majority of public services, and ultimately to the city’s bankruptcy.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to financial literacy and bank transparency. Since co-founding this website in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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Comments

  • Sam Cass

    September 30, 2009

    I believe there was a study done which shows cities do not earn a positive return on their Olympic investments. Still, a lot of cities want to host one so there must be some benefit.

  • Meoip

    October 01, 2009

    There is no short term game of the Olympics but Atlanta has seen an increase in tourism since hosting. It is a similar pattern for other cities, especially those with no cultural and natural tourism draw. Meaning foreign travelers go to Madrid because it's tourist city, they don't go to Atlanta because it's a tourist city but they go now because it hosted.

  • Rod Henderson

    October 02, 2009

    @ Meoip: You can ask anyone who lived through the 1996 Olympics nightmare in Atlanta whether they think that the Olympics were worth having now that a few lost tourists happen to come here. The Olympics didn't move the city forward and after the Centennial Park bombing our business and political leaders really haven't cared at all for the association. Of all of the Olympic cities, only Barcelona was successful in using the Olympics to transform a sleepy town to a cultural capital.

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