The first independent study of the possible economic impact of Boston’s hosting of the 2024 Summer Olympic Games concludes that there “could be a net economic positive,” but adds there is much left to be determined.
“Success will depend upon smart budgeting and effective planning to avoid some of the huge cost overruns that have bedeviled some Olympic host cities in the past,” said Paul S. Grogan, president and CEO of the Boston Foundation which commissioned “Assessing the Olympics: Preliminary Economic Analysis of a Boston 2024 Games.” Released Wednesday, the report was prepared by the UMass Donahue Institute.
“The findings, not surprisingly, neither suggest that holding the 2024 Olympic Games is an economic slam dunk for the city, nor do they reflect the economic disaster scenarios painted by some,” Grogan wrote in the report’s preface while noting that it is meant to “set the stage for new and more robust conversations about the costs and benefits of Boston’s bid.”
The study puts the total cost of hosting the games in Boston at approximately $9.1 billion, a number that includes neither the projected cost of public transportation projects nor money planned for new sports venues being built separate from the Olympics. However, the report notes, “There is a long history of initial budget estimates for Olympics being far lower than the actual cost of the Games. Thus, it seems unlikely that the actual final cost of the Boston 2024 Summer Olympics would actually be the proposed $9.1 billion.”
As to questions at large about transportation funding, the study says, “While Boston 2024 often states they will not need any public money for producing the 2024 Summer Olympics, the reality is there are several transportation projects that are not fully funded yet, despite the state’s transportation bond bill,” including a South Station expansion, “which still has significant question marks in terms of finding and timeline.” Boston 2024 CEO Rich Davey has said that the expansion of the terminal is on the backers’ “wish list,” but is not necessary for the games to be held.
The study also notes that “the commonwealth may also need to borrow additional money to make sure projects are finished in advance of the 2024 Games,” highlighting Kosciuszko Circle and roadway improvements near UMass Boston and the Bayside Expo Center for the planned Athlete’s Village on Columbia Point as transportation projects “deemed critical to the Olympics … but where funding and completion plans still need to be determined.” Based on independent analysis and media reports, including work by the Dorchester Reporter, which is cited in the study, “this project would likely require planning, design, and funding that have not yet been developed,” the report states.”
“A very tangible concern” of the Games would be displacing the New Boston Food Market, which is located at Widett Circle. “Boston 2024 would need to make an offer to purchase the land, but the 18 shareholders would need to unanimously agree,” the study said. As such, the study continues, many of the food production businesses use large refrigeration and freezing equipment, making it difficult to relocate, and could shutter many of the small operations who could choose to shut down after being paid for their land. Previous assessments have valued the parcel at $21 million, while New Boston employs more than 700 workers and has estimated revenues of $1 billion.
The report also delves into the insurance policies purchased by Boston 2024 to protect the city from cost overruns and financial risks – a move, the study notes, not extensively employed by previous host cities. Boston would be required to pay the US Olympic Committee $25 million should it withdraw itself from the Games – an expense that would be covered by an insurance policy purchased by Boston 2024, the study said. Should Boston withdraw in 2017, after being selected as the host city, the city would be required to pay $100 million to the International Olympic Committee. “Boston 2024 plans to purchase insurance to protect the city from this potential cost as well,” the study said. Such insurance, the report says, would be paid for with funds, raised through sponsorships, ticket sales, TV deals, and other Boston 2024-specific revenue sources.
The study relied on information provided by Boston 2024 and independent research into the operations of previous Games and proposals to draw its preliminary conclusions. It notes that the current proposal is still a “proof of concept” and not yet definite, requiring future study and analysis as the bid develops and changes over the years. Still, the document operates under the assumption that Boston will win the bid for the 2024 Games and notes the need for a future study of neighborhood impacts and long-term legacy effects.
For expenses outside of Boston 2024’s budget, which would include all permanent and legacy projects for the region, the study states that Boston 2024’s partnerships with the public sector will only be needed in securing land. Any public costs associated with such matters would be repaid by private sources once development began.
Along with Boston 2024’s estimate that the Olympic Village will cost $2.45 billion, and the Olympic Stadium $351 million, the study suggests that the Olympics will directly spur $2.1 billion in net new construction in the state, with construction activity occurring primarily between 2018 and 2023, creating 24,000 additional construction jobs during that time. From that spending, another $1.9 billion will be spent in the state’s economy, creating a total of $4 billion in total economic contribution from construction spending because of the Olympics.
Operational spending, which will have a one-time impact on the local economy, is expected to top $5 billion the year the Games are held. The study estimates 150,000 visitors each day during the course of the Games’ 16 days: a total of 2.38 million, with an additional sum of 210,000 media members, and 250,800 athletes and official visitors. All told, the visitors are expected to spend $293 million during the Games.
The study is also careful to note that the its estimated sums of economic impact cannot be combined because the benefits would occur over different time periods and be subject to different pressures. Finally, there is the report’s emphasis on legacy economic development: “An Olympic bid provides local government with a ‘due date’ for trying to achieve certain planning and infrastructure improvements,” it states. “The future vision involved in planning alone opens up the potential to create long-lasting positive changes for communities in Greater Boston,” including, it adds, a long-term tourism boost.