Hosting the Olympics in New York City is a terrible idea

In yet another break from his predecessor, New York City Mayor Bill de Blasio (D) says he has no interest in bringing the Summer Olympics to the Big Apple.

"This is not something the mayor is considering at this time," Phil Walzak, a spokesman for the mayor, told The Wall Street Journal.

Former Mayor Michael Bloomberg aggressively courted the International Olympic Committee in hopes of bringing the 2012 Games to the city, but de Blasio is right to not pursue that fantasy. The Olympics are an enormous financial boondoggle that, for all the pomp and promise of economic revitalization, never really live up to the hype.

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The problems with hosting the Games begin with the bidding process. Organizing committees from would-be hosts, representing local business interests, compete against each other to bring the Olympics to their respective cities. But since those businesses stand to individually gain from securing the Olympics — there's a fortune to be made in all the construction costs, for instance — their potential gains differ from what their cities might reap. As economist Andrew Zimbalist explained in The Atlantic, this difference is known as the "principal/agent problem."

As for the cities that lose the bidding war? They're still out millions of dollars for the massive, multi-year effort; Chicago spent an estimated $100 million unsuccessfully trying to secure the 2016 Olympics.

The winning bids are also a terrible predictor of the true cost of the Games. Athens went 10 times over budget hosting the 2004 Games. Nagano's 1998 Olympic finances were so outrageous that the bidding committee destroyed its accounting records. The Sochi Olympics are the most egregious example yet, with rampant cronyism and corruption more than quadrupling the estimated $12 billion price tag to a record $51 billion.

So what of the economic windfall — is that enough to outweigh all those cost overruns? Hardly. Though it's difficult to quantify the full impact of the Olympics, many studies have found the supposed benefits to be grossly overstated.

While there is some immediate economic stimulus in the form of increased construction, tourism, and so on, "the long-term economic legacy effects with respect to both GDP and unemployment appear to be quite modest," according to to a study on the 2004 Games. Other research suggests the Games are actually counterproductive for economic growth, and that the billions of dollars spent on them could be put to far better uses.

The Olympics "represent an alien industry, one that does not connect or mesh well with established businesses," according to a 2000 study. "Diverting scarce capital and other resources from more productive uses to the Olympics very likely translates into slower rates of economic growth than that which could be realized in the absence of hosting the Olympic Games."

Add those two factors up — higher-than-expected costs and a lesser-than-expected economic bump — and you've got a serious financial black hole. In the most remarkable Olympic financial fail, it took Montreal 30 years to pay off debt from the 1976 Games.

Then consider the massive infrastructure that often goes to waste once the Games end. Five years after Athens hosted the Olympics, 21 of its 22 stadiums went unoccupied. Since 2008, many of Beijing's facilities have sat uninhabited, too. And they are proving to be a financial burden; the iconic $500 million Bird's Nest costs about $11 million to maintain annually, though it has hosted scant events since the Games.

Which brings up another pressing question: where the heck would you stick all the Olympic infrastructure in New York, by far the most dense metropolitan area in the country? The city had a plan for 2012 that would have utilized unused or under-used spaces. But the city could arguably put those spaces to much better use, such as affordable housing.

The Olympics aren't coming to New York City any time soon, and that's a great thing. The city already has enough big sad money pits in its existing pro sports teams.