Enjoyed office hours tonight. Here are a few sources that seem to indicate a 15% to 20% chance of Boston hosting the Olympics in 2024. The data is all was all available at the time of the USOC selection announcement – if new information is available, the odds may have changed:

http://www.bloomberg.com/news/articles/2015-01-09/boston-faces-uphill-battle-in-bid-to-host-2024-olympic-games

There were four finalist US cities. Without knowing which cities were favored, we’d expect Boston to have had a 1/4 chance of selection, or 25%. As reported by Bloomberg and others, prediction market Bovada had Boston as the #2 most favored out of four, with roughly a 30% chance. http://www.bloomberg.com/news/articles/2015-01-09/boston-faces-uphill-battle-in-bid-to-host-2024-olympic-games

The other key piece of data is the $25,000,000 insurance policy purchased by the Boston 2024 committee. As far as I could determine from the limited details available, it was purchased in mid- to late- 2014 for $1 million and is payable if the city incurs expenses due to expenses over budget for the event.

A risk-free 10 year bond (slightly over 2% annual interest) paying $25 million in 2024 would have cost $20 million in 2014. That is, if Boston were already the IOC’s choice for host and if it were certain that Boston were required to pay $25 million towards the event, it would cost us $20 million today. For simplicity, we could assume that if Boston hosts it is guaranteed to exceed $25 million in expenses. (Keep in mind it’s a $10 billion event, and this assumption will tie out with Bovada’s estimates of Boston’s chances.) Assuming expenses are guaranteed if Boston hosts, a price of $1 million for a $25 million policy implies a 5% chance that we will need the policy, and thus a 5% chance as of 2014 of Boston being the IOC’s choice.

If we know Boston’s chances of being the IOC’s choice in 2014, and the chances of the USOC choosing Boston as of 2014, then we can derive the chance of the IOC choosing a US city to host as of 2014.

Chance of Boston as IOC choice, 5% = N chance of US hosting * 30% chance of USOC choosing Boston

Solving for N, N = 17% chance of an American host.

Unless the IOC is more or less likely to choose an American city given that the USOC chose Boston, 17% is a reasonable estimate of the chance of Boston as the final host city.

Ken, I think the insurance policy in place currently only refers to the bid phase of the process. It doesn’t cover the actual event related costs. That risk has to be much higher than $25 million, given the magnitude and the uncertainty, unless we put in place some legal firewalls, which I feel strongly that we should do.