Hosting The Olympics Is A Terrible Investment
When Rio de Janeiro won its bid to host the 2016 Summer Olympics back in 2009, the Brazilian government estimated that costs directly related to hosting the games would run just shy of $3 billion. But by the time Vanderlei de Lima lit the Olympic torch at last week’s opening ceremonies, the country had already spent some $4.6 billion on venues, administration, transportation and the like, putting the games roughly 50 percent over budget. By the time the games close on Aug. 21, the tally for the games will likely be higher still.
But it could be much worse. The 2014 Winter Games in Sochi blew their budget by 289 percent. The 1980 Winter Games in Lake Placid overtopped projections by 324 percent. And the 1976 Games in Montreal ran a staggering 720 percent over projections; the city spent three decades paying down the bill. While outliers such as these distort the average cost overruns somewhat (176 percent for Summer Games, 142 percent for Winter Games), the median cost overrun for all games for which we have data is 90 percent, making Rio’s cost overrun somewhat lower than the historical norm, at least so far.
The modern Olympic Games, in other words, are wildly expensive — and wildly more so than host cities expect when they make their bids. The Olympics have a well-deserved reputation for accelerated construction schedules and poor oversight, as well as for the cost overruns associated with them. Since the 1960 games in Rome, every single edition of the Olympics for which data is available has been more expensive than originally projected. But until recently it was unclear exactly how those cost overruns stack up next to each other, as well as next to other major civic megaprojects. – READ MORE