Getting the Olympics may not spell guaranteed financial and urban windfall for most American cities, claims one New York University Schack Institute of Real Estate professor.
In his report “Price of Victory: The Impact of the Olympic Games on Residential Real Estate Markets,” Constantine Kontokosta claims that getting the summer or winter Olympic games may not have the beneficial long-term results, and often comes with a significant opportunity cost, to be worth it for some cities.
“It doesn’t work for everybody,” said Mr. Kontokosta, the director of Schack Institute’s Center for the Sustainable Built Environment. “It only works in certain circumstances where, for example, Barcelona seemed to be successful largely because they had a pretty robust urban planning scheme and program already in place and really used the Olympics to catalyze investment from both public sources within Spain and also getting private investment,” he added.
By looking at six Olympics held in Los Angeles, Seoul, Calgary, Barcelona, Atlanta, and Sydney, Mr. Kontokosta said that only Sydney and Barcelona experienced significant positive impacts from hosting the games.
The report based these results on level of Olympic-related investment, source of funds and the tax burdens required to repay costs, among other factors.
“It’s also who’s hosting as well,” said Mr. Kontokosta. Hosting the Olympics in cities like Paris, New York, Tokyo and London may not have as much of a positive long term impact than it would in cities with emerging economies like Rio de Janeiro and Kuala Lampur, he said.
“That is something we saw with Seoul, when they hosted in 1988,” he said, “They were trying to introduce South Korea and the city into the global market place, and it was pretty effective in terms of accomplishing that.”
There is also the issue of cost overruns.
“Beijing spent around an estimated $40 billion on Olympic-related investment. London initially was supposed to be around a $4 billion budget and now it is swelling close to $20 billion,” said Mr. Kontokosta. “These things are massive undertakings.”
In 2005, Mayor Michael Bloomberg and the Daniel Doctoroff-spearheaded NYC2012 lobbied heavily to have the 2012 Summer Olympics held in New York City. It would eventually be awarded to London.
“We thought the Olympics would be the catalyst to get a lot of things that many people thought the city needed,” Mayor Bloomberg said in a 2011 interview with The NY Times. “In fact, many got done [anyway].”
Drosen@observer.com
