The headlines say that Milan and Cortina d'Ampezzo, Italy, have been awarded the 2026 Winter Olympics. Ten years from now Italians may look back on today as a disaster.
More and more cities are realizing that Olympic games are glamorous but not economically sound. I made that point four years ago when Boston withdrew its bid to host the 2024 Summer Olympics:
The [Boston] critics knew something that the Olympic enthusiasts tried to forget: Megaprojects like the Olympics are enormously expensive, always over budget, and disruptive. They leave cities with unused stadiums and other waste.
E.M. Swift, who covered the Olympics for Sports Illustrated for more than 30 years, wrote on the Cognoscenti blog a few years ago that Olympic budgets “always soar.”
“Montreal is the poster child for cost overruns, running a whopping 796 percent over budget in 1976, accumulating a deficit that took 30 years to repay. In 1996 the Atlanta Games came in 147 percent over budget. Sydney was 90 percent over its projected budget in 2000. And the Athens Games cost $12.8 billion, 60 percent over what the government projected.”
Bent Flyvbjerg of Oxford University, the world’s leading expert on megaprojects, and his co-author Allison Stewart found that Olympic Games differ from other such large projects in two ways: They always exceed their budgets, and the cost overruns are significantly larger than other megaprojects. Adjusted for inflation, the average cost overrun for an Olympics is 179 percent.
After the 2016 Summer Olympics in Rio de Janeiro, sports columnist Nancy Armour wrote in USA Today, “The legacy of the Rio Olympics is a farce.” She continued:
The closing ceremony was six months ago Tuesday, and already several of the venues are abandoned and falling apart. The Olympic Park is a ghost town, the lights have been turned off at the Maracana and the athlete village sits empty…. the billions that were wasted, the venues that so quickly became white elephants, the crippling bills for a city and country already struggling to make ends meet…
Columnist Anne Applebaum predicted in 2014 that future Olympics would likely be held only in “authoritarian countries where the voters’ views will not be taken into account” — such as the two bidders for the 2022 Winter Olympics, Beijing and Almaty, Kazakhstan. Her prediction seemed to be borne out a year later when the people of Boston revolted against the city's establishment -- business leaders, construction companies, university presidents, the mayor, etc. -- and forced the city to withdraw its bid for the 2024 summer games. Since then, however, Applebaum's faith in democracy seems to have been too high, as upcoming games will be held in Tokyo, Paris, Milan, and Los Angeles (along with China).
In Cato Policy Report, Flyvbjerg examined “the ‘iron law of megaprojects’: over budget, over time, over and over again.” The Olympics are glamorous, and nobody does glamour better than Milan, but they're not the road to prosperity.