In anticipation of our own Olympic Games, Mars’ Hill asked a professor at the University of Utah about the impact felt in his school and community as a result of the 2002 Olympics in Salt Lake City, Utah.

To understand the impact on a community from hosting Olympic events, it is necessary to have some sense of the revenue sources for putting on events of this magnitude. The flow of revenue from sale of rights and sponsorships drives the operations of the local organizing committee, as well as fueling the activities of the International Olympic Committee (IOC). Revenue is split among the local organizing committee, the national Olympic committee, and the IOC. All of this is based on the IOC’s ownership of the name “Olympic,” which results in very aggressive brand protection. To appreciate both social and fiscal impacts requires an understanding of who is fueling the operation.

The Salt Lake Organizing Committee (SLOC) reported revenue of just over $2 billion (this has little connection to what the governmental agencies spent). The bulk of that revenue came from TV and sponsorships. The TV revenue is reasonably easy to understand – TV rights are the platform from which the broadcasters then make their money selling advertising space. The sponsorships are a little harder to comprehend. What makes it worth $60 million for a company to be an Olympic sponsor? The sponsors and vendors have a major stake in the presentation of the events and particularly in the funding of surrounding cultural opportunities such as art exhibits and performances. I’ve heard that a company will pay that kind of money to prevent a competitor from being a sponsor – go figure.

The revenue stream for governmental units in the U.S. system is based primarily on tax revenue, although some of the private committee revenue will flow through to governmental units for specific services. For example, a publicly owned university may provide facilities for athlete housing or sports venues at a rental fee to the organizing committee. In the cases of Atlanta in 1996 as well as Salt Lake, these rental payments of several million dollars allowed for construction and renovation of student housing that was quite beneficial (albeit disruptive in the short term).

Fiscal impacts can be viewed in several different ways. It is difficult to place specific price tags on such expenses as assignment of military personnel and equipment to an event because some of those expenditures would exist in the absence of the event, although some additional transportation and overtime may be direct costs of the event. Similarly, infrastructure improvements (such as Salt Lake’s new light rail system) should occur anyway but may be hastened by the presence of a major event.

The picture in the US is complicated by the structure of our three overlapping governmental levels: federal, state, and municipality. The federal government invested somewhere around $1 billion in the light rail system (which could not run during the Opening and Closing Ceremonies for security reasons) and also bore the brunt of the security costs, which some estimates place at the level of over $300 million. The State of Utah claims that the net effect for the state was a gain of $76 million after a total expenditure of $2.7 billion, but the published abstract has no detail in it. The Salt Lake City officials produced a compact and realistic assessment of its costs and revenues, showing a net loss to the city of $773,619.

With regard to the University of Utah, we realized a net gain financially but at some cost in terms of disruption to our students, staff and faculty. Many students benefited from internship and employment possibilities during the Games; many more experienced a net inconvenience, but then most students derived pleasure simply from having a sporting and cultural event of such magnitude in their community. The educational impacts similarly were mixed. Post-mortem reviews indicated that undergraduate classes were difficult to teach with a 3-week break in the middle of the semester, while graduate classes seemed not to be affected as much.

All in all? I am reminded of the answer given by one Georgia official when I asked about the net effect of the 1996 Games in Atlanta: “It was a helluva party.” I think it was a net benefit to Salt Lake City and the University, but I’m not sure I would do it again. Once-in-a-lifetime is more than just a cliché.