Should Budapest Bid for the Olympics? - Measuring the Economic Impacts of Larger Sporting Events

The article deals with both the general economic impact of large sporting events and the likely economic impact of having the Olympics held in Budapest. The author describes the general economic theory of economic impact and the spending patterns at major sporting events. He finds that a considerable part of the money spent in a community at the time of such an event cannot be viewed as “new money”that will stimulate the local economy. A large economic impact of such an event requires that it be long in duration, attract large crowds and big spenders, and be family-oriented. The paper notes that in many cases physical facilities, and even transportation networks, that are constructed for major sporting events prove ill-designed to support economics development in the longer run. The author concludes that in considering holding a major sporting event Budapest has serious resource constraints and faces risks of increases in pollution and congestion. Further, since it has a rapidly growing diversified economy, holding the Olympics in Budapest is unlikely to be the best long run strategy to attract money into the city and its region.