Olympic host country Brazil is now in its third straight year of recession. Meanwhile, host city Rio de Janeiro recently declared a state of financial emergency.
The country and city combined to dump billions of dollars into hosting the games. Unfortunately, if past Olympic Games are any indication, neither will benefit from a return on investment.
It’s estimated that the direct costs associated with putting on the Rio Olympics — venues, transportation, administration, etc. — will end up higher than the $4.6 billion already spent, says FiveThirtyEight. That’s more than the $3 billion the Brazilian government estimated when putting together its bid to host the games.
But David Goldblatt, author of “The Games: A Global History of the Olympics,” wrote in Time that when all is said and done, the total cost associated with hosting the Rio Olympics could top $20 billion.
Sadly, it’s hardly unique for an Olympic host city to blow its budget.
Researchers at the University of Oxford recently released a study on the cost of the Olympics. They revealed that when compared with other big infrastructure projects — dams, bridges, highways and railway lines — the Olympics average a jaw-dropping 156 percent in cost overruns, “outdistancing all other types of megaprojects,” says FiveThirtyEight.
Hosting the Olympics is an economic gamble that hasn’t paid off since 1984, when Los Angeles hosted a profitable games. According to the Oxford study:
For a city and nation to decide to stage the Olympic Games is to decide to take on one of the most costly and financially most risky type of megaproject[s] that exists, something that many cities and nations have learned to their peril.
The Oxford study noted that these cities had the biggest cost overruns:
- Montreal (Summer 1976): 720 percent
- Barcelona, Spain (Summer 1992): 266 percent
- Lake Placid, New York (Winter 1980): 324 percent
- Sochi, Russia (Winter 2014): 289 percent
For more on how much the Olympics costs, check out “How the Olympics Got So Crazy Expensive: From 1948 to Today.”
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