19 July 2023
With the Victorian Labor governemnt cancelling the Commonwealth Games, due to the immense and unjustified cost, here's a breakdown on how the Olympics is funded.
The International Olympics Committee stump up some money, but it is not much, and is pretty much only for the running costs of the local organising committee. Everything else, infrastructure, operations, is funded by host states, largely from public money.
The IOC get big money from media deals. For each Games, they chip in about $1 billion, mostly for the running of the local organising committee. For Brisbane, from what’s in the media and bid documents (given that the host city contract is being kept secret), this is just under $1 billion.
Host cities can recoup costs via ticket sales and sponsorship. For the Brisbane 2032 Olympics, the government have estimated that just $1.3b will come from tickets and about $2 billion from sponsorships. Here's the breakdown the state government made in 2021 (from this document).
Worldwide sponsors include CocaCola, Deloitte, Visa and...Airbnb. Olympics drive up house prices, drive up rents and displace people in host cities. Airbnb are contributing to the housing crisis here & abroad - we should be cracking down on Airbnbs, not selling them advertising.
A chunk of tickets are set aside for IOC members and VIPs (the details of which we don’t know, because again, the full host contract hasn't been made public). The Australian Olympics Committee chair has also said that tickets to finals will be too expensive for most everyday people.
There is also $35 million in revenue from “asset disposal” which is another way of saying ‘sell-offs of publicly funded assets’. The London athletes village, for example, was sold to property company Qatari Diar, for about half what it cost to build.
Everything else - infrastructure, running costs - comes from public money, from the state & Federal governments.
The budget for the Brisbane 2032 Olympics is currenlty at $7 billion. This has already increased from $4.9 billion and will almost certainly increase further.
Most Olympics run at a loss. Researchers from the University of Lausanne write "costs exceeded revenues in most cases". Based on these numbers, Brisbane won't buck that trend. If the state government want the Games to be 'cost neutral', they will have to massively increase ticket costs, triple their sponsorship deals, or slash the infrastructure budgets.
All Games, since the 1960s, have gone over budget, without exception, by on average 172%. One of the reasons is due to the time constraints and pressure from the IOC. The timeframe for the Olympics is pretty much non-negotiable. If there is a disaster - say, a flood - or cost of materials increase, host cities can’t delay or deprioritise Olympics projects, as they might do for other projects. This is part of why the costs are so high.
There is also an obligation that host states cover all or most cost overruns, with the IOC bearing little to no responsbility. So the IOC - who specify things in the contract like the quality of the hotels their members stay in - don't have an incentive to rein in local spending.
But the IOC know that fewer and fewer cities want to host the Olympics (given what a bad deal it is) and have been encouraging cities to use existing infrastructure or host events in other countries. Queensland, however, will be spending $2.7 billion on one stadium and $2.5 billion on a swimming venue. These will be among the most expensive sports arenas in the world.
At $2.7 billion, the Gabba will cost about $1.2 million per track and field athlete that competes at the Olympics. Compare this to the fact that half of Australia's elite athletes earn less than the minimum wage.
There is also little to no transparency about the budget. The host city contract has not been made public. Operations of the organising committee have been shielded from right-to-information laws. A planned multi-government oversight body has been absorbed into the Premier's department.
With Victoria cancelling the Commonwealth Games, Queensland now needs to seriously consider the viability of the Olympics. What cost are we willing to bear? Is it really worth billions on billions, a closed school, a cleared park & a worsening housing crisis?