A shining Olympic Stadium with masses of travelers streaming into it. Urban renewal on a grand scale. Increased commerce and resulting tax bumps for government coffers. Those are among the benefits the Chicago region stands to gain if the city hosts the 2016 Summer Games — or at least that’s what boosters promise as a special committee puts the final touches on a secretive, competitive bid that is due in February.
“This is a tremendous opportunity,” says Jack Lavin, director of the Illinois Department of Commerce and Economic Opportunity, who sits on a crowded steering panel for Chicago 2016, a not-for-profit organization that is coordinating the city’s bid. “If Chicago is chosen, it’ll put Chicago and Illinois on a whole different level, as far as tourism, and especially international tourism, goes. We think this is a great win-win for the city and the state.”
Proponents have not been as quick to highlight the potential taxpayer costs of preparing for the Games, a multibillion-dollar enterprise that has gone over budget in other host cities (in London, site of the 2012 Olympics, the price tag has more than doubled). Also tempering the excitement are the concerns of some grass-roots organizers. They fear that the fast-track redevelopment necessary for the Olympics, if poorly planned and coordinated, could have a negative impact on Chicago neighborhoods where athletic venues and residences would be built. The city continues to hemorrhage low-income housing, critics say.
“On the south side of Chicago, some of our neighborhoods are either challenged by gentrification or have been challenged by decades of disinvestment,” says Jhatayn “Jay” Travis, executive director of the Kenwood Oakland Community Organization. The agency is part of an 11-member umbrella group dubbed the Coalition for an Equitable Olympics that seeks affordable-housing and job guarantees and other concessions from Chicago Mayor Richard Daley and Olympic planners. “We want to make sure any investments that are made or that come to our neighborhood actually benefit the people that are here and don’t serve to push the people out.”
Daley and Chicago 2016 chairman and CEO Patrick Ryan, a former Fortune 500 insurance executive, have led the Olympic charge, which gained momentum last year when the U.S. Olympic Committee selected the Windy City as the nation’s best bet to land the games. Chicago now squares off against Tokyo, Rio de Janeiro and Madrid, and the International Olympic Committee will select the final winner next October.
From the start, advocates of a Chicago Olympics have trumpeted the economic dividends — some of them long-range — that such a high-profile event could bring.
“The [potential] branding value is just huge for Chicago and Illinois,” Ryan says. “When people get to know a great city they start thinking, ‘Well, maybe I’ll get a second home there; we’re expanding, we need to get a North American headquarters, and Chicago looks like a great place right there in the heartland of the country.’ There’s no doubt that that kind of activity comes out of the branding.”
Obvious beneficiaries of the games would be the Chicago area’s hospitality and service industries, which would accommodate a projected 2 million visitors. Chicago 2016 has not released its own revenue estimates, but University of Illinois at Urbana-Champaign economist Geoffrey Hewings estimated the Chicagoland economy would see an infusion of $5 billion in gross spending and the creation of 81,500 jobs — many of them temporary — during the two weeks of the 2016 Games. He says his financial estimate includes a share of money that local and state governments would collect, but those revenues were not separated out.
Hewings cautions that his calculation, done for Crain’s Chicago Business in 2006 and based on the experience of Los Angeles’ hosting of the 1984 Olympics, doesn’t take into account the droves of people, including locals, who would steer clear of Chicago to avoid the hoopla. And addressing claims by organizers that an Olympics could generate an operating profit, he says the most accurate accounting would compare all expenses, including capital-construction costs, against revenues, such as merchandising, ticket sales and broadcasting rights. Hewings agrees that hosting the games could be a great opportunity.
“I would make a distinction between something like an Olympics, which is truly a mega-, mega-event, as opposed to hosting something of a more modest kind like the Super Bowl,” he says. “The fact that billions of people literally watch this — it potentially does provide some benefits for the city in the long term.”
Among the skeptics of a big Olympic payday is Allen Sanderson, a University of Chicago economist who specializes in sports finances. He warns that proponents typically exaggerate the ripple effects of the consumer spending that occurs during a huge event to help justify the initial costs. “They can apply a very unrealistic multiplier — you know, ‘recycles around the community’ kind of thing,” he says. “A lot of these multiplier numbers are just way too high.”
Of the final Olympic price tag, Sanderson concludes: “If we’re lucky, nothing goes wrong and we break even.”
The planning efforts of Chicago 2016 reportedly have been financed through more than $40 million in donations — a promising indicator to some that the private sector would step up in a big way for the actual games. The potential public cost share for a Chicago Olympics remains murky. The Chicago City Council last year agreed to put up a controversial $500 million guarantee as a sort of insurance policy for worst-case scenarios. A nagging question is whether the city government would end up absorbing or fronting some development costs, given Chicago’s latest budget problems and Daley’s often-quoted pledge that no taxpayer dollars would go toward an Olympics.
The signature construction projects envisioned for the Chicago games are a $1.1 billion Olympic village for athletes that would be built on or near the downtown lakefront; a nearly $400 million, 80,000-seat stadium within Washington Park on the city’s south side (it would be converted into a small amphitheater after the Games) and an $80 million aquatic center for Douglas Park on the west side.
Daley’s mayoral press office ignored requests by Illinois Issues to interview administration officials about the Olympic plans. Ryan insisted the Olympic facilities would be entirely privately financed and that the city’s guarantee would not need to be tapped, even with the souring national economy. “It’s clearly an issue that any sane-minded person would be looking at,” he says of the downturn, “but because we have an eight-year horizon, we do believe that we’ll be just fine.”
Roosevelt University political scientist Paul Green, an unabashed supporter of bringing the Olympics to Chicago, is not discouraged by the bleak financial atmosphere. He says Chicago civic leaders faced similar challenges while staging two transforming international events, the world’s fairs of 1893 and 1933, but plowed ahead to great success.
“Both took place during times of tremendous economic problems — the recession or near-depression of 1893 and certainly the depression of 1933-34,” Green says. “What [the fairs] did for the city is give it some life, some juice, and helped create incredible tourism and infrastructure and all that kind of stuff.”
Observers expect the federal government, which has provided transportation and security funding for previous U.S. Olympic events, to lessen Chicago’s burden if the Games come to Illinois. State government would be expected to chip in, too.
Lavin, the director of the Illinois Department of Commerce and Economic Opportunity, said he has been approached by Olympic planners about possible state assistance for venues that could be used after the games. He declined to offer details. He said Gov. Rod Blagojevich’s administration still plans to push for a state-level insurance guarantee similar to the Chicago City Council’s (the governor last year suggested a smaller level: $150 million). Lavin adds that a long-delayed state public-works program could dovetail with improvements necessary for an Olympics.
So what’s in it for the rest of Illinois? Olympic visitors typically have tunnel vision for the games and don’t hit tourism destinations, argues Sanderson, the U of C sports finance guru, who doubts travelers will venture beyond the metro area. Also, because the Olympics would be relatively compact, downstate would not share in the games. Ryan, who contends travelers will visit other parts of Illinois, said downstate colleges and universities would be used as training sites in the weeks leading up to the games.
State Sen. David Koehler, a Peoria Democrat, expects something tangible. “If they expect any downstate votes on [a state assistance] package, they need to make some kind of conditions on it that we’re going to receive some of the economic benefit,” he says. “I don’t think that’s too far-fetched.”
A bigger revolt could be brewing in Chicago itself, based on the concerns of Travis and other grass-roots organizers about housing and jobs for minority residents. They are trying to pressure city officials and Olympic planners to provide written guarantees before the Chicago bid is submitted early next year. Ryan, the Chicago Olympic chief, was noncommittal about such an agreement but said he will convince the groups that their communities will be “significant beneficiaries” if the games come.
Planners can mitigate the displacement of residents by cutting locals in on Olympic-related contracts and jobs and by redeveloping neighborhoods such as Washington Park long before the event, says Cheryle Jackson, executive director of the Chicago Urban League. The organization released an economic-impact study last year that offered recommendations to the city and Chicago 2016.
“Putting a stadium in an underserved community is a first step, but it can’t end there,” says Jackson, who, like Lavin, sits on the Chicago 2016 steering panel. “[For] tourists and visitors that come into the stadium, if there’s nothing in the community, if the community is not built up, there’s no reason for them to stay. They’re in and they’re out.”
Not everyone is dissatisfied. Cecilia Butler, president of the Washington Park Advisory Council and a longtime resident of the neighborhood, says she’s excited by the prospect of the Olympics and expressed optimism that organizers would do right by residents. A separate coalition she represents has asked city leaders and Chicago Olympic planners to accept 26 points ranging from a request for job development to shared control of the amphitheater that would remain in the park.
“I’m sure those people that should sign off don’t want to increase the anger,” Butler says. “The Olympics is something that everybody is supposed to be happy about. I’m sure they’re going to do the right thing, because if we really want the Olympics in the city of Chicago, that’s what we have to do.”
Mike Ramsey is a Chicago writer who has covered Illinois government and politics.
Illinois Issues, November 2008
