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Olympic fund diversion

PURE compares the Chicago Olympics to Millennium Park and Renaissance 2010, saying all are “efforts to divert foundation and corporate funds away from any threat to Daley (like those pesky non-profit advocacy groups) and to programs that essentially enshrine him as Mayor-for-Life.”

Olympic cynicism

The League of Women Voters and other Chicagoans who haven’t fallen for the Olympics sales pitch are victims of spreading negativity — indeed, succumbing to fashionable cynicism, according to Mary Schmich. 

She thinks that Chicago 2016 missed the boat in its arguments about jobs and economic benefits and youth programming, and that the 2016 Olympics should have been sold as a big party. 

The League opposes the bid, citing substantial public funding required by this privately-developed plan in a time of declining revenues.  The group objects to plans to build in parks and “the lengthy withdrawal of park facilities from public use.”  And noting that public meetings were called only at the last minute of a years-long planning process, they call the Chicago bid “undemocratic.”

All they’re asking for is a little democracy, some accountability and transparency.  Fiscal responsibility. And parks for people.  How cynical.

New product: political insurance

As more details are reported, the Olympic insurance schemes look less like financial protection for worried taxpayers and more like political cover for worried politicians.

Most of the billion-plus dollars of promised insurance is standard liability coverage, with a portion covering losses in case a catastrophe forces the games to be cancelled.

But the 45 percent of Chicagoans who now oppose the games, and the 84 percent who oppose the blanket financial guarantee passed by the City Council, aren’t worried about hurricanes and plagues.  They’re worried about business as usual: greedy political insiders feeding at the public trough while taxpayers pick up the tab.

The insurance doesn’t cover budget shortfalls in case “aggressive” projections of fundraising and ticket revenues don’t pan out.

Most private donations — $177 million — are supposed to come from naming rights, including $47 million for the small track that’s supposed to be left behind from the Olympic stadium in Washington Park.  That’s lots more than the $3.4 million a year paid for U.S. Cellular Field, as David Greising noted — on top of which, Crain’s now reports, “under Olympics rules, sponsors’ names can’t go up until after the games are over.”

The insurance whizzes at Aon are working on a new type of insurance to cover construction cost overruns. “If fixed-price contracts cannot be negotiated, the city’s Olympic committee says it would consider purchasing expensive cost-overrun insurance,” the Tribune reports, though “what that coverage looks like remains fuzzy.”

It would cover cost increases due to factors beyond the organizers’ control, such as inflation.  It would not cover increases due to changes in construction plans.  “Such change orders are a common cause of cost overruns,” the Trib notes.

Crain’s reports that this cost overrun insurance would cover increases up to 10 percent. It cites industry benchmarks which suggest the final costs could be 20 to 60 percent higher than estimates baseed on preliminary designs.  The record of recent public construction projects in  Chicago suggests 60 percent could reasonably be considered the floor.

The bid team “also plans to press private developers to line up as much as $4 billion worth of financial guarantees to protect against construction cost overruns on the proposed athletes’ village and sporting venues,” according to the Trib.

Do they actually think developers will agree to that, or is it just something to say to keep the lid on opposition until the October 2 IOC decision?  (Is that a dumb question?)

Chicago 2016 made a big show of rearranging the “staging” of the insurance so it pays off before city and state guarantees are tapped. 

This allowed aldermen to vote unanimously for unlimited financial guarantees.  It allows newspapers to use boilerplate like this, cited by the Trib last Wednesday as Chicago 2016’s response to the discrepancy between promises of “no public funds” and the city’s unlimited financial guarantee:  “The Games would make money and if they don’t, private insurance would kick in before the guarantees.”

That’s reassuring.  But it isn’t really true.  Unless the problem is a hurricane.

The bottom line may be that the budget projections, the insurance schemes, and the Civic Federation evaluation are all part of the bid.  Defined as “an attempt or effort to win, achieve, or attract.”  A sales pitch.

It has to be credible, yes.  But more important, it has to have a happy ending.

A couple weeks ago David Greising looked at the Civic Federation report and said the details didn’t support the widely-touted conclusion, so reassuring to the City Council, of “reasonable financial risk.” 

Back then he wrote: “Much is made of all the insurance to be taken out to cover any budget shortfalls….Here’s what the bid committee doesn’t talk much about.  The insurance would not cover a great many of the shortfalls laid out in the Civic Federation report.”

More recently he sat down with Chicago 2016’s insurance brokers and peppered them with questions about whether particular extreme circumstances would be covered.

Impressed the the major innovations being developed by Pat Ryan and his Aon wizards — and not without a few sensible caveats of his own — Greising exudes, “Insurance, in the end, is the only reason any rational person can support Chicago’s Olympics bid.”  And he concludes: “Taxpayers will not  be safe unless the Olympics organizing committee is smart and agile enough to guard against the unforeseen risks.”

In fact, what’s worrying most Chicagoans are the completely foreseen, predictable risks, including the ones detailed in that report sitting unread on all those aldermanic desks, the risks that are so commonplace that no insurance company would ever consider covering them.

Selling the Olympics

A recent Tribune poll found public support for the Olympics now evenly split, and last week Mark Brown suggested the drop in support happened because the public wasn’t privvy to the “sales pitch” that induced aldermen to unanimously pledge unlimited taxpayer support for the 2016 games.

In fact, support fell during the time Patrick Ryan and Lori Healey were holding their marathon ward meetings, suggesting that (1) they didn’t do so well at addressing citizens’ concerns and (2) those hearings also gave a public platform to Olympics critics, and they made sense to a lot of folks.

But there’s a lot of selling going on.  Steve Chapman notes the Olympic boosters are now running audio ads on CTA buses.  He calls this “not only annoying but stupid.”  (CTA Tattler reports he’s not alone.)  On the other hand, the ad campaign could very well be the only actual funding the CTA ever gets out of the whole Olympic enterprise.

The CTA ads are just part of a big campaign directed at Chicagoans.  Lewis Lazare calls it “a last-ditch effort to pump up enthusiasm for the Chicago bid among local government officials and the populace.” One wonders whether Chicago 2016’s financial disclosures will list the money spent marketing the games to taxpayers — or lobbying City Council members.

The marketing drive included a remarkable full-page ad last week in two newspapers (quite pricey, as Rick Telender reminds us) with Martin Luther King III touting the benefits from the 1996 Games for Atlanta’s poor communities, which he says were “revitalized,” while “small business people from disadvantaged communities were able to benefit.” 

Of course, that’s not the story told by a 2007 report from the Chicago Urban League (pdf), which details housing displacement (many folks were moved to the suburbs) and small business bankruptcies, along with ordinances making panhandling illegal and the large-scale arrest and detention of homeless people.

King III, a big booster of the Atlanta Olympics, has an impressive name and something of a reputation for seeking to profit from it.

He’s “wired into the second tier” of the “black misleadership class” in Atlanta, comments Bruce Dixon, managing editor of Black Agenda Report, which is based there.  In Atlanta, the Olympics were “the start of the drive to completely eliminate public housing in Atlanta” — a drive nearing completion today — and  “an excuse to clear and gentrify whole tracts of land, and jack up the value of existing real estate.  That’s it and that’s all. 

“The black misleadership class has no answer for gentrification, except to demand its cut of the proceeds.  When MLK shills for the Olympics, that’s what he’s doing.” 

Robert F. Kennedy Jr. was scheduled last week for a Chicago 2016 conference highlighting their “innovative sustainability initiatives,” with Kennedy presumably praising the group’s water conservation program.

He might want to check in with his local allies in the fight against coal power plants.  Kennedy’s been outspoken in denouncing the dumping of coal ash in rivers and streams and in debunking “clean coal” claims.

“How can they call it a ‘green Olympics’ when Chicago has the worst air quality in the Midwest, and they’re not doing anything about it?” asks Samuel Villasenor of Little Village Environmental Justice Organization.  The environmental conference is “a way to greenwash these Olympics,” he said.

Six coal powered plants owned by Midwest Generation in and around Chicago (one in Little Village) have finally agreed to install pollution controls for nitrous oxide by 2012, and for sulfur dioxide — by 2018.  Villasenor recalls athletes wearing face masks to protect themselves from air pollution in Beijing last summer.  

A truly green Olympics (and by the way, Chicago 2016 has apparently trademarked the term “Blue-Green Olympics”) would focus resources on rebuilding the CTA, Villasenor adds.

At a forum on the Olympics in Hyde Park last weekend, there were the usual politicians and advocates rehashing their positions.  Then Madiem Kawa, the volunteer nature stewart at Washington Park, was introduced.

She spoke briefly of the park’s “rich biodiversity” and then started showing slides of birds in the park (where an 80,000-seat stadium is planned), and naming them:  Wood Duck, Black Crowned Night Heron (an endangered species; there’s a family in the park), Green Heron, Great Blue Heron with a six-foot wing span, American Coot.  And gorgeous flowers:  shooting stars, cardinal flowers (which attract hummingbirds), columbine, and more.  Then a series of dragonflies. 

Then she just stopped and sat down.  She wasn’t selling anything.

The Olympics and tourism

The Olympics are being sold to us as a kind of panacea.  We can’t seem to manage substantial economic development, beyond giveaways for corporate headquarters and shopping center developers; the Olympics will provide 315,000 “`job years” (which, if my calculator serves, equals 115 million job days, and almost a billion job hours) — though sports economists think that’s probably inflated by an order of magnitude. 

The Olympics were going to provide funds to restore our mass transit, though that didn’t make the final cut.  But definitely, we’re told, it will raise our international visibility and bring us tourists.

At first glance, Chris Jones’s Tribune Voices piece yesterday (is it online?) looks like a plea for more mega-events, but it contains an argument that the city should be working much harder to raise its cultural profile.  We have incredible theater, music, dance, architecture and literature, and we deserve a lot more attention for it, and our city government should be promoting it.

Jones cites the Census Bureau’s Statistical Abstract, which says only 4.8 percent of international tourists coming to the U.S. visit Chicago.  What does the abstract (pdf) tell us about how hosting the Olympics helped Atlanta or Salt Lake City? 

Atlanta ranks 13th in attracting foreign tourists, behind eleven cities that have never had the Olympics (plus LA), including Chicago, Boston, Philadelphia, and San Diego. In 2007, 2 percent of foreign tourists visited Atlanta.  As for Salt Lake City, it isn’t in the top twenty.

As Allen Sanderson has argued (as Beachwood Reporter notes), if we want a huge two-week party and are willing to spend millions on it, the Olympics are just the ticket.  But if what we want is real economic development, including cultural development and international tourism, we ought to invest in those things directly, and long before 2016.

Olympic dreams, nightmares

How to pad an economic impact study (first find the guys who are willing to do it) and lots more, as Anne Elizabeth Moore,  former copublisher of Punk Planet, author of Unmarketable and other things, and organizer of last winter’s Unlympics, thoroughly deconstructs Chicago’s Olympics bid at Truthout.

Charge Olympic study biased

Last week the Civic Federation released a report pronouncing Chicago Olympic bid to be fiscally “fair and reasonable” with adequate taxpayer safeguards.  Now No Games Chicago is challenging the impartiality of the Civic Federation and the consultants who carried out the study.

NGC points out that half the Federation’s board members represent companies that are supporting the Olympic bid.  And three of  the funders of the $100,000 study  — the Chicago Community Trust, the MacArthur Foundation, and the Polk Brothers Foundation — are also Chicago 2016 donors. 

In addition, Chicago 2016 chair Patrick Ryan is a major donor to the Civic Federation.  And Ryan received an award from the group for outstanding civic contributions in 2007.

LEK Consultants, hired by the Federation to do the report, has worked for the city and currently has a major proposal pending for retail development at O’Hare Airport.  And two-thirds of the “experts” consulted by LEK are from companies backing the bid, according to NGC.

Olympic job loss??

Crains compares Chicago 2016’s claims that the Olympics would create 310,000 jobs and $22.5 billion in economic activity with projections from summer games in Los Angeles (1984) and Atlanta (1996) and finds them “vastly overstated.”

One sports economist calls Chicago 2016’s numbers “crazy.”

But why are they using projections for games that took place in previous decades?  Aren’t there real numbers for events that have already occurred?

No.  Post-game audits are rarely done “because studies of this sort provide little benefit to cities that have hosted such events,” according to “Fools’ Gold,” (pdf), a 2002 paper by Robert Baade of Lake Forest College and Victor Matheson of Holy Cross.

That’s the study Crains cites for its estimate of “at most” 42,000 jobs actually created by the Atlanta Olympics (compared to the 77,000 that had been projected).  But that number was the highest produced by three methods of estimating job creation; the lowest was 3,400.  The Los Angeles Olympics generated a little over 5,000 jobs, the two sports economists estimate. 

Two years ago Baade told In These Times that Atlanta (and Georgia) “could actually have lost jobs in the long-term, because Olympic mania captured public and private dollars that could have had more sustained economic impact.”

As for LA, Baade and Matheson think the 1984 Olympics “may have been profitable for Los Angeles.”  (Most Olympic committees hide their deficits by deleting the cost of infrastructure from their balance sheets.) 

But that’s probably because LA Mayor Tom Bradley “insisted that his city be exempted from the infamous IOC Rule 4.”  That’s the rule requiring the host city to assume financial liability for the games.  LA could do this only because no other city was bidding for that year’s games, they argue.

In another recent study (pdf), scholars at DePaul’s Egan Urban Center found the LA Olympics had “very limited” economic impact.  They looked at the 2000 Summer Games in Sydney — a city comparable in many ways to Chicago — and found that they accounted for a quarter of a percent of additional economic growth annually over ten years.

In 2005, University of Chicago economist Allen Sanderson wrote this in the Tribune (posted at Chicago2016.com):

“Economists who study the impact of Super Bowls, World Cups, NCAA basketball tournaments and Olympic Games come to the same conclusion:  Neither the immediate revenue nor the long-term spillover benefits ever come close to meeting expectations. These one-time big-ticket events constitute very poor public investments.

“Chambers of commerce trumpet the international exposure. Construction unions and entrepreneurs salivate. Benefits are overstated and costs are low-balled in ways that would even make an Enron Corp. accountant blush. And City Hall will claim that Somebody Else’s Money is financing the party.

“But in the end, there are few free lunches, and hosting the Olympics is certainly not one of them.”

Baade, Sanderson, and DePaul’s Larry Bennett joined Ald. Manny Flores and others at a Chicago2016.com panel last week — audio and video are available here.



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