When a city bids to host the Olympics, part of the bid is a promise that the city or national government will cover any cost overruns, and experience suggests that these can be significant. Alexander Budzier and Bent Flyvbjerg say:Oxford Olympic Study 2024: Will Hosting the Olympics Reduce Costs and Cost Overruns?” (May 2024, Said Business School, University of Oxford, Working Paper | 2023-24). They wrote:
Given that the last three Summer Olympics have cost $51 billion (in 2022 prices) and have actually gone over budget by 185%, not including roads, railways, airports, hotels, and other infrastructure (often costing more than the Olympics themselves), the financial scale and risks of the Olympics are worthy of study. … For example, the cost of the Paris 2024 Olympics has ballooned from €3.6 billion to €8.8 billion. Similarly, Los Angeles 2028 has revised its forecast from $5.3 billion to $6.8 billion. … For example, the cost overruns and associated debt of the Athens 2004 Olympics weakened the Greek economy and contributed to a financial and economic crisis that began in 2007 and is still severe nearly a decade later (Flyvbjerg 2011). In the case of Rio 2016, the Brazilian economy was doing well when the city bid for the Olympics. Fast forward a decade and two months before the opening ceremony, and that was no longer the case. Rio is now so desperate that the governor has declared a state of emergency to secure additional funding from a budget reserved for natural disasters and other catastrophes (Zimbalist 2020).
In fact, the International Olympic Committee found that fewer and fewer cities wanted to host the Olympics, especially in democracies, when people were given the opportunity to object to doing so. See the table below to see the pattern over time.
The first column of costs is adjusted for inflation, so that we can (roughly) compare them over time. As you can see, the Rio Olympics were particularly expensive, as was London. But also note that the number of athletes has increased dramatically, especially between 1976 and 1996. The number of events has also increased significantly, for example, by almost 30% from Barcelona 1992 to Paris 2024. (The Winter Olympics have a similar, but less severe, pattern.)
Budzier and Flyvbjerg point out that the main thing the IOC has proposed to contain costs is “reuse/refurbishment”, that is, minimize the amount of new construction for the Olympics and use existing facilities as much as possible. Paris is the first reuse/refurbishment Olympics, and while the costs actually seem lower, the same kind of cost overruns appear to be occurring. They provide figures showing the cost overruns for the Olympics compared to other kinds of “megaprojects”.
I’m probably more of a sports fan than the average person, but I’d start by excluding sports where the pros already have major global exposure in non-Olympic events: soccer, golf, basketball, tennis. These sports also require massive stadiums. Aside from the horror of it all, I have no interest in watching the Americans sweep the world in 3-on-3 Olympic basketball or flag football at the 2028 Los Angeles Olympics.
I also want to reduce the glamour. I’ve heard TV commentary that the organizers of the 2028 Los Angeles Olympics are already asking, “How can we surpass the glamour of the Paris Olympics?” I don’t think the general answer is, “Let’s focus on the athletes and have the Olympics within budget.”
But ultimately, the answer to the persistently large cost overruns is greater pressure for honesty. For one thing, many Olympic bids made 12 years before the event appear to have no provisions for inflation. Multiply that by the lack of seriousness throughout the bid, and the cost overruns are no surprise.
