Tag: sports taxes

Gold Standard

Lake Forest College Professor Is Go-To Guy for Insights on Financial Impact of Olympics, Other Big Events




By David A. F. Sweet



In the mid-1980s, Lake Forest College Professor Rob Baade wrote his first piece about sports and economics. Presented at a meeting of the Eastern Economic Association, his paper on sports taxes captured the interest of major national newspapers.

“Both The Wall Street Journal and The New York Times saw it. One of them described me as ‘America’s foremost sports economist,’” recalled Baade. “I was nothing of the sort, but the moniker stuck.”

Today, the moniker is fully accurate. During the world’s biggest events – including the Summer Olympics, which wrap up today in Tokyo – august organizations such as the International Monetary Fund ask him to author papers about how to reform the Olympics from an economic perspective, while major newspapers such as the Los Angeles Times bypass Harvard and Stanford experts to reach out to the small-college professor in the Midwest for quotes about the Games.

“I always know I’ll be busy around the Olympics,” said Baade,  who has served as the president of the International Association of Sports Economists.

In the IMF piece entitled “Rescuing the Olympic Games from Their Own Success,” Baade and a co-author argue that significant reforms are needed for the Games to succeed in the future – including the idea of a permanent host or staging the event in countries rather than cities, given that the rising costs of constructing Olympic facilities are hurting cities (who has a world-class velodrome handy?).


“The interests that stand to get the most out of the Games will make all kinds of promises,” says Lake Forest College Professor Rob Baade.

Does Baade think the International Olympic Committee would consider his call for a permanent host — such as Athens, the birthplace of the modern Games? No.

“They prefer an auction among cities – it’s in their financial interest,” the professor of economics said. After all, any city promising the biggest and best venues will captivate the IOC. It receives  much of the revenue raised during the 17-day spectacle, almost guaranteeing the host city will be facing an economic black hole from construction cost overruns combined with maintaining unused, dilapidating sports structures for years after the last Olympic athlete departs.

In fact, when Baade gave a talk in Rio de Janeiro before it hosted World Cup games in 2014 and the 2016 Summer Olympics, he cautioned that focusing only on building sports stadiums was foolish in the short term.

“Think about telecommunications, light rail – all those things that will provide an economic legacy,” Baade told me in 2013. The warning went unheeded: Only five years later, Rio has crumbling sports infrastructure from its once-in-a-lifetime Olympics and little else to show for the billions it spent. Even many of the medals it awarded athletes ended up cracked.

In most cases, the excitement of landing the Games subsides quickly, and the guarantees of a revamped city with a bright future often fall short.

“The interests that stand to get the most out of the Games will make all kinds of promises,” Baade said. “There’s nothing worse than frustrated expectations.” In Rio, for example, thousands of protestors tried to block the arrival of the Olympic torch, upset that economic conditions were bad as the multi-billion-dollar Olympics were poised to begin there.

Back in 2009, an Olympics in Rio seemed to have little chance. Chicago put forth what was considered the top bid to host the 2016 Games, featuring a slew of already-built venues and an extensive public transportation system. On a scorecard he kept with others, Baade said he had Chicago “way ahead of all the other cities.”

That October, Baade sat in a waiting room at a television station, ready to be interviewed when Chicago won during the IOC’s secret voting process.

“The producer came in and said, ‘Rob, we’re not going on air.’ I asked why. He said, ‘Chicago was the first city eliminated.’”

Baade thinks the IOC made the right move to deliver the Summer Olympics to Paris in 2024 and Los Angeles in 2028 (awarded on the same day; an unprecedented move) mainly because both possess a solid group of sports stadiums already in place. Los Angeles, in fact, helped revive the Olympic movement with its profitable Games in 1984, only eight years after Montreal was crushed by debt after hosting the event.


Chicago’s strong bid for the 2016 Summer Olympics fell short.

“The IOC cannot afford more economic failure,” Baade explained. “If the interest in hosting wanes, there’s economic implications for the IOC.”

Interestingly, Baade believes the decision for this year’s Olympics to continue in Japan during the pandemic wasn’t all about economics.

“This is also a political issue,” he said. “I think the government would have to be concerned with the political perception if they didn’t host and China hosted a successful Winter Olympics in 2022.”

Baade’s sports assessments reach far beyond the Olympics. He has written about the economic impact of big one-time events such as the Super Bowl and political conventions. In general, he sees fewer benefits for host cities than the hundreds of millions of dollars their proponents claim they bring in.

Baade has taught at the private liberal-arts college on the North Shore for nearly 50 years, beginning as an assistant professor in 1973. He also served as an assistant varsity basketball coach for the Foresters for almost 20 years. In fact, that was what really lured him to the idyllic Lake Forest campus; he wanted to coach basketball at a small college (student body: 1,500). A professor of his at the University of Wisconsin-Whitewater, where Baade procured a bachelor of arts degree, had been the LFC basketball captain at one time.

“He said back then, ‘They didn’t win a game last year,’ Baade recalled. “You couldn’t do any worse as a coach.’ I said they could always expand the schedule.”


David A. F. Sweet is the author of Three Seconds in Munich about the 1972 Olympics. Please e-mail him at dafsweet@aol.com.