When winning isn't everything.
The United States recently came up short in bids for two high-profile global sporting events: the 2016 Olympics (to Brazil) and the 2022 World Cup (to Qatar). But although it may be little consolation to U.S. sports fans, Rio and Doha could actually be the losers. A new study suggests that trying and failing to host major athletic competitions does as much for a country as actually succeeding -- without all the hassle.
"My underlying question when I started this research was: Why would anyone want to host a mega-event?" says Andrew Rose of the University of California Berkeley's Haas School of Business. "It seems like a huge waste of money." Take, for example, the $500 million "Bird's Nest" stadium built for the Beijing Olympics in 2008 and rarely used since, or the $15 billion spent by Greece on its 2004 Olympics, one factor blamed for the country's current economic distress.
Rose and co-author Mark Spiegel of the Federal Reserve Bank of San Francisco did find that countries that have hosted the Olympics have 30 percent higher levels of trade than countries that haven't. Still, countries that mounted serious bids -- but lost -- enjoy nearly the same economic benefits, without incurring the expense of building stadiums and athlete villages. So why is London, the city of the 2012 games, even bothering? "I have no idea what they're thinking," says Rose.