No Economic Gold at the End of the Olympic Rainbow

I love summer and I love sports.  2012 has already produced many sports highlights with I’ll Have Another winning 2/3 of horse racing’s Triple Crown, Tiger Woods’ renewed success on the golf tour, Roger Federer’s and Serena Williams’ record breaking tennis wins at Wimbledon, the mid-summer classic, baseball’s All-Star game and King James winning his first NBA title. And now it’s the Tour de France and, soon, the summer Olympic Games.

Big Sports Event = Big Economic Impact?

Sports spectaculars are often lauded for their economic impact. Does the reality match the claims? Victor Matheson, an economics professor at College of the Holy Cross in Massachusetts has analyzed the economic impact of “mega sporting events” like the Super Bowl, the Olympics, the All Star Game, and World Series. He finds many examples of major sporting events not living up to their pre-event hype.  For instance, Major League Baseball claims economic impact on cities that host the All-Star game in the neighborhood of $75 million in direct benefits. Matheson’s ex post research suggests that for the cities that hosted All-Star games between 1973–1997, average employment actually declined by a half percent.  Organizers of the 1996 summer Olympics in Atlanta suggested upwards of 77,000 new jobs would be generated. Matheson estimates that as few as 3,500 were actually created. Read more »