Chris Dillow:
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 the 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. ...
The numbers above come from a new study led by Bent Flyvbjerg at the University of Oxford’s Saïd Business School, who looked at six decades of Olympic budgets. ...
For its part, Rio is on track to come away from the 2016 Games more or less in line with what’s become the normal amount of additional expense on its books. But the implication of Flyvbjerg’s research is that Rio still may have been better off building $3 billion in roads and bridges (which likely would have ended up costing $3.6 billion to $4 billion because of their own overruns) than hosting the Olympics (which will end up costing at least $4.6 billion, and likely quite a bit more).
At the very least, the return on investment would have likely been greater. While most major infrastructure projects go over budget, megaprojects such as bridges, dams and railway lines tend to yield economic benefits for longer than the few weeks that many Olympic facilities are used. 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.
