Why do cities make deals to host Super Bowl & Olympics despite negative economic returns?

Why do cities agree to deals to host events like the Super Bowl and Olympics and build stadiums, despite proven negative negative economic results?

Seth Godin on the practical, human reasons this happens:

 

  1. The project is now. It’s imminent. It’s yes or no. You can’t study it for a year or a decade and come back to it. The team creates a forcing function, one that turns apathy into support or opposition.
  2. The project is specific. Are there other ways that Minneapolis could have effectively invested five hundred million dollars? Could they have created access, improved education, invested in technology, primed the job market? Without a doubt. But there’s an infinite number of alternatives vs. just one specific. 
  3. The end is in sight. When you build a stadium, you get a stadium. When you host a game, you get a game. That’s rarely true for the more important (but less visually urgent) alternatives.
  4. People in power and people with power will benefit. High profile projects attract vendors, businesses and politicians that seek high profile outcomes. And these folks often have experience doing this, which means that they’re better at pulling levers that lead to forward motion.
  5. There’s a tribal patriotism at work. “What do you mean you don’t support our city?

This seems applicable with a project of any size.

via The Super Bowl is for losers at Seth’s Blog

Split the deal to reach for bigger upside

Advice on investing and splitting the deal in order to share risk and reach for rewards that may otherwise be unattainable from Fred Wilson in Splitting The Deal at A VC.  His experience comes from venture capital, but these seems applicable in any type of private investing.

I am a firm believer in splitting the deal, even when the economics (another word for ownership) suggest that there is no room for others.

My personal track record tells me that splitting the deal works. It helps you step up to something that has a lot of risk but also a lot of upside and it brings other people who can add value into the situation early on.

At a time when we are seeing venture funds get bigger and bigger, I am convinced that the hallmarks of old school early stage investing; small fund sizes, small rounds, and syndicates remain best practices