Not Surprisingly, Olympics Mostly A Bust For London Retailers

Once again, we learn that hosting the Olympics doesn't carry nearly the economic benefit the IOC wants host cities to believe it does.

Despite promises that the Summer Olympics would bring them a crush of customers, most London retailers are finding reality to be quite the opposite

LONDON — After a week of unusually quiet streets, idling cabs and easily navigated shops, fears of the Gridlock Games have transformed into complaints about the Ghost Town Olympics

Experts say tens of thousands of foreign tourists without tickets to the Olympic Games appear to have decided to skip London, bowing to official warnings of stifling overcrowding — a forecast that ignored the lessons of other Olympic host cities that have emptied out during the Games over the past 20 years. In even larger numbers, these experts say, Britons themselves, including tens of thousands who normally commute to work in London, have heeded official appeals and stayed home.

With the Games nearing the end of their first week, and 10 more days to go, there has been no sign of the normal tourist-inflated crush at this time of the year — much less the no-room-to-move congestion officials warned would come with huge throngs of Olympic visitors competing for space on London’s notoriously overcrowded roads and transit systems, and in its shops, theaters, museums, galleries and restaurants. Three years ago, the Olympics minister at the time, Tessa Jowell, promised that the Olympics would “provide economic gold at a time of economic need.”

(…)

Jeremy Hunt, the culture and sport minister in the Cameron cabinet, said Thursday that people who saw the Olympics as an economic body blow were premature and taking too narrow a view. The government now acknowledges that there is unlikely to be any short-term boost from the Games. It has reassured those nervous about its outlay on the Games — put at about $15 billion by government officials and as high as $20 billion by some experts, with road, railway and other improvements factored in — that the expense will be recouped in the long term by a $20 billion boost in Britain’s trade.

“Having the Olympics in London is the best possible gift you could ask for because it has given London a profile on the global stage,” Mr. Hunt said, to the surprise of those who might have thought that London was already well established as one of the world’s major cities.

Mayor Boris Johnson, one of the Games’ biggest boosters, has made a midcourse correction of his own. He has admitted that the instant Olympic bounce he once forecast for London’s economy has evaporated, replaced by a “patchy” performance across many important sectors. But holding out for a turnaround, he has said things could improve as people realize that London without the crowds has become an unusually inviting place to go.

No matter how the politicians spin it, though, the signs of an Olympic bust are all over the place:

Normally crowded sidewalks in areas like Knightsbridge, Oxford Street, Bond Street, Piccadilly and Soho have looked much as they do when the city empties for summer weekends. Tables at sidewalk cafes have gone begging, and tickets to the West End’s normally sold-out hit shows are readily available, often at 20 percent discounts.

Cabdrivers complain that business is down 30 percent from normal at this time of year. “Where are the million extra visitors that we were promised?” asked Steve McNamara, a spokesman for the Licensed Taxi Drivers’ Association. He coupled this with a palpable absence of the national pride Mr. Cameron has urged on a nation hosting its first Olympics since 1948. “I’m looking forward to the closing ceremony,” on Aug. 12, Mr. McNamara said.

Hundreds of West End hotels that had advertised rooms at premium prices, in some cases five times the normal rate, have dropped prices back to the usual level or even offered heavy discounts. One of the few places that is doing a roaring trade is the campsite at the Lea Valley Waterworks Center, a golf course and nature reserve within sight of the Olympic Park. Angie Oliver, general manager of the center, said Friday that she expected a full house of 1,600 campers this weekend. “People just don’t want to pay extortionate prices for hotels,” she said.

Stores in the upscale West End shopping district have said sales are down by 10 percent and more, and restaurants used to turning people away are desperate for trade. Ricky McMenemy, managing director of the Rules restaurant in Covent Garden, popular with Americans for a menu specializing in traditional British foods, said that after a “disaster” last Friday, when diners stayed away to watch the opening ceremony, the restaurant was “seeing a 50 percent downturn” in diners this week.

Perhaps business will pick up the last week of the games as people realize that the predictions of crushing crowds didn’t come true. However it’s unlikely that it come in enough time for foreign tourists to change their plans, and Londoners may as well just be inclined to stay away until the whole thing is over with.

None of this should be all that surprising. As the article notes, going back at least 20 years at least, you can find that hosting the Olympics rarely benefited the economy of the host nation or the host city, and if you want to find an Olympics that turned into a total fiscal disaster then Montreal in 1976 fits the bill nicely. Indeed, with rare exceptions like Los Angeles 1984 an Atlanta 1996, it’s become a rarity for them to break even on all the expenses incurred over the course of four or more years to build venues and upgrade infrastructure. Nobody should be surprised that it’s happening again in London, and that it’s likely to happen again in Rio De Janeiro in 2016. Much like the stadiums that sports teams here in the United States continually sucker taxpayers into paying for, there’s just no evidence that hosting this massive two-week long spectacle brings any tangible benefits to the host.

That’s why I’ve always thought that Chicago actually dodged a bullet by losing out on the 2016 Olympics. The expenses they would’ve had to incur to be ready for the Olympics clearly never would’ve been recovered, and it’s quite likely that Chicagoans would do the same thing Londoners have and get the heck out of town for two weeks rather than deal with the crush of international media, athletes, and tourists actually attending the games. Let Rio deal with the problems and Chicago will have a much more pleasant August 2016.

Photo via The Mirror

FILED UNDER: Economics and Business, Sports,
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020.

Comments

  1. Tsar Nicholas says:

    Massive infrastructure costs + a strong local currency + a bad global economy + a disastrous European economy + a disastrous local economy = Britain swimming in red ink. Far from surprising.

    Regarding Chicago, can you also fathom the corruption that that would have engendered? Shit, the Feds would have needed to set up multiple layers of redundant U.S. Attorneys’ offices merely to deal with corruption at the city level. Then you’d also have had Cook County and the State of Illinois dipping their hands into the cookie jars. It would not have been pretty. I almost wish they would have gotten the bid, however, merely for the Machiavellian theatre component.

  2. Al says:

    At least taxpayer subsidized football stadiums are still a good idea, right?

  3. Al,

    No. Read what I said. Taxpayers in the US who pay for sports stadiums are suckers. Let the owners pay for them

  4. michael reynolds says:

    No one ever seems to notice that virtually all promises associated with sports end up being nonsense.

    Sports stadiums do not justify their expense in big American cities, sports programs are often money-losers at universities, and the Olympics end up being a business-killer. While we’re at it sports does not teach positive values, it teaches entitlement, bullying and mindless boosterism.

    I’ve never had any interest in sport and I’ve never had any reason to regret that lifelong lack of interest. It’s an enormous waste of resources whose only purpose is to give La-Z-Boy athletes an excuse to drink beer and shout at the television. Surely there’s a cheaper way.

  5. Part of the problem is that the IOC has been going crazy cracking down on any mention of the olympics except by corporate sponsors. One particularly egregious example was a ban on anyone in the olympic are from selling french fries because that would upset McDonald’s. When local businesses can’t doing anything to tie into the games, is it really suprising they don’t benefit from them?

  6. Al says:

    @Doug Mataconis:

    They’re not? I’m shocked. Shocked, I say.

    (In case you’re missing the sarcasm, was it the stadium for the Nationals that, besides not creating much in the way of jobs, also had a temporary tax attached to it that the city was trying to make permanent?)

  7. JKB says:

    @Doug Mataconis:

    Suckerd? More like robbed at the point of the legislature’s gun. I was in Seattle when they wanted to replace the Kingdome. The voters voted it down. The state legislature said, “Oh we only wanted your opinion, we’re still doing it.” Now the tax payer has money forcibly taken from him to pay for the politicians’ boondoggle. But sadly few are voted out. Perhaps that will change.

  8. @Al:

    You are correct about Nationals Park. Additionally, the city gave the owners (the Lerner family, multi-billionaires) generous tax breaks and credits to bring the team to DC.

  9. Brett says:

    That reminds me of how it was apparently a big deal that NBC was – shock! – going to break even on their television coverage of the Olympics, as opposed to losing $200 million. I just remember thinking, “If the Olympics is such a bust in terms of money, why do they even bother hosting the coverage in the first place? Prestige?”

    It could be prestige, but it’s not like anyone really cares about any particular Olympics round after they’re over.

  10. @michael reynolds:

    I’m a baseball and football fan myself, but not a fanatic about it. Nonetheless you’re mostly right. The Nationals got DC to give them a new baseball park in a mostly rundown part of the city with promises of economic development that would follow the stadium. So far, it hasn’t happened not even the restaurants and other such businesses one might expect to see around a sports venue.

    Sometimes it works out pretty well. Camden Yards in Baltimore is a notable success in that regal as is the new stadium the Indians built in Cleveland. But, not enough of a success to justify spending taxpayer dollars on what is a really a stadium built for teams owned by billionaires who employ millionaires.

  11. Moosebreath says:

    @Brett:

    ““If the Olympics is such a bust in terms of money, why do they even bother hosting the coverage in the first place? Prestige?””

    Because it gives a large audience for them to plug their other shows, allowing them to have higher ratings (at least initially). Therefore, it gives the networks some benefit later which isn’t counted in the figures for the games themselves.

  12. wr says:

    @Moosebreath: “Because it gives a large audience for them to plug their other shows, allowing them to have higher ratings (at least initially). Therefore, it gives the networks some benefit later which isn’t counted in the figures for the games themselves.

    Of course, this would have worked better if NBC hadn’t hired a bunch of developmentally disabled four year olds to do the Olympic tie-in promos for their new comedies. They might as have have aired cards reading: Warning! Don’t watch this crap even if someone offers to pay you!

  13. Me Me Me says:

    I’m fascinated by the Venn diagram that is “People who have contempt for the Olympics” and “People who will be voting for Romney in November”.

  14. PogueMahone says:

    It’s a little too early to tell.
    Besides, you cannot merely look at short term London. Events are being held all over Great Britain and also, how many spectators are watching the beautiful pictures of the many landmarks and are thinking about planning a trip there? We won’t ever know of course, but near future tourism numbers should be interesting to monitor.

    Just sayin’… it’s a little too early for ankle biting.

    Cheers

  15. al-Ameda says:

    For a lot of people, just getting there, getting lodging and getting tickets to various venues consumes a lot of their money up front, and then to hit the town (and one of the most expensive towns in the world) is too much. Still, 2 weeks to go, right? I hope London does well.

  16. anjin-san says:

    The Olympics are a taxpayer subsidized marketing opportunity for large corporations. Ask Mitt Romney – he certainly was not shy about raking in cash from the US treasury when he was involved in the USOC.

  17. LC says:

    Sigh. Of course, for Conservatives, if it doesn’t make a profit, it isn’t worth doing (which is why the LHC is in Switerland rather than Texas and Russian rockets are servicing the Space Station)..

    I don’t approve of cities and states giving tax-payer money to multi-millionaires so they can make a profit on their expensive hobbies – while displaying zero gratitude or loyalty to the the cities they rob.

    But the Olympics are a unique world-wide event. Thousands of ordinary Brits practiced for months or more, without pay, to put on the opening show. (That so many volunteers managed to keep the details secret is as amazing as the performance.) Most of the athletes probably not only don’t make any money but lose it (when one adds in training time, travel costs, lost wages, etc.).

    Greta Cristina has an interesting post on her blog about the many individual worlds we live in that matter to a subset of citizens (rowing, archery, comic books, quilting, etc.) but are pretty much invisible to the rest of the country. In the Olympics, we get a view at these individual sports worlds with their own enthusiasts and their own stars across the entire planet.

    I’m sure there are British curmudgeons who will complain endlessly about the waste, but right now I’m listening to a call-in program on the BBC, and there is a good deal of enthusiasm and excitement. The U.S. certainly enjoys counting up its medals.

  18. EMRVentures says:

    “Hundreds of West End hotels that had advertised rooms at premium prices, in some cases five times the normal rate, have dropped prices back to the usual level or even offered heavy discounts.”

    Advertising prices five times the normal rate? So, price gouging kept people away and now we cry a river. My heart bleeds.

  19. LC: Boeing, SpaceX, and Sierra Nevada Corporation were just selected to develop crew transport capability.

  20. grumpy realist says:

    Speaking as someone from Chicago, I’m glad we didn’t get it, and I think that 99% of the inhabitants here were as well. The feeling was: “we got enough on our plate already, what with the collapsing real estate market and the pension plan mess, why do you want to add to our responsibilities?”

    Oh, and Tsar? I honestly doubt that at this point Chicago is really all that more corrupt than any other similarly-sized city in the US. We’ve at least been trying to clean up our sleaze.

  21. matt says:

    @grumpy realist: Yeah I was relieved when CHicago wasn’t selected. There’s too much stuff going on already and any attempt at the Olympics would make life almost impossible for residents..