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Meet the Street: Faster, Higher, More Profitable With the Olympics

Sports professor John A. Lucas discusses the economics of hosting the Winter Games.
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The Olympics are not only about the triumph of athletes, but, to some extent, the triumph of capitalism.

According to John A. Lucas, professor emeritus of sports and Olympic history at Penn State, the Games are so lucrative that it would be impossible to estimate how much money the host city and the 210 businesses and television stations involved in the

Winter Games stand to profit.

John A. Lucas,
Penn State Professor Emeritus

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But as the

author of four books on the Olympics, Lucas can speak authoritatively about the cost of running the Olympics and the budget of the International Olympic Committee. The IOC has $8 billion in Swiss bank accounts, most of the money raised by private businesses and entrepreneurs, Lucas says. This year's Games are being held at a cost of $2 billion, with $400 million of that money coming from the U.S. government for security, which, Lucas reminds us, has been an especially significant issue since 1972, when terrorists murdered Israeli athletes.

Lucas shares with Meet the Street his cost/benefit analysis of the Olympics, from a business and historical point of view.

TSC: How much infusion of immediate net money do cities generally get as a result of hosting the Olympics?


It's a very complicated question. You have to understand that until 1972, when the terrorists killed the Israeli athletes, and thereafter, beginning in 1976 in Montreal, there was no security of any kind at any of the Olympic games.

All the money had to be raised by private entrepreneurs, private banking firms, multimillionaires and capitalists of this country -- without a single dollar from the federal government. And I am speaking only of the United States. Prior to 1976, we were the only country where the government contributed nothing.

Since the Munich massacre and the following games of Montreal, the United States was very much involved in security for Olympic games held in this country, starting with Lake Placid (N.Y.), 1980, when the American government, the FBI and CIA and the like contributed millions of dollars for security.

As the 2002 games in Salt Lake City kick off this week, it is estimated that when the Games are over, the United States government will have contributed $400 million, just for security.

Note that I mentioned nothing about monies from the government to run the Olympic games, to build the stadiums, etc., because there wasn't any. The American government contributes to the Summer and Winter Olympic games


in security, regrettably. Had there not been terrorism at the Munich games in 1972 and death at the Centennial Park in 1996, the United States government would not have been involved in a U.S.-based Olympics games, winter or summer,

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TSC: Obviously, there's more to the tremendous Olympic franchise than the $400 million security expense. Nearly 18,000 hotel rooms are needed, for starters. Do you have any idea how much Salt Lake City and Utah stand to benefit, both in the near and the long term?


The Olympic Games in Salt Lake City will end up costing $2 billion, and $400 million of that will come from the United States government, earmarked


for security. The other $1.6 billion will come from two sources:


television and 10 other television companies from all over the world, plus 199 business corporation that will contribute $1 billion -- from


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TSC: If it's a $2 billion cost, then what is the revenue?


There is a book that the International Olympic Committee, headquartered in Europe,

has next to their own Holy Bible, called the

Olympic Charter

. The very first sentence says, "The Olympic games are a nonprofit sporting festival." It is the hope

of the IOC that the host city will lose no money, and if they make money, that is purely incidental.

TSC: That might be their perspective, but, clearly, the 210 businesses and television stations involved have a different purpose, not to mention the city hosting the Olympics. Have you ever seen a figure on the gross and net revenues generated by Olympics?


Yes, they do have a different purpose. And so do the parking lot attendants who will make $175 for parking your automobile for five hours. And the cotton candy manufacturers who will sell their wares on the streets of Salt Lake City at $6, for a little piece of candy that cost between 3 and 4 cents. And the T-shirts that are


overpriced at $40. They come from Taiwan, cost 50 to 60 cents for the businessmen, and they sell it for 5,000% profit.

As to a figure, of course, I've never seen one. No one knows how much money is made by individual capitalist entrepreneurs. All that we know is how much money is made by the organizing committee of the host city. In Montreal in 1976, the organizing committee of the City of Montreal lost $1 billion. It's on the books. That was the greatest loss ever incurred by a host city committee.

TSC: Why did they lose so much money?


That's a long story.

Essentially, it was utter, complete and total corruption in various dimensions by the host city ... the French Canadian City of Montreal.

TSC: Speaking of corruption, a number of Salt Lake City officials were accused of bribing IOC members in order to attract the Olympics to their city. What happened there?


The two individuals from Salt Lake City who were the co-directors of the organizing committee have been fired. But beginning in the late 1990s, these two individuals, hoping that the Olympic Committee would

let their city host the Olympic games, bribed a great many IOC members with gifts and college scholarships and a whole host of things, hoping that the IOC members would return to Europe and vote for Salt Lake City.

It worked. Salt Lake City won the bid -- in part because it is a superb place to host the Games, and in part because some members, 13 members to be exact, were bribed. The 13 members of the IOC committee have been fired, and the two directors of the Salt Lake City organizing committee were fired. They were brought to court and released without anything brought and proved against them -- because bribery is not illegal anywhere in the world. It is immoral. It is unethical, but it is not


to give an IOC

member's wife a fur coat, or their children a free college scholarship.

TSC: Do you think it should be illegal? And is there any way the IOC could regulate these kinds of gifts?


If bribery were illegal, then every one of the 200 nations on planet Earth would have to send hundreds of thousands of people into jail for accepting lavish gifts.

TSC: In terms of the residual impact of the Olympics, can you give us some examples of stadiums, parks, theaters or tracks that have been built in various Olympic host cities that have a lasting impact on the economies of those places?


In the Games in 1976 in Montreal, where the people love lacrosse and ice hockey and had never heard of team handball, when all of the athletes left, dozens of stadiums remained empty, collecting cobwebs. So the IOC just got sick and tired of that.

Chapter nine of the

Olympic Charter

says that every city must sign a contract promising that the great expenditures for facilities will be used by people of that city, state and nation when the athletes go home, at least 100 times a calendar year.

TSC: New York's Mayor Mike Bloomberg is already trying to attract the 2012 Olympics to the Big Apple, having just approved a quirky campaign superimposing his face over a gymnast doing all kinds of acrobatics from the straphanger handles in a New York subway car. Humor aside, how likely is it that New York, which has never hosted the Olympics, will land the games?


You need 30,000 acres of empty land to host the Olympics. Mayor Bloomberg might find such a space in New Jersey and call them the New York Olympics. I don't think anyone would challenge him on that, much less care. If he can find 30,000 acres of land -- not swampy marshland -- to accommodate 20,000 athletes and coaches in the summer games, 4 million visitors and more than 50 different stadiums, then he can possibly have the games.

TSC: How important do you think the Olympics are to the American psyche at this time, particularly post-Sept. 11 and with the current state of the economy?


In Atlanta ... in 1996, the security from Washington, D.C., was


, costing in the hundreds of millions of dollars. But look what happened.

A terrorist bomb in Centennial Park killed one person and injured 110. Security cannot stop an insane person from walking into Centennial Park and blowing up people. No security is capable of doing that in a public place where no one is screened.

If we have a peaceful Winter Olympics game, without any violence of any kind and no deaths, and glorious Games with extraordinary performances by the world's greatest winter athletes, and we do it for three weeks -- then it is proof to me that the human species, from every race, color and creed, every ethnicity, every religious creed, every everything, can live in harmony. At least for a short time. has a revenue-sharing relationship with under which it receives a portion of the revenue from Amazon purchases by customers directed there from