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Chicago’s Olympic Escape

eye on the news

Chicago’s Olympic Escape

The city should be grateful that it didn’t get the 2016 summer games. August 1, 2016
Cities
Economy, finance, and budgets

When Chicago bid in 2009 to host this year’s summer Olympics, President Obama supported the effort and dismissed critics. “I mean, who’s against the Olympics?” he asked. As it turned out, plenty of people were—including, ultimately, the International Olympic Committee—and nearly seven years later, Chicagoans should be glad about it. While the games that start this week in Rio de Janeiro are already turning out to be a financial and public relations calamity for the Brazilian city, Chicago’s own woes have multiplied since 2009. The Olympics would have been an unimaginable burden to the hard-pressed Windy City.

Politicians like Obama and former Chicago mayor Richard Daley, who lobbied heavily for the games, have a naïve faith in the power of big spectacles. Daley chased the Olympics in the hope that they would help revitalize Chicago’s South Side and boost tourism, but the Olympics don’t work that way anymore, if they ever did. London won the 2012 games, beating out New York in bidding that took place in 2005, and Londoners celebrated with a party in Trafalgar Square, while a crestfallen Gotham mayor Michael Bloomberg apologized to America for losing the games. But once the 2012 games rolled around, the world had changed enormously.

The London games, projected at $8 billion, wound up costing $18 billion—a familiar pattern with the Olympics. Preparing for the games, meanwhile, put a strain on public resources in the wake of long-term economic problems following the 2008 financial markets meltdown. “This country’s bankrupt,” complained London mayor Boris Johnson just before the games. Meanwhile, a sharp increase in terrorism and disorder in England—including four days of rioting in August 2011, after police killed a man they said was planning to attack them—forced the city to devote enormous resources to security. Rather than boost tourism, the games simply shifted it, as tourists who might have normally visited London didn’t show up in the Olympic summer. West End theaters reported as much as a 30 percent drop in ticket sales, and a Moody’s report found no discernible economic benefit from the games.

Something similar is transpiring in Rio. Though Brazil’s economy was flying high when it won the games in 2009, the Brazilian miracle turned out to be a speculation-fueled bubble. By 2012, unemployed Brazilians were rioting as they watched the government pour money into the games, which will cost some $20 billion against expected revenues of only about $4.5 billion. Stories persist of high crime in Rio, dirty waterways where Olympians must compete, the spread of the Zika virus, and key facilities—like the athlete’s village—that remain incomplete. In a recent poll, 63 percent of Brazilians said that the Olympics would do more harm than good.

Meantime, Chicago has enough problems without the Olympic Games to worry about. Deeply in debt thanks in part to a pension crisis, the city recently raised property taxes by $500 million just to pour money into its retirement system. The city had anticipated investing heavily in infrastructure to prepare for the games; even without that spending, Chicago’s debt rating has sunk to junk-bond levels—a result of a “reckless pattern of borrowing,” as the Chicago Tribune described it, in which the city paid for routine budgetary items with debt to mask its deep financial problems. On top of that, Chicago would be facing the problem of covering costs from the games that now far exceed what the games earn.  The Brazilian federal government is financing 40 percent of the Rio games, but no similar subsidies exist in the United States. Chicago boasted that it could raise more revenue from private sources than other bidding cities, but the city’s estimates fell well short of what it now costs to produce the games.

Chicago’s failed bid has left a legacy of bad deals, according to a recent Chicago Tribune story. Looking to ensure labor peace for the 2016 games, the city negotiated 10-year contracts with 34 municipal unions at rich prices that have contributed to Chicago’s fiscal decline. The city also paid $2 million an acre for an empty site that would house the Olympic village—and it still owns the land. Undeveloped plots nearby go for a mere $300,000 an acre. Total cost to the city unless it can unload the site soon: $140 million. If the bid alone led to such ill-considered deals, imagine how badly Chicago might have mismanaged the vast building and planning for the games themselves.

It’s also questionable whether the games would have been the public relations coup that Chicago officials anticipated. Crime is soaring in Chicago, up nearly 70 percent through the first five months of the year. Violent crime rates on the South Side of Chicago are on par with those in some of the world’s most dangerous countries—including Brazil. This is the image that Chicago would have “marketed” to the rest of the world this summer.

Former mayor Daley originally opposed the Olympic bid, but when his popularity plunged, he saw winning the games as a way to revive his political career. This is what the Olympics have become: a way for politicians to distract citizens with the promise of circuses that cost a lot of bread. Chicago’s Olympic defeat was a blessing.

Photo by Jim Prisching / Getty Images

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