Michael Blowhard writes:

Dear Blowhards --

One of the many questions I'm sorta interested in but will never get around to making deep sense of is sports financing. I've read enough to feel huffy about the way governments spend tax money on stadiums and sports teams. Why should anyone's tax money be used to help George Steinbrenner amuse himself with the Yankees? And I marvel at the way public money is thrown at high school and college sports. Hey, would sports be quite as big a presence in American life if tax money weren't being used to subsidize them? Just a thought experiment.

But I wondered too about the recent Olympics: how were they financed, exactly? Like many people, I have a dim sense that TV pays for a lot. But I'm clueless about such basic questions as: does the country hosting an Olympics make or lose money doing so?

Fortunately, I stumbled across some facts and figures about the Athens Olympics in a recent issue of The Economist.

• The cost of running the recent Games was $2.3 billion. Half has been paid for by broadcasters, half by a combo of ticket sales, sponsporship, and merchanding.

• Costs ran 50% over the predicted budget.

• But Greek taxpayers have footed a lot of Olympics-related bills too: $300 million to help run the Games; $1.5 billion to ensure that they were secure; and $7 billion for new construction.

• This means that Greek citizens -- employed or retired, and infants too -- have coughed up $800 each to pay for the Games.

• Eight hundred bucks each! I'd be miffed about that -- but apparently the Greeks aren't. Although Greeks were never told that they would be subsidizing the Games to that extent, they turn out to be OK with it. It's fine with them. When they're told about these figures and are then asked for their opinion about the expense, four out of five Greeks say that the money was well spent.

• Some Greeks argue that the infrastructure improvements made to accomodate the Games help justify the costs. Yet these improvements boil down to a lot of snazzy new sports facilities -- which The Economist says are notorious as longterm money-losers. The Economist also points out that the Greek government is already hugely indebted.

Not for the first time, I find myself wishing that economists would spend less time lecturing us about how economically irrational we're being and more time investigating the way in which we choose -- consciously or unconsciously -- to live out our irrationality. Perhaps "being irrational in economic terms" is part of what it is to be human. And perhaps not all economic irrationalities are the same kind of bad; perhaps some are necessary, and even good.

Come to think of it, why don't economists spend more time distinguishing between irrationalities -- between the more-sensible and less-sensible, the more-rewarding and less-rewarding? Dare I wonder whether economists might be as confused as the rest of us are about what "sensible" and "rewarding" really mean? But if that's true, how dare they tell us how we ought to behave? A "rationality" that has no firm basis in what's sensible and what's rewarding is ... Well, at the very least, something to be wary of. Something that might perhaps be best viewed as mere information -- potentially helpful, but also something that may distract from the main business of life, whatever that might be.

Not that I have any idea what I'm talking about, of course. The Economist's website is here.

Best,

Michael

Most sports are not financed like this. The IOC has very cleverly ensured that they get all the profits and the host cities get all the losses.

The other thing to bear in mind is that Olympic Games are still very much 'amateur'. You don't get a multi-million dollar contract for appearing at the Olympics. This actually 'reduces' the cost quite considerably, compared to US Pro sports or European football.

I was in Sydney in 2000, and I got to see much of the infrastructure that was built for it. The main Olympic Stadium is an awesome structure, but it is very much a 'white elephant' financially.

While the numbers that the Greek taxpayer have had to cough up is impressive, these will pale into comparison as to what Beijing will cost; some reports I have seen suggest that could cost close to $30 billion, but the CCP's philosphy is that they are going to spare no expense... which is easy to do when your a One-Party State.

Posted by: Scott Wickstein on September 20, 2004 06:43 AM

And to think they are pushing for the new stadium @ Long Island City in Queens (even expropriating people's property along the way)!

Posted by: Tatyana on September 20, 2004 09:51 AM

I'm so tired of you, Olympics.
You're so yesterday.
Please, just go away.
Just go.
Away.

Posted by: ricpic on September 20, 2004 10:35 AM

"Come to think of it, why don't economists spend more time distinguishing between irrationalities -- between the more-sensible and less-sensible, the more-rewarding and less-rewarding? Dare I wonder whether economists might be as confused as the rest of us are about what "sensible" and "rewarding" really mean? "

I'll take a stab at it: if people are being "irrational" with their own resources, more power to them (unless they're truly mentally incompetent, of course... an admittedly fuzzy category). If people are being irrational with other people's resources, that's a problem.

Of course, since people's values are different and difficult to communicate, there's really no way I can reliably make you better off, by your standards, by employing your resources. From your point of view, I'll usually be employing your resources irrationally. So my ability to employ your resources for your alleged benefit should be kept to an absolute minimum.

Some of what people like to call "irrationality" is simply a result of the fact that people don't value every dollar, or every instance of some good or service, the same.

Posted by: Ken on September 20, 2004 11:24 AM

Amartya Sen has been doing work about the relationship between economics and ethics which might be relevant. I haven't gotten around to reading his work and only know about it second-hand through Hilary Putnam's "The Collapse of the Fact/Value Dichotomy", but I it sounds like there are economists thinking about this.

Posted by: joe on September 20, 2004 02:12 PM

what happened in India when I ndia hosted the Asian Games will probably happen in Greece too, but at a greater scale. You will see many sports facilities just sitting there, unused, and then falling apart from lack of maintenance, and from the lack of users. E.G; in India there is no sports infrastructure that allows mass participation, such that people get good enough at any given sport to ne able to get to the level where they can utilise Olympic level facilities, so, those facilities go unused. Or maybe the offspring of therigh and famouse use it as their free, govt paid private facilities. And the Govt , of course is left with a crushing debt burden, which makes lief difficult for the average dude trying to eke out a living and provide for his wife and kids. BTW, i did notice during my last visit, that there were a buch of feral cows grazing at the facilities at Tughlakabad ( part of New Delhi) where the ranges that were built for the shooting sports were!!! So, the shooting ranges have gone to hell, and now feral cows hang out there!!!! Poetic justice, aint it?

Posted by: ronin on September 21, 2004 12:56 AM

Rationality of course means reconciling competing values with their attendant costs. Economists tend to ignore the fact that different people in different places have different values, to choose a lame word, which may or may not coincide with the values that economists as a bloc hold. Greeks place a high value on national pride, so it could be that that they were being perfectly rational (err, logismos) in their lights. Probably.

Posted by: Evan McElravy on September 21, 2004 08:31 AM

Hey, people with information, and who know what they're talking about! Many thanks for tips and tales. Interesting the way people behave, and the way they're prone to laying out big bucks for "irrational" goods, isn't it? Which isn't to say they're always wrong to do so, of course ...

Posted by: Michael Blowhard on September 21, 2004 09:21 AM

Economics is called the dismal science,for a reason. It is trying to fit past preformance in to a formular that can predictalbly call future preformance. Do you realise that economist are not considered reliable witnesses in courts of law. It is a sign of our times that so muce of what we do is controlled by economic theorys that have no proof.
I am a Blowhard Too!!

Posted by: larkinsjapn on September 23, 2004 07:56 AM






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