What the Olympics Can Teach Us About Subsidized Sports

Published August 17, 2015

In July, Boston withdrew its application to host the 2024 Summer Olympic Games, becoming the latest city to respond to citizen concerns and cold hard facts about sports entertainment and public investments.

The Olympics seem to live in perpetual jeopardy, plagued by financial mismanagement and corruption. Bloomberg estimates that the 2004 games in Athens contributed €7 billion to Greece’s now-crippling debt. Russia spent billions failing to turn Sochi into an acceptable Olympic venue. China has struggled for years to get its money’s worth out of the 2008 Beijing infrastructure.

The Olympics have long been heralded as a great opportunity for the host city to showcase its unique culture and attract tourists. But research suggests the benefits do not offset the costs, and with the bulk of the price tag falling on taxpayers, citizens of prospective cities have begun to revolt.

Tokyo recently agreed to go back to the drawing board with the main stadium for the 2020 games after Japanese taxpayers expressed anger over its rapidly rising construction costs. Beijing will host the 2022 winter games, winning the bid over Almaty, Kazakhstan after Oslo, Stockholm, Munich, Krakow and St. Moritz, Switzerland all withdrew their applications — mostly after referendums revealed a public firmly opposed to the expense. People love to watch the Olympics, but they don’t love paying for it.

While the Olympics take bad government investment to a new level with every cycle, the same thing happens on a smaller scale every year. Heavily subsidized athletic venues don’t come with the same multiple-billion-dollar-price tag, but corporate welfare can do damage with far less. It’s time publicly subsidized stadiums get an Olympic-sized bad reputation.

NPR estimates that taxpayers have spent over $20 billion subsidizing stadiums for the NFL, MLB, NBA and NHL since 1990. Michigan taxpayers have certainly contributed a share to that total, specifically in Detroit, where parks for the Tigers and Lions have benefitted from government handouts. The Red Wings joined the list recently, with a new arena in the making that uses at least $284.5 million in public funds in a city that exited bankruptcy less than a year ago.

Public disapproval has ended the Olympic dreams of many cities across the world, and it could end the publicly funded stadiums of local sports teams, as well. It is too late to avoid subsidizing the new Red Wings facility, but with the Pistons floating a move into Detroit city limits from their current location in Auburn Hills, there will be ample opportunity to push for private funding in the future.

As for the Olympics? If the International Olympic Committee wants a future filled with democratic host countries as well as autocratic ones, it must make some reforms: relaxing its unreasonably high standards for public expenditure and allowing cities to use structures and housing that already exist rather than forcing them to build dozens of unnecessary venues and an Olympic Village.

But in the end, sporting spectacles generating billions of dollars should pay their own way — not rely on the taxpayer.

Geneva Ruppert ([email protected]) is a communications associate at the Mackinac Center for Public Policy. An earlier version of this news release was published at http://www.mackinac.org/21627. Used with permission.