Calgary’s mayor, Naheed Nenshi, says hosting another Olympics only makes sense if our city’s economy benefits. But slogging through the numbers is no easy task, especially when economists dispute the projections.
“You know what the rule is, if you have three economists look at something you’ll have seven opinions on the matter,” said Nenshi. “I think it’s important that we have all these different perspectives on the situation as we look around.”
In its report, the Calgary Bid Exploration Committee estimated a 2026 Olympics would cost $4.6 billion.
Mayor Naheed Nenshi chimes in with his thoughts about the bid to host the Olympic Games. Photo by Jeremy Klaszus.
American projections for those same Games have been significantly lower. Denver estimated hosting the 2026 Games would cost US $2 billion. Salt Lake City’s projection was even lower at US $1.29 billion. (The U.S. contenders are now off the table for 2026; the US Olympic committee indicated that it won’t be pursuing those Games.)
But why were these projections so much cheaper than Calgary’s? The Denver Post cited several possible reasons. One reason, Colorado has all but three of the 16 required venues. For the remainder, they’re looking at temporary structures constructed from recycled material.
Salt Lake City, meanwhile, hosted the Winter Games in 2002. That’s 14 years after Calgary, which means its winter sport facilities aren’t as dated.
Back in Calgary, the bid committee has relied on varying reports for its projections. An economic impact analysis from Deloitte provided an optimistic view of hosting, suggesting a 2026 Calgary Olympic Games would add $2.7 billion to Canada’s GDP, including $853 million to the Calgary area.
The Conference Board of Canada’s analysis was even rosier, stating Canada would stand to gain $3.5 billion in GDP, including $1.9 billion in Calgary.
The discrepancy was linked to the Conference Board taking into account tourism impacts while Deloitte did not.
But subsequent analyses commissioned by the city, originally kept secret from city council, have cast these projections into doubt.
Rosy but flawed projections
The Calgary Journal contacted the authors of those critical analyses: Trevor Tombe at the University of Calgary and Brad Humphreys at the University of West Virginia.
Both indicated they were bound by non-disclosure clauses, but their voices are heard loud and clear in their findings.
“To claim that GDP and employment will increase … is to go far beyond what the evidence suggests.” – Trevor Tombe
In his review, Tombe stated neither study captures the true economic impacts of hosting the Games. He recommended against deciding whether to host the Games based on such estimates, and recommended a full cost-benefit analysis.
“In the end, there will be economic costs of hosting the Games,” he writes. “If the benefits in terms of civic pride, community engagement, promotion of sports, and so on, is worth the cost, then hosting the Games makes sense.
“But, to claim that GDP and employment will increase at all, but especially by the magnitudes suggested in the 3rd-party reports is to go far beyond what the evidence suggests.”
Humphreys echoed Tombe’s concerns in his review.
“I find substantial limitations to both these reports in terms of the information they provide, and recommend strongly that these reports be given relatively little weight when reaching a conclusion about the relative merits of hosting the 2026 Games,” Humphreys wrote.
He also criticized the report authors for “cherry-picking” academic literature on the Olympics to present a “skewed picture.”
“The scholarly evidence from peer reviewed journals does not support the existence of large economic benefits like those forecasted by the Conference Board and Deloitte reports,” Humphreys wrote.
Ward 7 Coun. Druh Farrell says the city’s bid team needs to reckon with Humphrey’s and Tombe’s work.
“If they disagree with the results in those reports, explain why,” said Farrell.
“We discovered those two critical reports by accident. It’s boosterism in its worst form. If we move forward with a bid — and it looks very much like we’re being led in that direction — we need to be sure that we are mitigating risk. And I have no confidence that we’re doing that.”
Looking at the ledger
There’s something to be learned from examining the ledgers of past Olympics.
Many host cities have made money, including Calgary. A scan of official Olympic reports shows some of the host cities who stayed out of the red.
- 1984 Los Angeles Summer games, $222-million surplus
- 1988 Calgary Winter Games, $32-million surplus
- 1988 Seoul Summer Games, $479-million surplus
- 1992 Barcelona Summer Games, $5-million surplus
- 2002 Salt Lake City Winter Games, $100-million surplus
(All figures in US dollars)
Other host cities have struggled – and every city had had to contend with cost overruns.
According to a 2016 University of Oxford study , the 2014 Winter Games in Sochi are the most expensive and went over-budget by 289 per cent. Vancouver had the smallest cost overrun of recent Winter Games, at 13 per cent.
Cost Overrun Graph. Infographic by Huyana Cyprien and Stephanie Babych.
Is Olympics Lite the Answer?
The International Olympic Committee is attempting to make the Olympics less burdensome for cities.
Last month, the IOC released a suite of 118 reforms to entice host cities to bid. Dubbed “The New Norm,” the document reiterates that future Games will reuse venues, jive with cities’ long-term urban development goals and and be less costly.
READ MORE: The Economics of Hosting the Olympic Games
The IOC has given a thumbs-up to the Saddledome, Calgary Olympic Plaza and possibly spreading the Olympics out over several cities. There’s also talk of using Edmonton’s new arena, Rogers Place, as well as Whistler’s ski facilities.
Security also remains a question mark. The bid committee estimated the security costs of Calgary 2026 at $610 million, but also acknowledged that the threat level could change between now and then.
Calgary city councillor George Chahal says that security is the area where most of the Olympic budget will be placed. Photo by Jeremy Klaszus.
“I think that’s a major issue that we need to look at,” said Coun. George Chahal. “We’re the best country in the world and we’re a safe and secure nation, but we must make sure that we have the appropriate security measures in place.”
Chahal is also aware of previous budget issues and sees the 2026 Games as a chance for a fresh start for the Olympics.
Next steps
So far Calgary has spent $5 million on bid exploration. If Calgary decides to formally submit a bid it will cost an estimated $30 million, which would be split between all three levels of government (municipal, provincial and federal).
To date, neither the Notley nor Trudeau governments have indicated they are in support.
To enter the next stage of the IOC’s process, Calgary needs to declare its intention to bid by March 31.
The IOC is expected to announce the 2026 host city in September, 2019.
This story is part of Hindsight 2026, a joint project between the Sprawl and the Calgary Journal (which is produced by journalism students at Mount Royal University). We’re digging into past Olympics to evaluate whether a 2026 Winter Games in Calgary would help or hinder our city.
sdechant@cjournal.ca
Editor: Izaiah Louis Reyes | ireyes@cjournal.ca