United States: Analysis Of The Boston 2024 Proposed Summer Olympic Plans - Executive Summary

Article by Coleman Bazelon, Pallavi Seth, Steven Herscovici, Mark Berkman, Allen R. Sanderson, Brad Humphreys, Joseph J. Floyd and Michael P. Abasciano

This Report was prepared for the Commonwealth of Massachusetts Office of the Governor, President of the Senate, and Speaker of the House.

I. Introduction

We were asked by the Commonwealth of Massachusetts Office of the Governor, President of the Senate, and Speaker of the House to evaluate Boston's bid to host the 2024 Summer Olympic and Paralympic Games (collectively "Olympic Games"). Specifically, we were asked to evaluate the financial details contained in the Boston 2024 Partnership's ("Boston 2024") June 29, 2015 bid ("Bid 2.0"), as well as the potential risks to the Commonwealth of Massachusetts ("Commonwealth"), including to taxpayers, from hosting the Olympic Games in 2024. In our analysis detailed in this Report, we describe the components of Bid 2.0, test its assumptions to examine potential risks, evaluate who would have borne the responsibility if any adverse risks had been realized, and estimate the potential economic impacts of the Olympic Games on the Commonwealth.

Our assignment was not to provide an opinion or recommendation as to whether or not Boston should host the 2024 Olympic Games, but rather to provide objective analyses for evaluators to consider. We recognize that Boston 2024's ultimate bid to host the 2024 Summer Olympic Games would have evolved and that it would likely have continued to attempt to reduce the risks inherent in hosting an Olympic Games.

In carrying out our assignment, we reviewed documents related to Bid 2.0. Representatives from Boston 2024 were very responsive and met with us to answer any questions we had, including providing us with additional information detailing their financial projections. In addition, Boston 2024 facilitated discussions with its consultants on a range of topics that we analyzed.

We spoke with representatives from the following organizations: No Boston Olympics; Metropolitan Area Planning Council; Massachusetts Smart Growth Alliance; Transportation for Massachusetts; and the Massachusetts Department of Transportation and Massachusetts Bay Transportation Authority ("MBTA"). Our research has been informed by our own prior research as well as academic literature on the potential economic benefits and costs associated with hosting Olympic Games and other mega-sporting events.¹ Finally, our work has benefited from discussions with Professor Edward Glaeser at Harvard University.

On July 27, 2015, Boston withdrew from consideration as the U.S. host city for the 2024 Olympic Games. Nevertheless, we have completed the Report as originally conceptualized. A number of issues we address and projects that are included in our evaluation of Bid 2.0 may be of interest to various parties independent of Bid 2.0. Some of the ideas generated in Bid 2.0—such as those regarding housing, transportations, and additional park land—are concepts that are worthy of future discussion, independent of Bid 2.0. An evaluation of those, or other legacy projects is beyond the scope of this Report.

II. Executive Summary

On January 8, 2015, the United States Olympic Committee ("USOC") announced Boston was selected as the U.S. candidate city to host the 2024 Summer Olympic and Paralympic Games (collectively "Olympic Games") based on the bid that was submitted in December 2014 by Boston 2024. Between January and June 2015, Boston 2024 developed specific details of its plan, and on June 29, 2015, issued what it described as "Bid 2.0." On July 27, 2015, however, Boston 2024 and the USOC jointly agreed to pull Boston's bid from consideration. Nevertheless, we have completed our study.

This Report focuses on Boston 2024's proposal to become a Host City for the Olympic Games, the dynamics of the International Olympic Committee ("IOC") bidding process, and the risks to Local and State government if Boston had hosted the 2024 Olympic Games. It is organized as follows: In Section III, we present an overview of Boston 2024's Bid 2.0, detailing Boston 2024's vision of how Boston would have hosted the 2024 Summer Olympic Games. In Section IV, we review the budget contained in Bid 2.0 and test the sensitivity of the overall budget to potential increases or decreases in the revenues and costs. In Section V, we explain and analyze the risks to the Commonwealth and its taxpayers from hosting the Olympic Games. We describe the parties involved in the bidding process and the financial and other guarantees that a host city is required to sign. Financial guarantees require a host city to ensure that the venues and other necessary infrastructure will be built, in the event that costs exceed projections. We then describe how Boston 2024 expected to mitigate taxpayer risk through a comprehensive insurance plan that it would purchase and require contractors to purchase. In Section VI, we detail and evaluate the infrastructure investments that would have been needed to host the Olympic Games. Lastly, in Section VII, we estimate the economic impacts of hosting the Olympic Games, as described in Bid 2.0. All amounts in the Report are in 2016 U.S. dollars, unless otherwise specified.

Acknowledgements: We acknowledge the valuable contributions of many individuals to this Report and to the underlying analysis. Specifically, we are indebted to members of The Brattle Group, including Lynda Borucki, Kevin Neels, Mark Sarro, Yingzhen Li, Victor Zimmermann, James Wieler, Zidi Chen, Paul Organ, and Barry Rothschild for their contributions. We also acknowledge the valuable contributions of Susan Hoag, Igor Karagodsky of Boston College, and Anson Smuts of Floyd Advisory LLC to this Report.

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