Chicago Olympics Bid Could Cost Taxpayers

Published April 1, 2009

The City of Chicago’s efforts to land the 2016 Summer Olympics could leave taxpayers across Illinois on the hook for hundreds of millions of dollars, even though Mayor Richard M. Daley (D) last year vowed “not a dime” of taxpayer money would be spent on the Olympics.

The Illinois legislature is expected to throw taxpayer support behind Chicago’s bid. Gov. Pat Quinn (D), who recently took office after lawmakers impeached and removed Rod Blagojevich from office, has already publicly committed at least $150 million in state funds for the Olympics—and that could climb higher.

Quinn’s commitment likely will win approval, as he presides over a General Assembly dominated by fellow Democrats and riding a wave of good feeling since replacing Blagojevich.

“I support whatever is necessary,” Quinn told reporters, adding, “The General Assembly will have to act on that [funding], and it’s an opportunity that I think will happen in the next couple of months.”

This comes on top of hundreds of millions of dollars Chicago has pledged toward the Games.

Hundreds of Millions Promised

Last June, Chicago joined Madrid, Rio de Janeiro, and Tokyo as finalists to host the 2016 games. Chicago’s bid included a guarantee of $500 million in taxpayer funds to cover any operating deficit for the Games. City officials say the pledge is only precautionary, because they expect revenues to generate a surplus.

A few months later the City Council followed with approval of $85 million in borrowing to buy the Michael Reese Hospital campus as a site for the proposed Olympic Village. City officials say an arrangement with a real estate developer would enable the city ultimately to recoup its costs, but if the developer stumbles—as happened in Vancouver, Canada, where a similar deal to build the Olympic Village for the 2010 Games fell through—taxpayers would be dinged.

Chicago also has pledged another $45 million to pay for police, cleaning, and other services during the Games.

The Chicago 2016 Committee argues the city will reap economic and promotional benefits far exceeding what the city’s taxpayers may be forced to pony up.

City’s Claims ‘Nonsense, Laughable’

But there is virtually no chance the city will reap the rewards backers of the Games promise, said University of Chicago Prof. Allan Sanderson, who specializes in sports economics.

“The economic impact study the 2016 group commissioned and bragged about—$22 billion in benefits—is simply nonsense and laughable,” said Sanderson.

“I have yet to see an economic impact study for building a sports facility or convention center, or hosting a major sporting event, that did not promise cornucopias of cash to the city bold enough to ‘invest’ in the scheme,” Sanderson said. “And yet virtually all convention centers in this country lose money, and revenues spent inside new sports palaces enrich only the owners and leagues.”

Sanderson added, “The distinction between public and private dollars is essentially meaningless. All of these expenditures, whether by the city or a private firm or donor, have an opportunity cost.”

Meanwhile, organizers of the 2012 Olympics in London announced in February the projected costs have nearly tripled in five years, from $4.9 billion to more than $13 billion.

Many of Chicago’s most powerful politicians and businesspeople support the 2016 Games, but there is a growing movement against the project. An organization called “No Games Chicago” held a meeting February 3 that brought together nearly 250 opponents to discuss what they see as better ways for the city to spend taxpayers’ money.

Other Cities See Huge Costs

“The costs of putting on an Olympics are enormous, and no city to date has used ‘zero public money’ to put them on, particularly recently,” said Ramsin Canon, one of the group’s founders. “Security costs alone are astronomical—in London, into the billions of dollars. In Vancouver they are having trouble even accounting for how much public money is being sunk into what is increasingly a corporate welfare scheme.”

Opponents of having the Games in Chicago cite the city’s budget deficits as proof it doesn’t have the money to pay for the Games without cutting vital services or raising taxes. Chicago closed its $469 million budget deficit last year through a series of tax hikes, spending cuts, and the privatization of parking meters. The next budget is projected to have another deficit, a fact that is not lost on Games critics.

“How can they claim it will all be private money when the city is already using the people’s credit to borrow funds to knock down a hospital—a hospital with the only AIDS clinic for miles—that will become 85 to 90 percent unaffordable condos after a two-week stint as athlete housing, eight years from now?” Canon asked.

“If the city has $500 million of the people’s money to guarantee luxury condos and equestrian parks, then they have $500 million to invest in our neighborhoods—hospitals, buses, trains, schools, and parks,” Canon said. “Not only can we create jobs by investing in our neighborhoods, we can bring Chicago closer to what the people consider a ‘world-class city,’ one with safe streets, good public schools, and swift public transit.”

The selection of the 2016 Summer Olympics host city is scheduled to be voted on by the International Olympic Committee on October 2.

John Nothdurft ([email protected]) is a legislative specialist at The Heartland Institute.