66OLYMPIC REVIEWOLYMPIC RESEARCH CORNERconsider as many direct and indirect Olympic spendingas possible and their consequential induced effects.However, there are shortcomings. The effects resultingfrom a long-term change of the host city'sattractiveness, judged by its "location factors" - thevarious elements used to determine a place'sdesirability-cannot be detected as is difficult toisolate the Olympic effects from those of non-Olympicactivities, both during the Games and even more sopost Games. It is also important to highlight that thedirect economic impact of an Olympic Games is shortlasting. Overall, the impact is relatively small for mostnational economies and therefore it is not surprisingthat many scholars do not find a statistically significantimpact on the national Gross Domestic Product (GDP). OlympicGames do not support a lasting economic growth for a nation, but certainly do change the host city. TRANSFORMING THE HOST CITY While impact studies only consider the output andmacroeconomic consequences of Olympic-relatedactivities, cost-benefit analyses also look at othereffects, such as potential and productivity and considerthe qualitative elements that are brought to a city. Theimprovement in these intangible areas to a city canstimulate non-event related economic activity followingthe Games. A good example is the transformation of the city of Barcelona, which saw a significant increase in visiting tourists after the Games in 1992. Due to thepressure to deliver an adequate infrastructure for theGames, most host cities undergo an accelerated urbantransformation, which can be seen as the major Olympiclegacy. Even though some Games-related infrastructure- in particular special sport venues - is not needed in the long-term, the whole city transformation must betaken into consideration when discussing opportunitycosts and alternative spending of the rather small share of resources contributed by the city.A common phenomenon during the preparation forthe Games is that additional projects are piggy-backedto the direct Olympic-related city transformation. Insome cases this is positive in that obstacles are easierto overcome when a project becomes part of theOlympic scheme, however it can also be negativewhen time pressure creates cost overruns and otherprojects are crowded out due to price increases. Ingeneral, the Olympic Games themselves have requireda more or less similar infrastructure over the years and therefore only a moderate increase in costs couldbe justified. The dramatic growth of overall costs fromAtlanta 1996 to London 2012 could be traced to thepolitical wish to transform the city. The discussion onbidding for Olympic Games is often only based on themeasurable economic Games output. Future researchis now focussing more on the change of a city'slocation factors and detecting long-term economicINTANGIBLES - THE UNKNOWNECONOMIC BENEFITSOne major intangible legacy of hosting the Games is the general economic well-being and theimprovement of a city's location factors. Recently,scholars have worked on developing new and bettermethodologies to measure the intangible effects, asthey indirectly influence the economy of the hostnation. Examples of intangibles that are related to theeconomy are the worldwide location marketing, thevalue of happiness of citizens, the entertainment and"feel-good" factor of the population, the emotions toconsume or invest locally, the motivation to become a volunteer, the skill development of human resourcesor simply the reduction of health costs throughmotivating citizens to actively do sports. Seeing thevariety of intangibles it is clear that these, althoughdifficult to measure, are potentially the maineconomic benefits. Therefore, when discussingalternative investments of public resources, a hostcommunity must also consider missing the intangibleeffects of hosting the Olympic Games.ECONOMIC WINNERS AND LOSERS The Olympic Games have several winners. Firstly thelocal politicians, who can use external resourcesflowing into the city, such as government subsidies,plus the reallocations within the city budget to changethe structure of the city according to their politicalpriorities. The second group of winners is theconstruction industry, which can confidently expect to receive contracts for extensive construction projectsincluding parks, hotels, roads, sports facilities, housing,and sometimes convention and trade fair centres.Many of these projects contribute to the gentrificationof the certain areas of the city, the buying andrenovation of houses in deteriorated urbanneighborhoods, a process that benefits higher-incomegroups, which constitute the third set of winners. The fourth group is tourists who benefit from animproved tourism infrastructure and additionalattractions in the host city. A further group of winnersis the city's general population, many of whom benefitfrom the general upswing in economic activity, agreater supply of services based on the improvementof urban infrastructure and the image of the city.Although the extent of Games-related economic activitydiffers greatly between host cities, the transformedcity, the better image and greater overall demandleads to higher income and additional jobs. The criticism that additional income andemployment only benefit members of the middle andupper classes must be rejected. Each activitystimulated by the Olympic Games creates demandand therefore employment and/or additionalincome -directly and also indirectly -in industriesRightThesuccessfulSydney Games in2000 put the cityright on theinternational mapBelow rightHosting the 2012Games has led tothe long-overdueregeneration of alarge area ofEast LondonBelow far rightThe newinternationalairport at Beijingwas built for the2008 Games
not visibly related to the Games.The Olympic Games, however, also affect certaingroups negatively. The Games serve a particularcomplex network of targets and the winners arethose who benefit from their targets being reached.Investing in Olympic Games also means that otherprojects in the city may be crowded out. Publicmoney that was spent on the Games cannot be usedfor other activities and therefore the losers are allthose who had other targets, which cannot be servedbut might have been realised had the Games nottaken place in their city. Many losers of OlympicGames are therefore from the low-income groups,given the obvious priority for basic education,affordable housing, adequate medical care and socialintegration - aspects not directly supported byOlympic Games. Additionally, the poor can suffer fromthe subsequent gentrification of the city. Whenbidding for the Games, the potential negative effectsand whether they can be borne from an economicpoint of view requires on-going research. ?OLYMPIC REVIEW67Dr. Holger Preuss is professor of sport economics and sportsociology at the Institute of SportScience, Johannes Gutenberg-University Mainz, Germany. Hisresearch fields are the economicimpact measurement, sport eventtourism, the bidding process for mega events, legacy of sport events and ambush marketing.