Economic impact on the State of Georgia of hosting the 1996 Olympic Games.
The Centennial Olympic Games will be hosted by Atlanta, Georgia, July 19 through August 4, 1996. These are the last Games of this millennium and probably the last Summer Olympic Games to be held on U.S. soil for a generation. They are the first to be held in the South and the largest in history. Atlanta will be the host for more athletes from more countries participating in more sports ever in the history of the Olympic Games. The Atlanta Committee for the Olympic Games (ACOG), a private nonprofit corporation created in January 1991, has been planning for and will stage this spectacular 17-day event starting July 19, 1996. This article describes the economic impact of hosting the 1996 Olympic Games on the State of Georgia, with specific emphasis on the metropolitan Atlanta area.
Beginning with one man's dream, the concept of Atlanta hosting the Olympic Games has been met with mixed emotions. From the bid period, it has been critical to ensure that the community understood the overall economic benefit of the Games in order to 1) justify the human, financial, and physical resources required to stage the Games; 2) justify the disruption in the summer of 1996 to the community; 3) demonstrate the governmental benefit of the Games, proving to the taxpayers of Georgia the value of hosting the Olympics as quid pro quo for any potential state and local operational support; and 4) understand the long-term economic impact of the Games by industry in order to capitalize on the associated economic growth.
Economic impact studies, which estimated quantitatively the economic impact to the State of Georgia which would flow from hosting the 1996 Games for the 1991 to 1997 time period, were conducted in 1990, 1992, and 1995. The first study was completed at the same time that the Atlanta bid was submitted. The 1992 study incorporated ACOG's first detailed budget and visitation estimates based on the preliminary event schedule. In addition to Games-time visitation spending, it also included pre- and post-Games visitation spending, which accounted for over one-third of total projected visitation spending. The 1995 update incorporated the most current financial forecast and, for the first time, identified long-term impacts or "legacies" from hosting the Games.
Overall Economic Impact
Based on the 1995 study, the total economic benefit on Georgia's economy of hosting the 1996 Summer Olympic Games is estimated to be $5.1 billion during the 1991-1997 period. The economic impact has been and will continue to be the result of spending by ACOG as well as spending by visitors to the region. By 1997, ACOG's spending will have generated some $2.6 billion of economic activity, while the spending by out-of-state visitors will have created an additional impact of $2.5 billion.
The initial injections of new dollars has occurred primarily in and around Atlanta, Athens, Savannah, and, to a lesser extent, the Columbus and Gainesville areas; however, the respending of these dollars, or the induced economic impact, has had effects that have been felt in even the smallest Georgia communities. This economic phenomenon, known as the multiplier effect, recognizes that new dollars to the economy subsequently will be spent in successive rounds within Georgia. The induced impact of the Games was derived from the initial impact of the Games multiplied by a factor developed by the U.S. Department of Commerce's Regional Input-Output Modeling System.
[TABULAR DATA FOR EXHIBIT 1 OMITTED]
Exhibit 2 ECONOMIC AND JOB IMPACT OF OLYMPICS Economic Impact by Industry (in millions) Lodging and amusements $677.7 Business services 610.2 Eating and drinking 412.7 Real estate 383.5 Households 328.2 Retail trade 321.5 Transportation 234.5 Food products 215.1 New construction 212.6 Other services 203.4 Wholesale trade 183.0 Utilities 149.5 Health services 146.9 Communications 139.7 Other industries(*) 923.0 Total $5,141.5 Jobs Created by Sector Lodging and amusements 18,067 Eating and drinking 11,689 Business services 10,483 Retail trade 8,871 Other services 3,900 New construction 2,807 Health services 2,687 Transportation 2,640 Wholesale trade 1,988 Personal services 1,431 Other sectors 12,463 Total 77,026 * Includes 25 other industries, the largest of which are finance, insurance, printing and publishing, maintenance and repair construction, and paper products.
The Games projected total economic impact is summarized in the chart in Exhibit 1. ACOG expenditures represent the portion of ACOG's spending for the purchase of goods and services produced by Georgia's industries. Visitation spending represents the portion of spending by out-of-state visitors for the purchase of goods and services produced by Georgia's industries.
The Olympics' economic impact measured by expenditures and new jobs is presented in Exhibit 2. In terms of jobs created, the Olympics has impacted businesses involved in the following industries: hospitality, business services, retail trade, construction, health services, transportation, wholesale trade, and personal services. Approximately 77,000 full- and part-time jobs have been created, with a significant portion - 38 percent - in the hospitality industry, which includes lodging and amusements as well as eating and drinking. It is projected that the 1996 Games will generate an estimated $176 million in additional tax revenue for state government, primarily through general sales and use taxes ($91 million), personal income taxes ($65.4 million), selective sales taxes ($10.7 million), and corporate income and license taxes ($9 million).
Displacement. In measuring the economic impact that the 1996 Games will have on Georgia, any potential negative effects resulting from the loss of visitor dollars from conventions and altered vacation plans have been considered. Although this displacement is expected to be significant during the Games, it has been measured in terms of the entire 1991-1997 period. Many conventions that might have been held during the Games, particularly small state and regional meetings, simply were rescheduled for another time during that period. Likewise, while residents might choose to vacation outside Georgia during the 1996 Games, these lost dollars are anticipated to be within normal levels of out-of-state vacation spending. For the most part, only the timing of the vacation has been altered. In many cases where Georgians have chosen to spend their vacations in the state in order to attend the Games, the effect will be positive. Considering the combination of both positive and negative effects, displacement impact has been expected to be neutral.
The Olympic Legacy
Long-term, less measurable impacts of the Games are termed Olympic legacies. These legacies fall into three main categories: 1) world-class facilities and other community investment, 2) media exposure, and 3) community benefits.
Facilities and Community Investment. World-class facilities will be among the most enduring legacies of hosting the 1996 Games. A total of $600 million has been invested in permanent projects directly related to the staging of the 1996 Games, as presented in Exhibit 3. The state will benefit from these Olympic Games venues well into the 21st century. Several of the area's public and private universities will receive more than $250 million of new and upgraded sports facilities and dormitories.
The legacy is broader than simply the facilities built to host Olympic Games events or house athletes, however. Various construction, renovation, and expansion projects have been or will be completed as a direct result of Atlanta hosting the 1996 Games. The $57 million Centennial Olympic Park, the Atlanta Convention and Visitors Bureau's new Welcome South Visitors Center, and the $10 million International Sports Plaza are examples of such projects.
There have been hundreds of other construction projects that can be credited partially to the Olympic Games. Many initiatives were on the drawing board for some time, awaiting the funding needed to support them. The Olympic Games provided a call to action that has been the catalyst for this funding. These projects have been both public and private and have ranged from major renovation and expansion programs to small-business refurbishment. Included in this group are the new international concourse and the renovation of the terminal at Hartsfield Airport as well as restoration of historic landmarks such as the Margaret Mitchell House. Numerous public improvements have been funded from the proceeds of a publicly ratified $150 million general obligation bond issue, which, prior to the Games, had been controversial and had failed approval on several outings before the voters.
Many community-based projects have been supported by a combination of governmental funding (local, state, and federal) as well as private funding. Although ACOG directly participated in a few of these projects, in most cases, the Olympic contribution was as a catalyst or leveraging agent.
The Corporation for Olympic Development in Atlanta (CODA) is an agency created by the City of Atlanta to identify, plan, and complete various community improvement projects. With $32 million from the city's general obligation bond issue combined with federal matching funds and private donations, CODA has been able to widen and upgrade sidewalks, [TABULAR DATA FOR EXHIBIT 3 OMITTED! plant trees, install new lighting, build bicycle paths, and repave streets. Added to the more visible projects in preparation for the Games, CODA has helped residents in several neighborhoods develop long-range plans for revitalization. Focusing on neighborhoods surrounding Olympic venues in the downtown area, the Metropolitan Atlanta Olympic Games Authority, the City of Atlanta, several other governmental agencies, and nonprofit entities have devoted financial and technical resources to the construction or renovation of more than 700 housing units as well as a 400-bed university dormitory.
The high visibility of the Olympic Games helped to establish the designation of Atlanta as one of the federal government's empowerment-zone cities. Under this program, Atlanta became eligible for hundreds of millions of dollars from the federal government for economic revitalization of innercity neighborhoods. This has provided the City of Atlanta an opportunity to build further on the neighborhood revitalization efforts achieved in the areas surrounding the Olympic venues.
Media Exposure. National and international recognition of the city and state through extensive media exposure has enhanced Atlanta's reputation as one of the world's leading cities. Sixty percent of the world's population will view Atlanta and the State of Georgia during the 17-day period. The long-term impact of media coverage will positively influence tourism, convention activity, business location and expansion decisions, and foreign investment. The Atlanta Chamber of Commerce, the Georgia Department of Industry and Trade, and other entities will stage significant marketing campaigns during the Games period. Moreover, Georgia will benefit from a growing reputation as a global sports center with its new athletic facilities. As evidenced by Atlanta's selection to host the Mobil Indoor Track and Field National Championships for the years 1994 through 2002, it is anticipated that in the future, Georgia will be chosen to host numerous national and international sporting events.
The governor and several public and private entities have been participating in a project called Operation Legacy. Lead by Georgia Power, this project has been designed to familiarize the world's leading investors and corporations visiting for the Games with the economic opportunities available in Georgia through tours and other marketing activities. To date, according to Operation Legacy, 10 companies have committed projects that will provide 1,515 new jobs.
Community Benefits. Olympic Games-related programs have had a positive effect on the quality of life in Georgia communities. An example of such a legacy is the mobilization of the Olympic Force, a group of 700,000 volunteers who have been affiliated with more than 1,700 community and civic groups throughout the state. During the last several years, this nucleus of volunteers has carried out various community improvement projects. Moreover, the 1996 Olympic Games will be the catalyst for job training programs; youth and education programs, including the Olympic Day in the Schools program; cultural programs; and community projects.
The Metropolitan Atlanta Rapid Transit Authority (MARTA), Atlanta's public transportation system, will benefit from its association with the Olympics. MARTA was awarded a $14 million federal grant to purchase natural gas buses which will be showcased during the summer of 1996. Prior to the Games a state-of-the-art system for transit customer information and automatic vehicle location, funded primarily from federal sources, will be implemented to improve MARTA service.
In conclusion, the 1996 Olympic Games has provided both short-term economic impacts and less quantifiable long-term impacts. The Olympic Games will showcase Georgia, the stage upon which many of the world's present and future leaders and decision makers will walk at Games time. The opportunity to foster long-term business relationships will be enormous. The long-term beneficial effects on decisions regarding investment, trade, corporate relocation, government spending, convention sites, the location of major sporting events, and vacation plans will be among the most enduring, yet statistically untraceable, legacies of the Games.
PATRICK C. GLISSON is chief financial officer for the Atlanta Committee for the Olympic Games (ACOG). He has held a number of senior financial management positions in both the public and private sector, including serving as commissioner of finance for the City of Atlanta, and is a former president of GFOA (1987-1988). TINA P. ARBES, director of financial planning and analysis for ACOG, is responsible for revenue forecasting and reporting, decision support, economic impact analysis, and business/financial structure development. She has more than 15 years financial planning experience, primarily in the area of public finance. The three economic impact studies were completed by Dr. Jeffrey Humphries from the Simon S. Selig, Jr., Center for Economic Growth at the Terry College of Business at The University of Georgia and by Michael Plummer from Polk-McRae Consulting Group and IRE Advisors, economic/management consulting firms.
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|Author:||Glisson, Patrick C.; Arbes, Tina P.|
|Publication:||Government Finance Review|
|Article Type:||Cover Story|
|Date:||Jun 1, 1996|
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