A-priori cheerleading documents studies: mega sporting events, like the Olympics, are boons to local economies. Ex-post studies by independent academics: um, not that much. Score another one for the academy. From the WaPo:
Two weeks after announcing they had sold every one of the record 6.8 million tickets offered for the Games, Olympics officials expressed dismay at the large numbers of empty seats at nearly every event and the lack of pedestrian traffic throughout the park, the 2,800-acre centerpiece of the competition.
U.S. swimmer Michael Phelps won his third gold medal Tuesday in an arena with at least 500 no-shows, and there was a smattering of empty seats Wednesday morning as he captured his fourth gold in the 200 butterfly. The U.S. softball team played in a stadium only about 30 percent full on Tuesday, while the day before, 10 of 18 venues did not reach 80 percent capacity, officials said. Meantime, crowds of tourists and fans have been thin in the extravagantly landscaped Olympic Park, which holds 10 venues including National Stadium.
To remedy the problem, officials are busing in teams of state-trained "cheer squads" identifiable by their bright yellow T-shirts to help fill the empty seats and improve the atmosphere. They are also encouraging residents to apply for access to the heavily secured park.
Here's something we economists have discovered: when you raise the cost of something, fewer people are willing and able to buy it. We've even given it a name: the law of demand. Maybe the fact that people have to apply for entrance might be one of the factors why they aren't coming. And it's not just the locals that are staying away.
"Business is worse than at this time last year," said a receptionist at a 22-room hotel in Beijing's Chongwen district, where rooms cost $28 a night. "It's the season for traveling and last year the hotel was full. The Olympics should have brought business to Beijing, but the reality is too far from the expectation."
Whatever the cause, the attendance problem has blindsided Chinese organizers, who expected jammed arenas for even obscure sports and throngs across Olympic Park.
The International Olympic Committee encouraged the Chinese to address the issue. "We've been saying, 'You're missing a great opportunity to get more of your people in here to celebrate your games,' " said Kevan Gosper, vice chairman of the IOC's coordination commission for Beijing. "I would want to stress how important it is for the host city that the venues are seen to be full and everybody has the opportunity to enjoy the festivities."
As I wrote before, the primary economic impact is captured by the IOC via public subsidization/rent seeking. If a sporting event is something that needs to be subsidized, it probably ain't all it's cracked up to be.
*The substitution effect of mega events: a mega event expected to draw a large crowd ends up driving others away who would have come to the city in the absence of the event.