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October 4th, 2009 (Modified on October 9th, 2009)

Chicago Loses Olympic Bid: The Right Move?



Moving past individual opinions over whether or not you believe our president should have flew to Copenhagen to woo the International Olympic Committee, the point here is, Chicago’s last-place finish may have been for the best.

Hosting the Olympics is a costly event, especially during an economic downturn. Cities rarely emerge profitable after the games have concluded:

Chicago 2016, the organization leading the effort to host the games, expects a cost of $3.8 billion, including a “rainy day” fund of $450 million in case of unforeseen increases.

But there’s good reason to be skeptical of that projection, said Robert Livingstone, producer of GamesBids.com and a leading expert in the Olympic selection process. Host cities routinely overrun their Olympic budgets, he said.

“It’s going to be more expensive than we think it’s going to be, because it typically is,” Livingstone said. “I think every [host] city is going to lose money. It’s not an efficient event.”

The bidding process alone is costing Chicago about $100 million, even if it doesn’t win, Livingstone noted.

What Chicago did have going for it was that, to a certain degree, the city already had the infrastructure needed to host the Olympic games (stadiums, hotels, rail systems, etc.). The less new infrastructure thata city needs, the less the city is forced to spend.

We’re sure that Chicagoans (and the president for that matter), are disappointed with the committee’s votes, but hey, maybe it was for the best.

Do you agree?

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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