Since the start of the Rio Olympics, media coverage of the controversies surrounding the games has mostly been limited to things like the algae-polluted diving pool, turning attention away from the widespread protests in recent months against the Games themselves and their costs. (This is a bit of a tradition: The 2014 Winter Olympics in Sochi were widely considered an unfathomable scandal, until the events began and suddenly everyone forgot about the caviar highway and the anti-gay laws.) So it’s nice to see Fivethirtyeight turn its attention to what a massive money suck the Olympics have become, not just for Rio but for any city that hosts them:
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.
Those numbers are all from a new study by Bent Flyvbjerg of the University of Oxford, and are right in line with past estimates of the Olympics’ inherently massive cost overruns. The reasons why are simple: Construction projects of all kinds often go over budget, and when you add in the fixed deadlines for Olympic venues — you can’t just delay the swimming events if the stadium isn’t ready — it’s a recipe for inflated costs.
That said, what we should care about here isn’t really how badly Olympic organizers underestimate the costs of hosting the games, but whether cities lose money in the end on hosting them. And though Fivethirtyeight buries the lede a bit here, it eventually notes that the numbers on that count are if anything even more dismal:
Host cities almost invariably fail to cover Olympics costs with associated revenues (for instance, in 2012 London took in $3.5 billion in revenues and shelled out something like $18 billion to host the games), leaving them with piles of debt and various useless venues. Research has repeatedly shown that in most cases the Olympics are a money loser for cities, particularly those in developing nations where the cost-benefit proposition tends to skew even worse.
The Rio Games will likely be cheaper than other recent Summer Olympics, but still cost Brazil several billion dollars, in exchange for a hoped-for boost in tourism that other cities have found never arrives. You’d hope that all this would make cities think twice before looking to host the 2024 Summer Games, the next ones up for bid, but you would be wrong. At least we’ll always have Oslo.