The study, conducted for the Boston Foundation by the Hadley-based University of Massachusetts Donahue Institute, also warned that there are legitimate concerns about cost overruns and transportation investments.
BOSTON - Hosting the 2024 Summer Olympics in Boston would result in an influx of several billion dollars into the Massachusetts economy, according to the first independent economic study of the proposal.
But the study, conducted for the Boston Foundation by the Hadley-based University of Massachusetts Donahue Institute, also warned that there are legitimate concerns about cost overruns and required transportation investments.
"It is clear that Olympic construction and spending activity will likely have a significant economic impact on the state, especially as it draws on otherwise untapped sources of funding from the private sector or external sources," the authors wrote. "That said, substantive questions still remain regarding the bid and the fiscal realities of the budget forecast."
Dan Hodge, director of economic and public policy research at the UMass Donahue Institute and one of the study's authors, said the goal was to look at the economic pros and cons and determine what new spending would occur as a result of the Olympics and what the risks are.
"There is the potential for positive economic impact, and that largely stems from the nature of the Olympics, which requires different forms of up-front investments as well as significant operations and visitation," Hodge said.
But, he said there are questions about cost overruns and whether taxpayers will be on the hook. "Any time you're doing a budget that's in the billions of dollars, there's potential for either expenditures to rise...or revenues to come up short," Hodge said.
The University of Massachusetts could benefit from the Olympics. The bid proposal calls for building the athlete's village at UMass Boston, then turning it into student dormitories.
Assuming the Olympics goes off as planned by Boston 2024, the private organization formed to bring the Olympics to Boston, they would cost an estimated $9.1 billion. This includes costs related to constructing venues and to staffing and holding the games, but does not include investments in transportation projects. The cost would be paid for by a mix of Olympic revenues (like ticket sales and sponsorships), federal money for security and private funding.
The report estimates that between 2018 and 2023, there would be $3.8 billion in total construction activity for the Olympics, of which $2.1 billion would be net new activity benefiting Massachusetts companies. During that time, new Olympics-related construction would generate around 4,100 jobs a year.
Operational costs related to the Olympics - things like security, information technology, venue management and ceremonies - would create $5.3 billion in spending, of which $2.9 billion would be a new benefit for Massachusetts firms. During 2024, operations spending would generate 50,000 new jobs in Massachusetts.
Since Boston is already a popular tourist destination, and Olympic visitors would supplant other tourists, the Olympics would not create a huge boost in tourism. The report says the games would add around $300 million in tourist spending and 4,300 jobs in 2024. It estimates that there would be 712,000 net new "visitor-days" in the region for the Olympics. One visitor who spends 10 days in Boston counts as 10 "visitor-days."
However, the report contains numerous cautions. It notes that the venues are still uncertain, there are unexamined issues about the long-term legacy to Massachusetts, and there is little agreement about the long-range benefits to Boston tourism. There are concerns about the displacement of businesses to accommodate Olympic venues.
All recent Olympics have cost more than originally anticipated, which raises questions about whether city or state taxpayers or private donors will be responsible for covering those costs.
At the same time, the last three Olympic Games in the United States all turned a profit, according to the report.
The issue of potential taxpayer costs has been raised by leaders on Beacon Hill. Gov. Charlie Baker, House Speaker Robert DeLeo, and Senate President Stan Rosenberg are talking about hiring a consultant to study the bid and ensure that taxpayer interests are protected.
Boston 2024 says it will buy insurance to protect the city of Boston from cost overruns.
There is also a worry that needed transportation projects - such as an expansion of South Station - are not necessarily in line to be funded by the state. The study raises concerns that an Olympic bid could pressure the state to prioritize Boston area transit projects at the expense of the rest of the state or to use more public funding to accelerate these projects.
However, an Olympic bid could also force the state to do important regional planning. The study points out that planning stemming from a failed Olympic bid by New York catalyzed the development of new neighborhoods, parks, stadiums, middle-class housing and a subway extension.
Chris Dempsey, co-chairman of No Boston Olympics, an advocacy group opposing the Olympics, said the study raised the same concerns that the organization has been raising, particularly regarding the risk to taxpayers.
"It's very clear that if things don't go according to the boosters' claims, the public is on the hook," Dempsey said. "The insurance product they've offered is untested and likely inadequate to cover the risk that the plan actually exposes taxpayers to."
Dempsey said the study points out that Olympics have a history of going over budget. And the economic benefits are primarily to certain segments of the economy. "It's great if you're in the construction industry, but not good for you if you're in education or health care, the type of industry that relies on people, not on purchasing steel and concrete," Dempsey said.
Doug Rubin, a spokesman for Boston 2024,countered that the report also notes that the last three U.S. Olympics - in Atlanta, Salt Lake City and Los Angeles - have made a profit.
"There's been a model the U.S. has used to operate these games in a cash flow positive way. We plan on following that model," Rubin said.
Rubin said new reforms put in place by the International Olympic Committee make it easier for Boston to hold the games in a financially sustainable way by emphasizing the use of existing and temporary facilities and making the games walkable. He said the insurance will address concerns about public funding.
Rubin said the job and spending numbers in the report make clear that "there's a real economic potential there."
One open question is the impact of the Olympics outside Greater Boston - including in Western Massachusetts.
Hodge said the economic impacts will be greatest around Boston. "The economic impacts related to construction and operations and visitation are going to primarily be near where the venues are," Hodge said.
There could be some effect in Western Massachusetts - if some basketball or volleyball games are held there, or if construction contractors or suppliers get jobs working around Boston. But Hodge said there is also a concern that the state will fund Boston area transit projects at the expense of projects elsewhere in the state. Though state leaders might want to ensure the benefits are spread widely, there may not be money to do so.
Rubin said Boston 2024 hopes the Olympics catalyze infrastructure investments statewide. Even if most venues are near Boston, other cities could be used for training by athletes who visit months before the Olympics. Rubin said his group has had preliminary discussions with officials in other regions about their involvement.
But Dempsey pointed out that all the proposed construction would be within Route 128, in eastern Massachusetts. "If you're outside 128, it's much harder to see the economic benefit for you, but it's easy to see how you might be paying for it," Dempsey said.
Olympics Report 2
