When a metropolis bids to host the Olympic Video games, a part of the bid is a dedication that the town or the nationwide authorities will cowl any price overruns–and expertise suggests the associated fee overruns might be giant. Alexander Budzier and Bent Flyvbjerg focus on the patterns in “The Oxford Olympics Study 2024: Are Cost and Cost Overrun at the Games Coming Down?” (Might 2024, College of Oxford Stated Enterprise College, Working paper | 2023-24). They write:
On condition that the final three Summer season Video games price USD 51 billion (in 2022 costs) and overran budgets by 185% in actual phrases – not together with street, rail, airport, resort, and different infrastructure, which regularly price greater than the Video games themselves – the monetary dimension and dangers of the Video games warrant research. … The Paris 2024 video games, for example, have seen prices surge from EUR 3.6 billion to eight.8 billion. Equally, Los Angeles 2028 has revised its forecast from USD 5.3 billion to six.8 billion. … As an example, price overrun and related debt from the Athens 2004 Video games weakened the Greek economic system and contributed to the nation’s deep monetary and financial crises, starting in 2007 and nonetheless enjoying out virtually a decade later (Flyvbjerg 2011). For Rio 2016, the Brazilian economic system was doing effectively when the town bid for the Olympics. Quick ahead a decade to 2 months earlier than the opening ceremony and this was not the case. Rio was now in such dire straits that the governor declared a state of emergency to safe extra funding for the Video games from cash reserved for coping with pure and different disasters (Zimbalist 2020).
Certainly, the Worldwide Olympic Committee has been discovering that fewer and fewer cities wish to host the Video games–particularly in democratic international locations when persons are given an opportunity to vote in opposition to doing so. For a way of the patterns over time, right here’s a desk:
The prices within the first column are adjusted for inflation, and thus (roughly) comparable over time. As you possibly can see, the Rio Olympics was particularly pricey, as was London. However discover additionally that the variety of athletes has elevated dramatically, particularly from about 1976 to 1996. The variety of occasions has additionally risen considerably; for instance, up virtually 30% from the 1992 Video games Barcelona to the 2024 Video games in Paris. (Patterns for the Winter Video games are comparable, however at a decrease stage.)
Budzier and Flyvbjerg level out that the primary proposal from the Worldwide Olympic Committee to carry down prices has been “reuse/retrofit”: that’s, decrease the quantity of latest building for the Video games and use current amenities wherever attainable. Paris is the primary reuse/retrofit Olympics, and whereas prices do certainly appear decrease, the identical sorts of price overruns appear to be occurring. They supply a determine exhibiting price overruns on the Olympics in comparison with different kinds of “megaprojects”:
I’m in all probability an even bigger sports activities fan than your typical individual, however I’d begin price management by by dropping the sports activities the place professionals have already got main world publicity within the non-Olympic occasions: soccer, golf, basketball, tennis. These sport additionally require giant venues. Aside from the awfulness of all of it, I’ve little interest in the three-on-three Olympic basketball, or in watching People wipe out the world in flag soccer as scheduled for the Los Angeles Video games in 2028.
I’d additionally dial again on the glitz. I’ve heard tv commentary to the impact that the organizers for the Los Angeles Olympics in 2028 are already asking: “How can we outdo the spectacle of the Paris Games?” I think the widespread reply will not be: “Just focus on the athletes, and bring the Games in under budget.”
However on the finish of the day, the reply to an ongoing report of huge price overruns is a higher stress for honesty. As one instance, apparently loads of Olympic bids, made 12 years earlier than the occasion, haven’t any provisions for inflation. Multiply that lack of seriousness all through the bid, and price overruns shouldn’t be a shock.
