Andrew Zimbalist- Finance & Development, March 2010, Volume 47, Number 1
When Rio de Janeiro won the bid last October to host the 2016 Summer Games, thousands of jubilant Brazilians danced on Copacabana Beach and the news made headlines around the world. Chicago’s failed bid for the same games reportedly cost that city about $100 million. Why do countries place so much value on hosting the Olympics or similar mega sporting events?
Hosting a large sporting event potentially offers both direct and indirect economic benefits. Direct benefits include capital and infrastructure construction related to the event, long-term benefits such as lower transportation costs thanks to an improved road or rail network, and spending by tourists who travel from out of town to attend the games. Indirect benefits may include advertising effects that showcase the host city or country as a potential tourist destination or business location in the future and an increase in civic pride, local sense of community, and the perceived stature of the host city or country. But there is also a potential downside, resulting from possible cost overruns, poor land use, inadequate planning, and underutilized facilities.
The Olympic Games are much like other large sporting events, such as the World Cup, Super Bowl, or World Series, but they involve many more participants, officials, and fans; require more infrastructure construction; generate many more out-of-town visitors; and generally have a much higher profile.
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