Estimating the Value of Medal Success at the 2010 Winter Olympic Games
Research pegs the intangible benefits generated by the Canadian government's Own the Podium program at between three and five times its cost: between $215 million and $3.4 billion.
Humphreys, Brad R., et al. (2011). Estimating the Value of Medal Success at the 2010 Winter Olympic Games. Working Paper No 2011-2. Edmonton,Alberta: University of Alberta.
The Canadian government, through Sport Canada, operates three programs designed to develop and support elite athletes: the Sport Support Program, the Hosting Event Program, and the Athlete Assistance Program. In 2007-08, Sport Canada provided these programs a total of $119.6 million in support. In addition, Canada spent $110 million on its Own the Podium program, geared specifically toward enhancing Canadian performance in the 2010 Vancouver Winter Olympics. To that point, Canada was one of only two host nations not to win a gold medal at its own Olympics, and had the dubious distinction of being the only host to be shut out twice at home, at both the 1976 Summer Games in Montreal and the 1988 Winter Games in Calgary. Created in 2005, Own the Podium was intended to help Canada achieve a best-ever finish in the medal count in Vancouver. Whether due to Own the Podium or not, Canada did extremely well in the Vancouver Games, winning an all-time, all-nation, Winter Olympics record 14 gold medals, and finishing third behind the United States and Germany in the overall medal count with 26.
In this paper, we undertake a Contingent Valuation Method (CVM) study of the intangible benefits generated by the performance of Canadian athletes in the 2010 Vancouver Winter Olympic Games. This project represents an important extension of sports CVM research into a previously unexamined area.
The researchers used the contingent valuation method (CVM), commonly used by economists to measure the value of public goods, in a unique way. About 2,000 Canadians were surveyed before and after the Games about their willingness to pay extra taxes to support elite athletes and enhance medal success. No previous study has analyzed outcomes of sports mega-events using the CVM method, according to the authors.
The heart of the survey revolved around hypothetical scenarios and questions eliciting willingness to pay for Olympic success. Before the Games, the survey asked Canadians how satisfied they were with Canada's third-place ranking at the 2006 Olympic Games. After the Games, the survey told them the Canadian government was spending $120 million to support athletes at Summer and Winter Olympics—about $10 per household—and asked whether they supported that. Survey respondents were told that Own the Podium cost $3 of spending per annual Canadian household and were asked if they thought more money for the program would result in more medals than in 2010.
This allowed researchers to estimate willingness to pay for success in the Vancouver Games and conduct a simple cost-benefit analysis of the Own the Podium program.
Next, respondents were presented with a hypothetical scenario about expanded funding of Own the Podium for the 2014 Winter Olympic Games. They were told that the extended program would be financed by an annual income tax surcharge for three years of amounts ranging from $10 to $65. They were asked whether they thought this would increase Canada's gold medal count at the Games, how many more it might result in and their level of satisfaction with such an increase.
Respondents were also asked whether they would vote in a referendum on a tax increase to support Own the Podium and how high or low they'd be prepared to go to support such a proposal.
Results indicate that Canadians believed, even before the 2010 Vancouver Olympics, that the intangible benefits generated by the Own the Podium program far exceeded the costs of operating the program. Their experience with the 2010 Winter Olympics caused them to reassess and conclude that the benefits were even higher than they previously expected. In the small but growing CVM sports literature, no other example of the willingness to pay for sports public goods unambiguously exceeding the cost of the subsidies granted have been found, and certainly no case of the benefits being a multiple of 3 to 8 times the subsidy cost has ever been found. No previous study analyzed outcomes of sporting events. Seeing the national team succeed, where others had not, clearly has the potential to generate significant intangible benefits relative to winning the rights to host a mega- event and then seeing it take place.
Before the Games, 54.3 per cent of those surveyed said they would support continuing to pay additional taxes to fund Own the Podium; after the Games, that was significantly increased, to 80.9 per cent.