Maroula Khraiche and Abhinav Alakshendra
In the last 50 years, every Olympics has experienced a major cost overrun. This paper explores the reasons for this cost underestimation and looks into the occurrence of the…
Abstract
Purpose
In the last 50 years, every Olympics has experienced a major cost overrun. This paper explores the reasons for this cost underestimation and looks into the occurrence of the winner's curse. We also forecast the spending pattern of future host cities. Finally, we discuss the role of the International Olympic Committee in making the Olympic Games more efficient and sustainable.
Design/methodology/approach
The review of literature on the topic of constant cost overrun in the Olympic Games is surprisingly very thin. We comprehensively review the existing literature to understand the scholarship in this area. This paper also produces future cost trends for the host cities.
Findings
We argue that cost underestimation is resulting from the outdated bid process which encourages spectacle over efficiency. A no-bid environment is more efficient and allows the host city to negotiate effectively with the International Olympic Committee. The Los Angeles Games of 1984 was profitable and has shown reusing the infrastructure can save a lot of money which could help make the Olympic Games economically sustainable.
Originality/value
This paper adds to the existing knowledge on the cost overrun aspect of Olympics financing. We also forecast the cost trends of hosting future Olympics.
Details
Keywords
American taxpayers heavily subsidize professional sports leagues and teams through direct and indirect public funding to build professional sports stadiums. Today, the proportion…
Abstract
Purpose
American taxpayers heavily subsidize professional sports leagues and teams through direct and indirect public funding to build professional sports stadiums. Today, the proportion of public funding to build professional sports stadiums is greater than private contribution. In last 20 years, almost all of the 100 professional stadiums opened have received some form of direct or indirect financial assistance from local, state and federal government. The paper aims to discuss these issues.
Design/methodology/approach
This paper investigates and documents most often used methods of stadium financing in recent years along with the historical shift from privately built stadiums to public funded stadiums in the span of 65 years. This paper also briefly reviews the literature evaluating the impacts of public spending for professional sports stadiums. The vast literature on the topic reveals that economists and city planners agree that public subsidy to build expensive professional sports stadiums cannot be justified on the grounds of perceived economic development.
Findings
Over the years, funding mix to build professional sports facilities has changed dramatically. Local government has been coming up with various financing strategies involving new and old instruments.
Originality/value
The findings also suggest that share of local and state government has gone up in recent years compare to federal government share.