The upcoming Olympics have been marred by the Zika crisis, body parts washing up on a prominent beach, a lack of security, disease-ridden shitwater, and a political meltdown. All these extra-normal maladies have made it somewhat easy to wash over the fact that Rio has created the same boring problem for itself that every Olympic host city does: they went way over budget trying to build everything.
Bent Flyvbjerg and two other researchers from the business school at Oxford University published a study concluding that Rio de Janeiro spent $4.6 billion to put on the Olympics, $1.6 billion more than their $3 billion budget, good for a 51 percent overshoot. This is less than the usual cost to put on a Summer Olympics (the last six have cost an average of $8.9 billion) and far less than the furthest any city has gone over budget (Montreal went 720 percent over in 1976).
At 51 percent in real terms, Rio 2016 seems on track to incur a substantial cost overrun ofUSD 1.6 billion. This is less than the overruns for the most recent Games in London andSochi, but the same as median overrun for Games since 1999.
Their study also found that, without exception, Olympics come with cost overruns:
All Games, without exception, have cost overrun. For no other type of megaproject is this the case. For other project types, typically 10-20 percent of projects come in on or under budget. For the Olympics it is zero percent.
The average Olympics goes 156 percent over budget, per the study. So $1.6 billion is a huge figure, but put in context, it reflects poorly on the entire scam of the Olympics moreso than on Brazilian malfeasance:
At USD 4.6 billion, the Rio Games appear to be on track to reverse the high expenditures of London 2012 and Sochi 2014 and deliver a Summer Games at the median cost for such Games.
At USD 0.4 million per athlete, Rio is on track to deliver its Games at a cost per athlete similar to previous Summer Games and substantially lower than both London 2012 and Sochi 2014.
Read one particular way, the construction overruns were a strange sort of success. Rio didn’t fuck up any worse than they were expected to. But accepting that means you have to accept a system where $1.6 billion worth of lies baked into its structure is good and worthwhile. If anything, Rio’s pedestrian mishandling of their construction budget throws the rest of their incompetency into sharper contrast. Even a correctly-handled Olympics comes with a oversized tab to pick up at the end. Never mind that Rio’s government recently declared a state of “public calamity.” Brazil and Rio’s twin financial problems only make the 51 percent overshoot sting that much harder than it would elsewhere.
Hosting an Olympics is a great way to ruin your city. Oxford ended their abstract with this warning:
Given the above results, 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 mega-project that exists, something that many cities and nations have learned to their peril.