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$10 Billion to Host the Winter Olympic Games: Is it worth it?

Key Economic Concepts:

• Cost/Benefit Analysis

Description:

Students learn about costs and revenues related to the '98 Winter Games in Nagano. Discussion questions about estimated benefits and costs to the host city are presented. Monetary and intangible costs and benefits are also discussed. Students conclude by preparing for a city council meeting in which they state how hosting the Olympics could be beneficial even if total revenues do not cover the monetary costs.

Introduction:

To learn about costs and revenues related to the '98 Winter Games in Nagano, see Television, Sponsorship Revenue Could Top $800 Million ^[1] .

Discussion Questions

According to these articles, how much was spent in Nagano on improvements, buildings, and Olympics operating expenses?

How much revenue from sales and licensing fees is expected?

What other benefits will the citizens of Japan and, particularly, Nagano enjoy after the games are over?

What is the most important single event that has ever occurred in your town? Was it worth staging this event? Why or why not?

What are the estimated costs associated with holding this event? List kinds of costs such as: additional city buses required, security, food, pay for event workers, crowding, etc.

What are the estimated revenues this event would create? Include parking, hotel costs, ticket sales, retail sales, etc.

What benefits other than revenues will this event create?

If this event were made larger, what new costs and benefits would be added?

Resources:

• Television, Sponsorship Revenue Could Top $800 Million:  In this site one can find out the costs and revenues related to the '98 Winter Games in Nagano.
  www.cbssports.com/u/olympics/nagano98/news/feb98/revenue2398.htm ^[1]

Process:

Use the following tables to organize information you have on costs and benefits for this event:

Event Costs

Event Benefits

For each of the costs and benefits, mark (M) if the cost is monetary or (I) if the cost is intangible, with no dollar payments involved. Then mark benefits as direct (D) or indirect (I) and short term (S) or Long term (L). You should have enough information to determine whether or not it's worth it to host the event even if financial costs exceed the financial revenues.

Intangibles are difficult to quantify, but try to estimate the dollar value of the benefit to you personally. Write the amount in the "Amount of Personal Benefit" column.

Using the tables above, add any additional costs and benefits associated with hosting the Olympics. Use the articles you read about Nagano to help you. Label each cost as pertaining to the local event (L), the Olympics (O) or both (B).

Imagine you represent one of the five areas of concern below:

• hotel, restaurant and other retail businesses

• the benefits after the Games of the new facilities

• job-related benefits

• publicity

• other benefits

Prepare a presentation for your next city council meeting in which you state how hosting the Olympics could be beneficial even if total revenues do not cover the monetary costs.

*Adapted from: Saunders, Philip and Kraft, Michael, "It Worked in Atlanta, but Will it Play in Peoria?" Senior Economist, Volume 11, No. 4, pp 10-12. Copyright (c), Council for Economic Education: New

Links Used:

1. ^{^ ^} "Television, Sponsorship Revenue Could Top $800 Million" - (www.cbssports.com) In this site one can find out the costs and revenues related to the '98 Winter Games in Nagano.

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