Back on this date in 1981, on the cusp of the Reagan era, it may have seemed like morning here in America. But at the very same time, the international Olympic movement looked out ahead and saw nothing but clouds on every horizon. As real-world crises kept intruding on and overshadowing the world’s quadrennial sports celebration, the future of the Olympics increasingly appeared fraught with peril.

The Olympic crown jewel—the Summer Games—had just witnessed a third successive disaster. Munich ’72 had endured the murder of Israeli Olympians by Black September terrorists, a worst-case scenario—Jewish blood spilt on German soil—that was far worse than anything organizers ever imagined. Montreal ’76 was not as infamous, unless, of course, you lived there; it left behind crippling debt—finally paid off just a few years ago—and facilities that came to define white elephants. And Moscow ’80 had been reduced to a private party, virtually ignored in the West after America and its allies boycotted the festivities to protest the Soviet invasion of Afghanistan.

The five rings clearly had lost their luster and, not surprisingly, the world's premier cities no longer wanted any part of hosting them. The Summer Olympics was forced to find homes in decidedly second-tier cities whatever their claims to newfound economic clout (Seoul, Atlanta) or old-world charms (Barcelona) And the Winter Games, with huge construction mandates colliding with an emerging environmental consciousness, were even less desirable. The cities eager to host those would have had to rise up several notches just to be regarded as second tier. In the ensuing years Winter Olympics would be awarded to Albertville (’92), Lillehammer (’94) and Nagano (’98) and provoke the same, public refrain: Where?

But the 1984 Summer Games in Los Angeles, despite a retaliatory Soviet-bloc boycott, marked a remarkable turn-about. It demonstrated that an Olympics, if run with corporate rigor, could not only avert economic disaster, but actually turn a profit. At the same time another economic trend was giving the Games a boost. The Olympics were emerging as the best—and sometimes only—way to justify wholesale urban renewal and to sell it to the politicians and, ultimately, the public. Beyond the glitzy, new sports facilities, Olympic hosts won approval for new airports, highways and transit systems as well as for re-dos of massive, blighted sections of the city.

The lure of a makeover while turning a profit proved irresistible and suddenly the world’s glamour capitals were once again begging for the privilege of hosting the world: London, Paris, New York, Madrid and Moscow battled for 2012; Madrid, Tokyo, Chicago and Rio de Janeiro are competing for 2016. Even the losers can walk away with spoils. As part of its Olympic campaign, NYC 2012 brokered new stadium deals for each of New York’s baseball teams—both with large public subsidies that couldn’t have been sold to civic leaders or taxpayers in any other context. The Chicago area, according to one study commissioned by the city’s Olympic campaign, says the 2016 Games would yield $22.5 billion in new economic activity.

Despite skepticism from some economists about such rosy projections, Chicago and its 2016 rivals are way too far down the road to risk lowering expectations and jeopardizing public support, a critical selling point to IOC delegates. Yet the global recession, with its severe cash crunch, is already taking a toll on the plans for the three future Olympics that have already been rewarded—Vancouver 2010, London 2012, Sochi 2014. In November, according to the New York Times, the city of Vancouver agreed to advance $100 million Canadian dollars to cover cost overruns at the $1 billion Olympic village on top of $193 million in loan guarantees to which it had already committed. And while Vancouver can count on athletes filling that village, it is far less certain that tourists will show up in sufficient numbers next February to fill the city and ski resort hotels.

London has already seen its costs sky 300% over its own projections back in 2005, when it upset Paris for the right to stage the 2012 Olympics. And recently the British minister in charge of the Games even conceded publicly that had the government known back then what it knows now, it might not have pursued them in the first place. But the rest of the world knows now what London didn’t know then. And that knowledge could trigger another Olympic down cycle in which the burdens of hosting appear to outweigh the benefits. At the very least, any city that would pursue a future Olympics will have to come up with a convincing answer to a familiar equation: what price glory?

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