Business & Economy

Would a 2024 Olympics boost the Los Angeles economy?

Despite studies backed by Olympics boosters showing Otherwise, one prominent sports economist says the 2012 Olympics actually had a negative effect on tourism in the United Kingdom because people who would have normally visited stayed away.
Despite studies backed by Olympics boosters showing Otherwise, one prominent sports economist says the 2012 Olympics actually had a negative effect on tourism in the United Kingdom because people who would have normally visited stayed away.
EMMANUEL DUNAND/AFP/Getty Images

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A 2024 Olympics in Los Angeles would cost an estimated $4.1 billion, Mayor Eric Garcetti said Monday. 

“Los Angeles is the ideal Olympic city,” Garcetti told The New York Times. “We have endless diversity, attractions and scenic beauty as well as world-class venues that are ready to host the Olympics and make it profitable as it was in 1984 and 1932.”

Putting aside the question of whether $4.1 billion is a realistic estimate — the city would have to cover cost overruns — what kind of impact would the games have on the Southern California economy?

Victor Matheson, a professor of Economics at College of the Holy Cross, has studied the impact of past Olympics and World Cups, and found varying results.

"Generally, we find anywhere to zero to a very large tourist impact," said Matheson. 

Unlike NFL stadiums, Matheson says the Olympics do bring new visitors to town, but they also displace other activities that would have also generated economic impact. Economists call this a "crowding-out effect."

It's not as if Southern California is hurting for tourists, points out Matheson. Downtown Los Angeles hotels — which currently has a shortage of rooms — are already more than two-thirds full.

South Africa received only about 200,000 more visitors during the 2010 FIFA World Cup than would have normally visited while Brazil got upwards of a million new visitors in 2014, according to Matheson.

Despite studies backed by Olympics boosters showing otherwise, Matheson says the 2012 Olympics actually had a negative effect on tourism in the United Kingdom because visitors who would have normally visited stayed away.

"The actual number of visitors to the U.K. actually fell during the month of the Olympics," said Matheson. "For example, the number of people going to London shows was way down. They actually suspended a number of shows during the Olympics."

The people who attend the Olympics don't much benefit the wider economy because they don't spent much money at local businesses, said Michael Leeds, a professor of economics at Temple University.

"They come, they go to the games, they go to the venues, they stay in the Olympics area, and that is pretty much it," said Leeds.

For many Olympic cities, what they don't get in an economic activity they hope to recoup in marketing value, by putting the city on the map for two weeks for a worldwide television audience, but Los Angeles probably has little to gain there, says Leeds.

"I don't think there are too many people in the world who haven't heard of Los Angeles," Leeds said.