Financial strain looms over Brisbane's hosting of the Olympics, as it typically accompanies such events.
The "blank check syndrome" is a common issue in the organisation of major events, particularly the Olympics. This tendency to allocate more money when problems arise can perpetuate cost overrun, leading to financial strain for host cities.
The Olympics, second only to nuclear storage projects in terms of cost overrun, have been a source of concern for many. The Tokyo 2020 Olympics, postponed due to the covid-19 pandemic, is a recent example of the financial challenges faced by host cities.
Professor Bent Flyvbjerg, an expert in mega-projects, has identified several factors driving cost overrun in Olympic games. One of these factors is irreversibility, where hosts do not have the option to walk away from the Olympics once they have bid for it. Another factor is the long planning horizon for the Olympics, which can span between 7 and 11 years, increasing the risk of problems.
The design standards for Olympics venues are tight and non-negotiable, setting the Olympics apart from other megaprojects. The tight coupling of events in the Olympics contributes to its complexity, making it difficult to make changes without affecting the entire project. Host cities, being "eternal beginners", are unable to capitalize on prior experience, leading to high cost overrun.
The International Olympic Committee (IOC) has been actively pursuing reforms over the past ten years, particularly achieving significant success in cost savings and sustainability through its "Olympic Agenda 2020" reform initiative. However, the "blank check syndrome" remains a challenge, as host cities have no room to move on time or scope, leading to increased spending.
For instance, Montreal took 30 years to pay off the 1976 Games due to this syndrome. The cost of Paris 2024 is reported at US$8.7 billion with a cost overrun of 115%. Similarly, Los Angeles 2028 has revised its forecast from US$5.3 billion to US$6.8 billion.
Brisbane, the host city for the 2032 Olympics, has committed to a budget of A$7.1 billion (approx. US$4.6 billion). The city aims to showcase the Australian construction industry's ability to deliver major economic and social infrastructure. However, the challenges posed by the "blank check syndrome" and the complexities of the Olympics remain to be seen.
Economic downturns have occurred in countries between landing the Olympics and hosting, such as in Rio 2016 and Athens 2004. These economic factors, combined with the "blank check syndrome", can further exacerbate the financial strain on host cities.
Despite these challenges, the Olympics continue to be a symbol of international unity and sportsmanship. As Brisbane gears up for the 2032 Games, the world will be watching to see how the city navigates the financial complexities of hosting the Olympics.
