This is an archive story, published in the July 1996 edition of Geographical magazine. All facts, figures and statistics were accurate at the time of original publication.
On 19 July, Atlanta in the US state of Georgia will be the sporting focus for an estimated two million visitors, almost doubling the city’s three million population. Two thirds of the world’s television-viewing population will turn their attention to its new Olympic stadium – one of 29 competition venues, 12 of which are newly constructed. Merchandising, corporate sponsorship, six million ticket sales and $456million in television broadcast rights will pump the city with cash. And by 5 August, it will all be over.
The athletes, support teams, temporary migrant workers and television crews will head for home, and economic geographers will start monitoring the financial fate of the city. Atlanta has invested a staggering $2,580million on the Olympics including $232million on the new stadium and $194million on the village that will accommodate the athletes – claiming that it will revitalise its urban environment. But Olympic cities have had mixed fortunes in the past, and some still doubt whether this great sporting event really does benefit the host city.
Canada’s 1976 Montreal Olympics are typically cited as the Games that should never be repeated. The city never recouped its initial investment, and there was little benefit to the urban infrastructure because the Olympic village was constructed outside the city. As Mike Dyble, international marketing director for Manchester’s Olympic 2000 bid, explains: ‘Even at the time of the 2000 Games’ bid process, some cities just didn’t want them. There was disunity about the bids within the cities, and it was often seen as a great [financial] burden. There were shadows of Montreal in many people’s minds.’
No-one knows how successful the 1980 Moscow Games were, but it was not until 1984 that Los Angeles demonstrated that the Olympics could be a financially-viable venture. ‘Nobody wanted to bid for the 1984 Games except Los Angeles,’ says Dyble. ‘It pretty much re-worded the International Olympic Committee’s (IOC) terms and produced a staggeringly successful set of Games, and still gave the IOC a cheque for £100million.’
US ‘marketing gurus’ were set loose on the Los Angeles’ Olympics, converting them from a serious liability into a profit-making venture. Now that the US is hosting the Olympics again, a similar gold mine is widely anticipated. But financial success is far from guaranteed. Professor Robert Baade from Forest Lake College in Illinois has studied the economic impacts of professional sports stadia in 30 US cities, and has come to a startling conclusion.
‘There is not a statistically significant impact on the local economy or the regional economy,’ he says. ‘It doesn’t seem as if professional sports have that much of an impact. I am a little bit guarded with regard to the Olympics because you are attracting lots of money from outside the area. But the reality is that once the event is over, even if that infrastructure is used, it will simply realign leisure spending within Atlanta’s economy, rather than adding to spending overall. So the impact after the Olympics is likely to be something that is close to nil.
‘In order to induce any kind of change in economic activity, you have to increase spending overall. Professional sports do not accomplish that. They simply realign spending within the community.’
This applies to all cities regardless of how they plan their investment, says Baade. However, he concedes that geographical location can have a moderating effect. ‘If you have a sports franchise that is geographically isolated, it may bring in a significant number of spectators from outside the area. Then, it may be that professional sports will give the local economy a boost,’ he says.
Baade also claims that even the siting of the stadium has not been proven to have a net economic benefit on the city: ‘Some people argue that if you locate a stadium in a central business district, and if you integrate it in a synergistic way with other commercial and residential activity, then the stadium can serve as some kind of economic anchor and at least help the very local economy grow. But there have been some very new experiments in the US in this regard and we are going to have to wait for a number of years before we are able to offer what I would consider to be some valid statistics to test that claim.’
Most alarming of all, Baade says that many economic assessments of the impact of professional sports stadia are simply naive and ignore the true negative effects of the development. ‘With many of the impact studies, we see that the benefits are emphasised and the expenditure is neglected or, in some cases, ignored. If, for example, you were to finance the construction of a stadium through an increase in local sales taxes [a US system of local VAT], you’ve really got to consider not only the benefit derived from increased construction spending, but also the negative effects associated with the increased tax burden, such as less spending in the stores.’
The players themselves are not blameless, either. ‘When you have athletes being paid so much – for example, in the US the average baseball player earns more than $1million a year – a lot of those players are not even living in the community in which they play. It means that they are repatriating their earnings to their primary residences. So, new professional sports developments can trigger a financial outflow by diverting resources from locally-owned enterprises to professional enterprises where most of the revenues are going to owners and players who live elsewhere.’
Often, says Baade, investment in sports can divert resources away from more effective types of urban investment too. ‘When we consider the kinds of jobs that are created or induced by investment in professional sports, we are generally thinking about jobs that are seasonal, low skill and low wage in nature. Now, let’s say the money that is spent on building a new sports stadium is spent instead on subsidising a new industrial park. The jobs created in the industrial park may be year-round, high-skill and high-wage in nature. One of the realities that cities and regions need to address is, “What kind of jobs are we creating and what are the long-term implications for our economy of diverting resources away from, say, industrial parks, educational facilities, streets and sewers?” There are some very difficult trade-offs that need to be discussed.’
Even those associated with the Olympics admit that the balance sheets proclaiming their success can be a little misleading. ‘Investment goes into capital costs and running costs,’ explains Dyble. ‘A lot goes into capital accounts in particular, and just gets written off over a long period of time, after the event that it financed is finished and forgotten.’
But overall, says Mike Dyble, the Olympics are beneficial – even if you do not get to host them. ‘Our bid for the year 2000 Games probably cost about £8million, some of which was cash and some gifts in kind from companies like British Airways, who provided help with travel costs. But in turn, Manchester gained global publicity from its bid, and attracted millions in advance government infrastructure funding that it otherwise would not have seen.’
Among the results are Britain’s giant velodrome and the 16,000-seater ice hockey arena, which is the largest in Europe. ‘The £10million velodrome costs were borne by the Sports Council and Manchester gets all the spin-offs,’ says Dyble. ‘The arena is operated by Nynex which pays revenues to the city.’
Professor Terry Stevens, a leisure consultant from Swansea, has been comparing the impacts of new stadia in Atlanta with those in Barcelona, host to the 1992 Games. ‘Stadia are dramatic visual landmarks in a city. Used effectively for global events as well as the hosting of major league sports, they can make a very significant direct economic impact on the economy,’ he argues. ‘For example, in the last football season, Newcastle United estimated 170,000 Norwegians took short weekend breaks in the Newcastle area to go to St James’s Park. Today, if it was given a global event to host, the economic impact of tourist bed nights would to be dramatic. So, it all hinges on the stadium which is the heart around which the other venues operate.’
Stevens believes Atlanta will be successful because it has developed its Olympic facilities with their after-use in mind. ‘Atlanta is taking a radical approach. It is building an Olympic stadium, but at the end of the Games it literally gets cut in half. Half is demolished, the Atlanta Braves [an American football team] will move into the other half, and its old stadium will be demolished too, and the shooting range at Wolf Creek will be handed over to the Atlanta shooting club. So, it won’t have this embarrassment of huge venues that are under-utilised. Compare that with Barcelona, where new facilities were built that duplicated those already in the city. Barcelona football team had Nou Camp, a 120,000-seater stadium, but instead of using it as the Olympic stadium it built Monjuic, which now has no proper use. It hosts the occasional pop concert and athletic event, and the Barcelona Dragons, the city’s American football team, plays there. But its use is only partial.’
“I think we are seeing with each Games an evolution of the way of doing business with the Games”
But Stevens says that Barcelona was not wrong in its approach; different cities simply have different objectives. ‘Barcelona purposely used the Games to undertake a lot of infrastructure development for the city as a whole. While a lot of the capital was ascribed to the Games, I think really the Games were just an excuse to get these things done. At the end of the day, I think it would say this was just leverage to get it done in advance, and I think you would find Atlanta saying similar things about some of its infrastructure.
‘I don’t think that you can say that this capital investment is being written off or causing long-term funding problems, because it totally depends on what the city’s long-term objectives are. For example, the investment in the Atlanta Hartsfield Airport, which now has a new international terminal, was probably needed and would have been done in the next five years anyway. But the Olympic Games was the spur to get it done sooner.’
Nevertheless, one of the most contentious debates is whether the whole city benefits from the massive inward investment of the Olympics. ‘There will be parts of the community that will say “We would prefer this money to be spent on other things”,’ says Stevens. ‘It’s very debatable whether poorer sectors of the city get any real benefit. But when I visited Atlanta, there were improvements in infrastructure in poorer areas, which in turn make them more appealing for inward investment from businesses and so on. There’s also been a general improvement in community spirit, which has reduced crime rates. Atlanta had one of the highest murder rates in the US – and the community desire to work together to make the Olympics a success is leading to some real investment in the city, which is creating jobs and improvements to roads and sewers, and to general living conditions.’
Many companies have moved headquarters to Atlanta in order, says Stevens, to ‘profile themselves’ with the Games. ‘That works two ways, of course. It attracts people on higher salaries which pushes up the price of property. But it also brings jobs into downtown areas, because companies are going downtown rather than out of town. A large business district that was vacant is now being rejuvenated.’
However, there is a risk that investment into Atlanta could have a negative, knock-on effect in other cities in the region. Although there is no sound data available yet to test this concern, Stevens thinks it unlikely. ‘Everything that the Atlanta Committee is doing is focused on what it will do for the whole of Georgia and the southeastern US, not just Atlanta.’
Perhaps one of the most radical effects of the Olympic Games on the urban environment is to create a city of national importance that temporarily, at least – rivals the traditional economic or administrative capital. ‘I think that the Games is giving momentum to the old medieval idea of the city state and the Olympics will, over the next ten to 20 years, constantly reinforce that,’ explains Stevens. ‘Atlanta is a city; serving a bigger region, with events taking place in other surrounding cities. It will always be the city that leads, but it will always rely on its hinterland.’
He continues: ‘There are those who would say that the development of the regional city state is one step closer to a developed nation state. Barcelona and its Catalonia region now give two fingers to Madrid, for example. The Games were part and parcel of the confidence-building for the city state that is Barcelona. And it is difficult to divorce Barcelona from the whole of Catalonia, or Atlanta from the whole of Georgia. If only Cardiff had more ability to make its own decisions then perhaps Wales would be a better, more devolved country rather than relying on London to make decisions. Manchester was putting in a bid for the northwest and north Wales, which would also have hosted some venues. But the city has to be the focus because it’s tangible.’
Stevens points out that people visiting Atlanta want to be able to walk between the different events. Only the more unusual sports, such as sailing, have been moved to more remote locations, which will involve a substantial journey from the city.
‘Overall, it’s a buoyant city and one that’s proud of its achievements. It’s been very successful in its own terms, but there is an acknowledgment that the stadia could have been better planned for after-use,’ adds Stevens. ‘I think we are seeing with each Games an evolution of the way of doing business with the Games.’
This is an archive story, published in the July 1996 edition of Geographical magazine.
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