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. [...]
To put those cost overruns into perspective, Flyvbjerg and his colleagues compared the Olympics to other megaprojects such as bridges, dams, highways, railway lines and major IT projects. The Olympic Games average 156 percent cost overruns, outdistancing all other types of megaprojects. For comparison, road projects average overruns of 20 percent; bridges and tunnels 34 percent; energy projects 36 percent; rail projects 45 percent; dams 90 percent and IT projects 107 percent. Even road, bridge and rail projects come in under budget 10 percent of the time. Of all the types of projects compared, only the Olympics has a flawless record for going over budget, making the games a particularly risky undertaking for governments unprepared to absorb those additional costs. [...]
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.
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