When a city bids to host the Olympic Games, part of the bid is a commitment that the city or the national government will cover any cost overruns–and experience suggests the cost overruns will be large. Alexander Budzier and Bent Flyvbjerg discuss the patterns in “The Oxford Olympics Study 2024: Are Cost and Cost Overrun at the Games Coming Down?” (May 2024, University of Oxford Said Business School, Working paper | 2023-24). They write:
Given that the last three Summer Games cost USD 51 billion (in 2022 prices) and overran budgets by 185% in real terms – not including road, rail, airport, hotel, and other infrastructure, which often cost more than the Games themselves – the financial size and risks of the Games warrant study. … The Paris 2024 games, for instance, have seen costs surge from EUR 3.6 billion to 8.8 billion. Similarly, Los Angeles 2028 has revised its forecast from USD 5.3 billion to 6.8 billion. … For instance, cost overrun and associated debt from the Athens 2004 Games weakened the Greek economy and contributed to the country’s deep financial and economic crises, beginning in 2007 and still playing out almost a decade later (Flyvbjerg 2011). For Rio 2016, the Brazilian economy was doing well when the city bid for the Olympics. Fast forward a decade to two months before the opening ceremony and this was no longer the case. Rio was now in such dire straits that the governor declared a state of emergency to secure additional funding for the Games from money reserved for dealing with natural and other disasters (Zimbalist 2020).
Indeed, the International Olympic Committee has been finding that fewer and fewer cities want to host the Games–especially in democratic countries when people are given a chance to vote against doing so. For a sense of the patterns over time, here’s a table:
The costs in the first column are adjusted for inflation, and thus (roughly) comparable over time. As you can see, the Rio Olympics was especially costly, as was London. But notice also that the number of athletes has increased dramatically, especially from about 1976 to 1996. The number of events has also risen substantially; for example, up almost 30% from the 1992 Games Barcelona to the 2024 Games in Paris. (Patterns for the Winter Games are similar, but at a lower level.)
Budzier and Flyvbjerg point out that the main proposal from the International Olympic Committee to hold down costs has been “reuse/retrofit”: that is, minimize the amount of new construction for the Games and use existing facilities wherever possible. Paris is the first reuse/retrofit Olympics, and while costs do indeed seem lower, the same kinds of cost overruns seem to be occurring. They provide a figure showing cost overruns at the Olympics compared to other kinds of “megaprojects”:
I’m probably a bigger sports fan than your typical person, but I’d start cost control by by dropping the sports where professionals already have major global exposure in the non-Olympic events: soccer, golf, basketball, tennis. These sport also require large venues. Except for the awfulness of it all, I have no interest in the three-on-three Olympic basketball, or in watching Americans wipe out the world in flag football as scheduled for the Los Angeles Games in 2028.
I’d also dial back on the glitz. I’ve heard television commentary to the effect that the organizers for the Los Angeles Olympics in 2028 are already asking: “How can we outdo the spectacle of the Paris Games?” I suspect the common answer is not: “Just focus on the athletes, and bring the Games in under budget.”
But at the end of the day, the answer to an ongoing record of large cost overruns is a greater pressure for honesty. As one example, apparently a lot of Olympic bids, made 12 years before the event, have no provisions for inflation. Multiply that lack of seriousness throughout the bid, and cost overruns should not be a surprise.
