<table><caption>**Table 30** BOCOG expenditure evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 CNY)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final (000 CNY)</th></tr></thead><tbody><tr><td>Venues</td><td>0% (10,536,410)</td><td></td><td></td><td></td><td></td><td></td><td>-78%</td><td>-54% (4,866,966)</td></tr><tr><td>Workforce</td><td></td><td></td><td></td><td></td><td></td><td></td><td>0%</td><td>-37% (1,398,035)</td></tr><tr><td>Technology</td><td></td><td></td><td></td><td></td><td></td><td></td><td>0%</td><td>-15% (3,758,815)</td></tr><tr><td>Services</td><td>0% (2,353,132)</td><td></td><td></td><td></td><td></td><td></td><td>-14%</td><td>9% (2,567,121)</td></tr><tr><td>Marketing &amp; Events</td><td>0% (2,833,124)</td><td></td><td></td><td></td><td></td><td></td><td>33%</td><td>45% (4,101,156)</td></tr><tr><td>Administration &amp; Coordination</td><td>0% (1,931,675)</td><td></td><td></td><td></td><td></td><td></td><td>25%</td><td>19% (2,293,439)</td></tr><tr><td>Other</td><td>0% (1,182,419)</td><td></td><td></td><td></td><td></td><td></td><td>445%</td><td>-50% (585,333)</td></tr><tr><td>Total</td><td>0% (18,836,760)</td><td></td><td></td><td></td><td></td><td></td><td>25%</td><td>4% (19,570,864)</td></tr></tbody></table>

Sources: Beijing 2008 Olympic Games Bid Committee (2001), BOCOG (n. d., 2007)

<figure><img src="image_33.png" /><figcaption>**Fig. 26** BOCOG expenditure evolution of estimates and final</figcaption></figure>
### 4.5.3 Beijing 2008 Non-OCOG Costs

Costs for the venues were not available. Thus we cannot calculate cost overruns for Beijing 2008.

We tried hard to obtain information on Beijing's capital investments. However, we failed; and the Olympic scholars we contacted could not help and did not find any data on the Chinese internet. The only way left was using Western newspapers. Various costs for individual sports facilities, some of which fluctuated greatly, were very problematic, which is why they cannot be described as valid.

However, four years before the Games, the City of Beijing and BOCOG decided to reduce the investments into the Games by EUR 724m (FAZ 7.9.2004, 32). Several venues were shifted. One was to take the horse riding events to Hong Kong. The budget at that time was above USD 3,000m for the 18 new venues.

## 4.6 Vancouver 2010

The cost of the Games was shared by three levels of government, Olympic and Paralympic sponsors, and the Vancouver Organising Committee for the 2010 Olympic and Paralympic Winter Games (VANOC).

The City of Vancouver and VANOC were responsible for key aspects of the Games that took place in British Columbia (BC). This included the delivery of competition venues (PNE, Hillcrest, Trout Lake, Killarney and Britannia ice rinks), non-competition venues (such as the Olympic and Paralympic Village in South East False Creek, the Protocol Centre at Coal Harbour Community Centre and LiveCity sites), other key infrastructures and a number of 2010 Games programmes which supported Vancouver's role as host city (British Columbia and Paralympic Winter Games Secretariat 2010, 4). The three levels of government involved in the financing were:

1. Government of Canada

* provided 50% of venue costs to VANOC (approx. CAD 290m)

* security

2. Province of British Columbia

* provided 50% of venue costs to VANOC (approx. CAD 290m)

* contributed to federal security costs

3. City of Vancouver

* provided some operational support (traffic, live sites, etc.)
* venue costs were primarily to expand the planned Olympic venues for civic use, such as a swimming pool.

The City of Vancouver was responsible for providing a number of different venues for the Olympic Games. This included the curling venue at the Vancouver Olympic Centre (or Hillcrest Community Centre), short-track/speed skating and figure skating venue at the Pacific Coliseum, and practice ice rinks at Trout Lake, Killarney, and Britannia. New facilities were built at Hillcrest and Trout Lake, while the remaining facilities were upgraded. Included in the Hillcrest cost estimates is CAD 35.8m for the aquatic pool (built at the same time as the curling venue to take advantage of planning and construction synergies) and CAD 12.8m for the post-Games conversion of the facility to its final legacy of community centre, library and day-care facility (General Manager of Financial Services and General Manager of Olympic Operations 2010, 3).

### 4.6.1 VANOC Revenue

On 2 July 2003, the city of Vancouver was awarded the Olympic Winter Games 2010. VANOC was established as a not-for-profit company without share capital under Part II of the Canada Corporations Act on 30 September 2003, and registered extra-provincially under the BC Society Act.

The revenues of VANOC were as shown in the next table and figure.

<table><caption>**Table 31** VANOC revenue evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 CAD)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final (000 CAD)</th></tr></thead><tbody><tr><td>IOC Contribution</td><td>0% (666,145)</td><td></td><td></td><td></td><td>-4%</td><td>-33%</td><td>-31%</td><td>-27% (484,959)</td></tr><tr><td>Top Sponsorship</td><td>0% (162,204)</td><td></td><td></td><td></td><td>30%</td><td>22%</td><td>25%</td><td>7% (173,948)</td></tr><tr><td>National Sponsorship</td><td>0% (560,386)</td><td></td><td></td><td></td><td>42%</td><td>36%</td><td>39%</td><td>30% (730,989)</td></tr><tr><td>Ticket Sales</td><td>0% (269,360)</td><td></td><td></td><td></td><td>-10%</td><td>-3%</td><td>-1%</td><td>0.05% (269,500)</td></tr><tr><td>Licensing</td><td>0% (46,623)</td><td></td><td></td><td></td><td>3%</td><td>16%</td><td>19%</td><td>25% (58,179)</td></tr><tr><td>Lotteries</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr></tbody></table>
<table><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 CAD)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final (000 CAD)</th></tr></thead><tbody><tr><td>Donations</td><td>0% (24,686)</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Disposal of Assets</td><td>0% (12,344)</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Subsidies</td><td>0% (49,372)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>280% (187,796)</td></tr><tr><td>Other</td><td>0% (69,432)</td><td></td><td></td><td></td><td>127%</td><td>302%</td><td>311%</td><td>154% (176,106)</td></tr><tr><td>Total</td><td>0% (1,860,553)</td><td></td><td></td><td></td><td>13%</td><td>8%</td><td>10%</td><td>12% (2,081,477)</td></tr></tbody></table>

Sources: Vancouver 2010 Candidate City (2002); VANOC (2007, 2008, 2009, 2014)

<figure><img src="image_34.png" /><figcaption>**Fig. 27** VANOC revenue evolution of estimates and final</figcaption></figure>

VANOC also had a revenue overrun of 12%. The IOC contribution was 27% less than expected. It dropped dramatically because the exchange rate of the Canadian dollar dropped from bidding to staging the Games by 33%. All other categories managed to receive a revenue overrun. The sale of tickets was well planned, with an increase of only 0.05%. In addition, the TOP sponsorship, national sponsorship and income
through licensing products had a moderate revenue overrun. The subsidies and others categories earnt more than twice as much as previously stated. Subsidies of CAD 187.8m were contributed by British Columbia and Canada for the Paralympic Games, opening ceremonies, torch relay and medical services (VANOC 2010a).

### 4.6.2 VANOC Expenditure

It is typical for Games organising committees for an excess or a deficiency to arise and fluctuate as the timing of the receipt of revenues and the payment of expenses are dependent on specific contracts and do not follow a regular business cycle. On a project-to-date basis, there was, for example, an excess of deferred operating revenues over deferred operating expenses of CAD 198.0m (VANOC 2009, 4).

Comparing the revenues and expenditures from VANOC at the end we found a break-even position where there was no excess or deficiency of operating revenues over operating expenses. This break-even position reflects that some of VANOC's revenues, namely the final portion of the IOC contribution, were recognised and received only as required to cover expenditures (VANOC 2010, 4). VANOC's overall cost projection was not consistent, which is why there were very large fluctuations in different categories, with some categories even having no content at the end, or they were decentralised in other categories. On the basis of this fact, the changes and final figures of VANOC's expenses should be considered with caution. In summary, there was a 12% cost overrun.

<table><caption>**Table 32** VANOC expenditure evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 CAD)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final (000 CAD)</th></tr></thead><tbody><tr><td>Venues</td><td>0% (389,450)</td><td></td><td></td><td></td><td></td><td>-21%</td><td></td><td></td></tr><tr><td>Workforce</td><td>0% (285,467)</td><td></td><td></td><td></td><td></td><td>-60%</td><td></td><td></td></tr><tr><td>Technology</td><td>0% (341,057)</td><td></td><td></td><td>22%</td><td>13%</td><td>18%</td><td>33% (452,425)</td><td></td></tr><tr><td>Services</td><td>0% (136,502)</td><td></td><td></td><td></td><td></td><td>117%</td><td></td><td></td></tr><tr><td>Marketing & Events</td><td>0% (221,135)</td><td></td><td></td><td></td><td>354%</td><td>53%</td><td>381%</td><td>437% (1,186,514)</td></tr></tbody></table>
<table><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 CAD)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final (000 CAD)</th></tr></thead><tbody><tr><td>Administration &amp; Coordination</td><td>0% (175,130)</td><td></td><td></td><td></td><td>-30%</td><td>32%</td><td>-26%</td><td>-34% (115,799)</td></tr><tr><td>Other</td><td>0% (311,812)</td><td></td><td></td><td></td><td>77%</td><td>6%</td><td>45%</td><td>5% (326,789)</td></tr><tr><td>Total</td><td>0% (1,860,553)</td><td></td><td></td><td></td><td>13%</td><td>8%</td><td>10%</td><td>12% (2,081,527)</td></tr></tbody></table>

Sources: Vancouver 2010 Candidate City (2002); VANOC (2007, 2008, 2009, 2014)

<figure><img src="image_35.png" /><figcaption>Fig. 28 VANOC expenditure evolution of estimates and final</figcaption></figure>

### 4.6.3 Vancouver 2010 Non-OCOG Costs

The government of B C made significant contributions to the 2010 Winter Games. The total construction contribution of BC and the government of Canada was around CAD 580m for the venues.
<table><caption>**Table 33** Vancouver 2010 non-OCOG cost evolution of estimates and final from public resources</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 CAD)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final (000 CAD)</th></tr></thead><tbody><tr><td>Olympic Stadium</td><td></td><td>0%</td><td>16%</td><td>44%</td><td></td><td></td><td></td><td>323% (12,094)</td></tr><tr><td>Ski Jumping Hill</td><td>0% (124,944)</td><td>-7%</td><td>-1%</td><td>0%</td><td>0%</td><td></td><td></td><td>-2% (122,467)</td></tr><tr><td>Sliding Centre</td><td>0% (67,888)</td><td>-7%</td><td>31%</td><td>59%</td><td>62%</td><td></td><td></td><td>55% (104,928)</td></tr><tr><td>Ice Stadium</td><td>0% (50,404)</td><td>-19%</td><td>-17%</td><td>-19%</td><td>-20%</td><td></td><td></td><td>-24% (38,216)</td></tr><tr><td>Olympic Village<sup>14</sup></td><td>0% (327,468)</td><td></td><td>14%</td><td>13%</td><td>12%</td><td></td><td></td><td>12% (367,300)</td></tr><tr><td>IBC/MPC</td><td>0% (18,514)</td><td>-7%</td><td></td><td>-82%</td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>Total<sup>15</sup></td><td>0% (570,704)</td><td>-8%</td><td>-11%</td><td>-14%</td><td>12%</td><td></td><td></td><td>13% (645,005)</td></tr></tbody></table>

Sources: British Columbia Olympic and Paralympic Winter Games Secretariat (2004); Partnerships British Columbia (2007); Vancouver 2010 Candidate City (2002); VANOC (2007, 2010a, b)

Almost all buildings were financed exclusively by British Columbia and Canada. The only exception was the Olympic Village, which was largely funded by the City of Vancouver (VANOC, 2010b). The costs for the renovation of the Olympic Stadium were exceeded by 323%, although it should be noted that no costs were planned for this at the time of the Candidature File, as the stadium already existed. The sliding centre exceeded 55% of its original cost estimate. Furthermore, the Olympic Village was 12% more expensive. In contrast, the construction of the Ski Jumping Hill (-2%) and the Ice Stadium (-24%) was below the estimates. All in all, we get a total cost overrun of 13% for Vancouver.

<footnote n="14">14 Vancouver Olympic Village and Whistler Olympic and Paralympic Village are accounted for in this category.</footnote>

<footnote n="15">15 IBC/MPC is not counted in the total amount since the final costs were not available.</footnote>
<figure><img src="image_36.png" /><figcaption>**Fig. 29** Vancouver 2010 non-OCOG cost evolution of estimates and final from public resources</figcaption></figure>

## 4.7 London 2012

Before a bid was decided, in May 2002, Arup (jointly commissioned by the Department for Culture, Media and Sport (DCMS), the Greater London Authority and the British Olympic Association) reported on the costs and benefits of bidding for the Games. Then, in early 2003, PricewaterhouseCoopers (commissioned by DCMS) produced a probability assessment of the risks and uncertainties involved in a bid to host the Games. The government announced in May 2003 its support for a London bid for the 2012 Games, and the government and the Mayor of London agreed a public sector funding package of GBP 2,375m to meet the costs of the Games.

Government funding for the 2012 Olympic and Paralympic programme, excluding security, was held by the DCMS already in June 2003. That was the host department of the London 2012 Olympic and Paralympic Games. The DCMS aimed to improve the quality of life for all through cultural and sporting activities, to support the pursuit of excellence and to champion the tourism, creative and leisure industries. The Government Olympic Executive was set up within the DCMS to ensure the Games were delivered on time and on budget and that they benefited the whole of the UK. This included overseeing the entire London 2012 project, identifying
and solving problems, delivering the public sector effort and being accountable to Parliament and to the public (DCMS 2012a, 23).

The Greater London Authority and the Olympic Lottery Distributor also contributed a lot to the Games. Security funding continued to be provided primarily by the Home Office

The Olympic Delivery Authority (ODA) was established in April 2006 by the London Olympic and Paralympic Games Act 2006, and was responsible for building the permanent venues and infrastructure needed for the Games (ODA 2015, 1). The ODA was a non-departmental public body whose board was appointed by the Minister for the Olympic and Paralympic Games (in consultation with the Mayor of London) and reported to the Government Olympic Executive. The ODA was the primary recipient of support from the public sector funding package, which comprised funding from the government, the lottery and the Mayor of London (DCMS 2012a, 23).

The following figure shows the various authorities/organisations that were involved in the staging of the Olympic Games.

<figure><img src="image_37.png" /><figcaption>**Fig. 30** Authorities/Organisations involved in delivering and controlling the Olympic Games 2012</figcaption></figure>

Source: National Audit Office (2007a, 23)
As a reminder, at the time the bid was submitted, the estimated cost to the public and private sector was around GBP 5bn. The GBP 2,375m public sector funding package was intended to cover the GBP 2,992m core Olympic costs, towards which GBP 738m of private sector funding was also expected. Additionally, there was GBP 1,044m exchequer funding towards the infrastructure on the site of the Olympic Park (National Audit Office 2007b, 28).

Overall the public funding of the Games was GBP 9,298m (National Audit Office 2012, 22), including all work on infrastructure. However, in the post-Games period, the revenues from the sale of land in the Olympic Park or the sale of the Olympic Village reduced this funding severely. It was estimated that more than GBP 1,340m would flow back to the government, the National Lottery and the City of London (DCMS 2012b, 16). In 2012, it was expected that, without further cost pressures emerging, there would be a GBP 377m underspend against the Funding Package (National Audit Office 2012, 22), which meant the total costs were GBP 8,921m. Against this, the anticipated final cost for the ODA programme as at November 2014, including residual liabilities to be discharged by the ODA statutory successor body, DCMS, was GBP 6,739m (ODA 2015, 8). Savings against the original baseline budget derived primarily from value engineering changes, effective risk management, procurement, lower inflation, efficient delivery, prompt commercial close-out and VAT recovery.

<caption>**Fig. 31**
Funding for the Olympic and Paralympic Games in London 2012</caption>

Source: DCMS (2012b, 16)

<figure><img src="image_38.png" /></figure>
Working against cost overruns, the ODA was able to save further against the original budget by GBP 1,032m. The latest savings ODA was able to achieve were largely from the efficient delivery of Games-time transport operations (such as ORN and rail services), corporate security services, and venues (DCMS 2012b, 11).

The overall costs shown here include venue security costs of GBP 514m for this Games (National Audit Office 2012, 23). The anticipated final cost (September 2012) of policing and providing security outside the venues was GBP 455m (National Audit Office 2012, 23).

The London Organising Committee of the Olympic Games and Paralympic Games (LOCOG) and the Olympic Delivery Authority wound up in 2013 and 2014 respectively.

### 4.7.1 LOCOG Revenue

LOCOG was responsible for the overall staging of the 2012 Games. LOCOG raised its own income through a variety of sources, including ticket sales, sponsorship, merchandising and the IOC (broadcasting revenue, TOP sponsorship programme). It also received a small percentage of its income from the government towards the cost of the Paralympic Games. It was a private company limited by guarantee established by a joint venture agreement between three stakeholders:

1. Secretary of State for Culture, Olympics, Media and Sport,

2. Mayor of London,

3. British Olympic Association.

The income generated through these various sources were assigned to staging the Games only. LOCOG did not fund the capital costs of venues or other permanent infrastructures.
<table><caption>**Table 34** LOCOG revenue evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 GBP)</th><th>t-6</th><th>t-5<sup>16</sup></th><th>t-4<sup>16</sup></th><th>t-3<sup>16</sup></th><th>t-2</th><th>t-1</th><th>final (000 GBP)</th></tr></thead><tbody><tr><td>IOC Contribution</td><td>0% (390,514)</td><td>-5%</td><td>-6%</td><td>-5%</td><td>-5%</td><td>-2%</td><td>-2% (381,600)</td><td></td></tr><tr><td>Top Sponsorship</td><td>0% (195,257)</td><td>-7%</td><td>-5%</td><td>-5%</td><td>-5%</td><td>8%</td><td>19% (232,200)</td><td></td></tr><tr><td>National Sponsorship</td><td>0% (471,871)</td><td>36%</td><td>46%</td><td>47%</td><td>47%</td><td>49%</td><td>55% (731,100)</td><td></td></tr><tr><td>Ticket Sales</td><td>0% (322,825)</td><td>15%</td><td>14%</td><td>27%</td><td>27%</td><td>91%</td><td>104% (657,100)</td><td></td></tr><tr><td>Licensing</td><td>0% (59,879)</td><td>11%</td><td>18%</td><td>19%</td><td>19%</td><td>60%</td><td>35% (80,900)</td><td></td></tr><tr><td>Lotteries</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Donations</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Disposal of Assets</td><td>0% (23,431)</td><td>19%</td><td>18%</td><td>-35%</td><td>-35%</td><td>1%</td><td>-55% (10,500)</td><td></td></tr><tr><td>Subsidies</td><td>0% (46,862)</td><td>48%</td><td>47%</td><td>48%</td><td>48%</td><td>106%</td><td>143% (114,100)</td><td></td></tr><tr><td>Other</td><td>0% (91,771)</td><td>214%</td><td>181%</td><td>21%</td><td>21%</td><td>177%</td><td>121% (202,900)</td><td></td></tr><tr><td>Total</td><td>0% (1,602,409)</td><td>26%</td><td>27%</td><td>20%</td><td>20%</td><td>48%</td><td>50% (2,410,400)</td><td></td></tr></tbody></table>

Sources: IOC data; LOCOG (2008, 2009, 2012); London 2012 Candidate City (2004)

The IOC contribution to the 2012 Games came from income generated, and from projected income – to be raised by the Olympic Movement – primarily from the sale of television and related broadcast image rights. Here, the minus 2% was caused by inflation rate adjustments. The TOP sponsorship contain included money from the Worldwide Partners’ scheme. However, nearly 40% of the sponsorship money came from local and national sponsorship. These revenues came from the sale of marketing rights, and were paid for in return for exclusive marketing communications and advertising rights in relation to the 2012 Games (and within the ‘quadrennial period’ that included the Vancouver 2010 Winter Games) (UEL 2013, 115).

The table does not show revenues from lotteries and donations. The latter were included in “others”. Lottery funding was added to help fund the infrastructure

<footnote n="16">16 LOCOG had used nominal numbers in its cost and revenue projection, so we downgraded a projected inflation of 2% per year and inflated with the actual GDP-deflator.</footnote>
and other programmes, such as the support of elite athletes and coaches, but not
LOCOG (National Audit Office 2007b, 18).

The partly high revenue overruns can be explained by conservative revenue estimates. Experience with the Millennium Dome, where the income generated fell well short of the amounts forecast, served as a lesson for a number of LOCOG's planned revenue sources (National Audit Office 2007a, 17). In summary, LOCOG had a cost overrun of 50%.

<figure><img src="image_39.png" /><figcaption>**Fig. 32** LOCOG revenue evolution of estimates and final</figcaption></figure>

4.7.2 LOCOG Expenditure

Funding made available to LOCOG had increased by GBP 41m in the period between May and September 2012. Having taken over responsibility for the Olympic Park earlier than originally planned, in January 2012, following the completion of all main venues the previous July 2012, LOCOG was better placed to undertake a range of work, and thus the ODA did less (DCMS 2012b, 11). This explains the expenditure overruns of LOCOG for "venues" (see next table). The increase was also caused by underestimating the overlay costs.

The costs for workforce fluctuated a lot three to five years before the Games.
Marketing exploded a year before the Games and finally left a 78% expenditure
overrun. The total expenditure overrun of LOCOG was at 48%, which was – as
usual – covered by the revenue overruns as can be seen in the table above. The September 2012 accounts showed an operating loss of GBP 53m, though there were deferred revenues of GBP 75m, which turned out a profit position later. LOCOG was at that time still facing expenditures in closing all its contracts and closing down the organisation (UEL 2013, 116). All in all, the cost overrun of the Organising Committee in London was about 48%.

<table><caption>**Table 35** LOCOG expenditure evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 GBP)</th><th>t-6</th><th>t-5<sup>17</sup></th><th>t-4<sup>17</sup></th><th>t-3<sup>17</sup></th><th>t-2</th><th>t-1</th><th>final (000 GBP)</th></tr></thead><tbody><tr><td>Venues</td><td>0% (443,233)</td><td>22%</td><td>26%</td><td>7%</td><td></td><td>45%</td><td>58% (701,668)</td><td></td></tr><tr><td>Workforce</td><td>0% (121,710)</td><td>154%</td><td>-49%</td><td>248%</td><td></td><td>-16%</td><td>-14% (104,362)</td><td></td></tr><tr><td>Technology</td><td>0% (291,584)</td><td>-5%</td><td>30%</td><td>57%</td><td></td><td>60%</td><td>72% (501,888)</td><td></td></tr><tr><td>Services</td><td>0% (178,986)</td><td>24%</td><td>20%</td><td>10%</td><td></td><td>-30%</td><td>48% (264,257)</td><td></td></tr><tr><td>Marketing &amp; Events</td><td>0% (213,481)</td><td>11%</td><td>38%</td><td>-6%</td><td></td><td>209%</td><td>78% (380,077)</td><td></td></tr><tr><td>Administration &amp; Coordination</td><td>0% (178,986)</td><td>33%</td><td>62%</td><td>-54%</td><td></td><td>55%</td><td>70% (303,820)</td><td></td></tr><tr><td>Other</td><td>0% (174,430)</td><td>11%</td><td>37%</td><td>10%</td><td></td><td>-41%</td><td>-34% (114,572)</td><td></td></tr><tr><td>Total</td><td>0% (1,602,409)</td><td>26%</td><td>27%</td><td>26%</td><td></td><td>48%</td><td>48% (2,370,644)</td><td></td></tr></tbody></table>

Sources: LOCOG (2008, 2009 2012, 2013); London 2012 Candidate City (2004)

Two grants were made available to LOCOG immediately prior to the start of the Games: one for GBP 9.3m to cover the additional costs of venue preparation as a result of the extremely wet weather in the months leading up to the Games; and one for GBP 5m to cover Games-time contingency requirements. LOCOG confirmed that it would not require these grants, as it had planned to be able to cover both the pre-Games expenditure and Games-time contingency expenditures by

<footnote n="17">17 LOCOG had used nominal numbers in its cost and revenue projection, so we downgraded a projected inflation of 2% per year and inflated with the actual GDP-deflator.</footnote>
its own budget (DCMS 2012b, 11). Here the weather conditions as a potential cost overrun is mentioned.

LOCOG forecast that its final costs would be covered by its income. LOCOG raised GBP 731m in local and national sponsorship, hitting its upper sponsorship target during difficult economic conditions. Consistent with its guarantee to cover shortfalls in revenue, LOCOG's income included GBP 27m from the Public Sector Funding Package, which the government provided to enable LOCOG to move forward more confidently (National Audit Office 2012, 8).

<figure><img src="image_40.png" /><figcaption>Fig. 33 LOCOG expenditure evolution of estimates and final</figcaption></figure>

### 4.7.3 London 2012 Non-OCOG Costs

The National Audit Office (2012, 33) stated that, in its first report (February 2007), it highlighted the need for the budget to be clearly determined and effectively managed. After the Games were awarded to London in July 2005, a good deal of work was done to develop the cost estimates, but the ODA had to make decisions about individual projects without certainty of its overall budget and long-term funding. In March 2007, the Department announced a revised Public Sector Funding Package of GBP 9.3bn. This was more or less been stable until the delivery of the Games, even though at the end it was GBP 6,739m (ODA 2015, 8). However, to the public
the immense cost increases became obvious and incited concerns between bidding in 2003 and 2007.

The cost overruns of our selected venues (basket) (Tab. 36) are shown in the next table. When looking at the cost development of the venues in London, it is noticeable that all venues became more expensive than originally planned. The swimming pool was three times as expensive as expected, as was the Velodrome, and the IBC/MPC cost more than twice as much. The construction of the Olympic Village had a rather moderate percentage increase in costs. In summary, the cost increase in the non-OCOG area can be estimated at 43%.

<table><caption>**Table 36** London 2012 non-OCOG evolution of estimates and final from public resources</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 GBP)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final (000 GBP)</th></tr></thead><tbody><tr><td>Olympic Stadium</td><td>0% (305,690)</td><td>67%</td><td></td><td></td><td></td><td>79%</td><td></td><td>40% (429,000)</td></tr><tr><td>Swimming Pool</td><td>0% (79,479)</td><td>178%</td><td></td><td></td><td></td><td>242%</td><td></td><td>216% (251,000)</td></tr><tr><td>Multipurpose Hall</td><td>0% (27,172)</td><td>120%</td><td></td><td></td><td></td><td></td><td></td><td>47% (40,000)</td></tr><tr><td>Velodrome</td><td>0% (31,248)</td><td>138%</td><td></td><td></td><td></td><td>218%</td><td></td><td>182% (88,000)</td></tr><tr><td>Olympic Village</td><td>0% (706,484)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>6% (748,000)</td></tr><tr><td>IBC/MPC</td><td>0% (146,052)</td><td>55%</td><td></td><td></td><td></td><td></td><td></td><td>103% (297,000)</td></tr><tr><td>Total</td><td>0% (1,296,126)</td><td>85%</td><td></td><td></td><td></td><td>120%</td><td></td><td>43% (1,853,000)</td></tr></tbody></table>

Sources: DCMS (2012a, b); House of Commons (2010); London 2012 Candidate City (2004)

The Olympic Village was partly financed by the private sector. That funding is not considered here and may have been probably lower if we had considered the private funding. In addition, when the deals with the private sector to fund the Olympic Village and Media Centre became problematic in 2007, the government funders enabled the ODA to continue the construction work in parallel with resolving how to fund the two projects (National Audit Office 2012, 30). This was needed to keep the programme on track and required a degree of pragmatism even though the activities did not progress in an ideal sequence.
<figure><img src="image_41.png" /><figcaption>**Fig. 34** London 2012 non-OCOG cost evolution of estimates and final from public resources</figcaption></figure>

At the end of December 2006, the National Audit Office (2007a, 16) gave the following reasons for cost overruns and the need to develop new cost plans and budgets.

**Contingency provision:** The cost estimates in the Candidature File included a contingency provision to cover unanticipated costs on individual projects. This contingency was too low.

**Tax:** Treasury guidance stated that tax costs should be included in cost estimates. At the time of the bid, the tax status of the proposed ODA was undecided and the cost estimates in the Candidature File excluded provision for value added tax.

**Security:** The cost estimates at the time of the bid included GBP 190m for security, including the cost of security at the Olympic venues. However, as stated above, the reality was that security was around GBP 514m (National Audit Office 2012, 23).

**Private sector investment:** At the time of the bid it was assumed that some Olympic infrastructure and regeneration costs would be met by private sector investment or financing of around GBP
750m, thereby reducing the cost of the Games to the public sector. However, in the light of advice following the bid, the Department concluded there was little prospect of securing significant private sector funding to deliver the Olympic Park in view of the tight timescale for delivering the Park and the lack of an identifiable revenue stream.

When analysing the bid budget of 2004 (non-OCOG and LOCOG) with a first serious budget from 2007, the following areas needed a major cost adjustment (National Audit Office 2007b, 16).

1. Venues (including legacy conversion) (ODA)

2. Transport infrastructure and operating costs (ODA)

3. Infrastructure and regeneration costs (ODA)

4. Support for elite and community sport (public funding)

5. ‘Look of London’ costs (public funding)

6. Paralympic Games (public funding)

## 4.8 Sochi 2014

The city of Sochi was officially awarded the right to host the 2014 Olympic Winter Games on 4 July 2007. However, the history of big construction sites and urban image changes had started long before Sochi secured the right to host the Olympic Games and even before summer 2005, when the Sochi 2014 Bid Committee was established. Much of the construction was made in general infrastructure, and basically Sochi was largely changed and the Olympic Games merely played a role in this. After Sochi was awarded the right to host the Olympic Winter Games, a new decree no. 991 was approved on 27 December 2007, considering the detailed IOC requirements, but lacking any specification regarding financial support (Anti-Corruption Foundation n. d., 6).

The number of shareholders involved in the financing of infrastructure was extremely high in Sochi. According to Aumüller (2014, 28), the Games budget included more than 200 projects that were financed by
1. Private investors (Wladimir Potanin, Oleg Deripaska, Viktor Wekselberg who invested in the Olympic University, Rosa Chutor (Alpine, Snowboard/Freestyle Park), but also in the harbour, Airport and Hotel)

2. Private investors (UGMK-Holding (Schajba-Arena); Slawoblast (Curling-Centre))

3. State-controlled companies (Gazprom (Nordic skiing and Biathlon centre); Sberbank (jumping hill))

4. State-owned companies (Olympstroy (ice channel, Bolschoi Ice Palace; Fischt-Stadium); Omega (Adler-Arena Oval))

Two state-owned companies, Olympstroy and Russian Railways (RZD) (USD 7.6bn or some 20 infrastructure projects), received over half of the overall federal budget. Olympstroy spent USD 6.3bn on constructing 11 sports venues (Anti-Corruption Foundation n. d., 7).

The figure illustrates the share of these investors on the overall budget.

<figure><img src="image_42.png" /><figcaption>**Fig. 35** Financing of the Winter Games Sochi 2014</figcaption></figure>

Sources: Anti-Corruption Foundation (n. d., 7) based on RF Government Decree no. 991, Federal Laws on Budget, Annual reports of Olympstroy and other entities, ACF analyses.
Out of all investments, only 19% was used to construct sports venues (Anti-Corruption Foundation n. d., 14). This mix of different investors makes it very difficult to keep track of financial streams.

### 4.8.1 SOOC Revenue

The Sochi 2014 Organising Committee (SOOC) had an approximately 75% private share of resources. The figures in the following table show that the revenues, unlike for other Games in this study, did not increase. The main reason for this is that the inflation rate was extremely high during that time. From 2007 (bidding time) to 2014, inflation almost doubled the prices, which means that the revenues were reduced by more than 50% (2007 GDP deflator = 58.9; in 2014 it was 123.6). Despite the high inflation in Russia, the revenues only decreased by 3% compared to the bid plan.

<table><caption>**Table 37** SOOC revenue evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 RUB)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final (000 RUB)</th></tr></thead><tbody><tr><td>IOC Contribution</td><td>0% (20,141,427)</td><td></td><td></td><td></td><td>-32%</td><td>-35%</td><td>-38%</td><td>-32% (13,647,182)</td></tr><tr><td>Top Sponsorship</td><td>0% (11,370,161)</td><td></td><td></td><td></td><td>-44%</td><td>-51%</td><td>-54%</td><td>-45% (6,235,528)</td></tr><tr><td>National Sponsorship</td><td>0% (22,740,321)</td><td></td><td></td><td></td><td>97%</td><td>69%</td><td>72%</td><td>76% (40,088,582)</td></tr><tr><td>Ticket Sales</td><td>0% (8,405,667)</td><td></td><td></td><td></td><td>-37%</td><td></td><td>-6%</td><td>-15% (7,152,367)</td></tr><tr><td>Licensing</td><td>0% (2,306,518)</td><td></td><td></td><td></td><td>-13%</td><td>25%</td><td>-27%</td><td>-23% (1,768,969)</td></tr><tr><td>Lotteries</td><td>0% (974,585)</td><td></td><td></td><td></td><td>91%</td><td>75%</td><td></td><td></td></tr><tr><td colspan="9"><strong>Donations</strong></td></tr><tr><td>Disposal of Assets</td><td>0% (802,149)</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Subsidies</td><td>0% (27,164,938)</td><td></td><td></td><td></td><td>-59%</td><td>-57%</td><td>-44%</td><td>-42% (15,666,099)</td></tr><tr><td>Other</td><td>0% (4,693,537)</td><td></td><td></td><td></td><td>78%</td><td>253%</td><td>110%</td><td>135% (11,021,602)</td></tr><tr><td>Total</td><td>0% (98,599,304)</td><td></td><td></td><td></td><td>-5%</td><td>-9%</td><td>-7%</td><td>-3% (95,580,329)</td></tr></tbody></table>

Sources: Sochi 2014 Bid Committee (2006); SOOC (2011 2012, 2013, 2014)
The IOC contribution to the staging of the Winter Games increased by more than 50 per cent from 2002. In other words, SOOC did a great job, as nominal figures show a great increase in revenues over the years. Particularly in the area of national sponsorship, it was even able to generate 76% more revenues, as it was denominated in USD, but paid in Russian roubles – thus SOOC benefited from USD revenues. The “other” category listed a 135% revenue overrun. All other categories took less than planned, due to high inflation. As a result, a revenue underrun of -3% overall can be observed.

<figure><img src="image_43.png" /><figcaption>**Fig. 36** SOOC revenue evolution of estimates and final</figcaption></figure>

### 4.8.2 SOOC Expenditure

The interpretation of the expenditure has to be seen in terms of the inflation over the time. Much expenditure must have become more expensive. It was therefore a great achievement that the final expenditures of SOOC were 6% below the estimate in the bid documents.
<table><caption>**Table 38** SOOC expenditure evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 RUB)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final (000 RUB)</th></tr></thead><tbody><tr><td>Venues</td><td>0% (12,411,537)</td><td></td><td></td><td></td><td>-41%</td><td>-46%</td><td>-36%</td><td>-33% (8,296,734)</td></tr><tr><td>Workforce</td><td>0% (18,151,389)</td><td></td><td></td><td></td><td>17%</td><td>7%</td><td>6%</td><td>1% (18,243,653)</td></tr><tr><td>Technology</td><td>0% (16,444,501)</td><td></td><td></td><td></td><td>-1%</td><td>-8%</td><td>-5%</td><td>-2% (16,169,998)</td></tr><tr><td>Services</td><td>0% (10,967,397)</td><td></td><td></td><td></td><td>-20%</td><td>-28%</td><td>-19%</td><td>-23% (8,427,313)</td></tr><tr><td>Marketing & Events</td><td>0% (12,059,517)</td><td></td><td></td><td></td><td>2%</td><td>-13%</td><td>9%</td><td>10% (13,228,170)</td></tr><tr><td>Administration & Coordination</td><td>0% (11,804,306)</td><td></td><td></td><td></td><td>-13%</td><td>-16%</td><td>-19%</td><td>-10% (10,590,319)</td></tr><tr><td>Other</td><td>0% (16,760,721)</td><td></td><td></td><td></td><td>5%</td><td>21%</td><td>1%</td><td>4% (17,369,193)</td></tr><tr><td>Total</td><td>0% (98,599,369)</td><td></td><td></td><td></td><td>-5%</td><td>-9%</td><td>-7%</td><td>-6% (92,325,380)</td></tr></tbody></table>

Sources: Sochi 2014 Bid Committee (2006); SOOC (2011, 2012, 2013, 2014)

<figure><img src="image_44.png" /><figcaption>**Fig. 37** SOOC expenditure evolution of estimates and final</figcaption></figure>
It seems that BOCOG and the SOOC kept the workforce and administration expen-
diture under control, but both had relatively high administration costs compared to
other OCOGs. The venues, services and administration & coordination categories
saw a significant decline in costs. On the other hand, the expenditure on the side
of workforce, marketing & events and other was higher than expected. In general,
the changes are very moderate, despite the high inflation rate.

4.8.3 Sochi 2014 Non-OCOG Costs

All venues were designed specifically for the Olympic Games and included in the:

a. Federal Target programme on Olympic facilities construction and Sochi de-
velopment as an Alpine ski resort (Decree of the Russian Government no. 991
dated 29.12.2007),

b. Regional Target programme on Olympic facilities construction and Sochi de-
velopment as an Alpine ski resort (The Decree of the Governor of Krasnodar
Krai no. 723 dated 19.08.2009) and

c. Municipal target programme on Olympic facilities construction and Sochi
development as an Alpine ski resort (The Decree of the Head of Sochi Admin-
istration no. 14 dated 14.01.2011) (Kasimov 2015, 194)

Overall, according to the Anti-Corruption Foundation (n. d.), the cost overruns for the sports venues were very large. Our data show more moderate cost overruns, because we considered the inflation rate. Inflation in Russia was very high between 2007 and 2014, which reduced the perceived cost increase. However, as shown in the next table, it is on average of our “venue basket” at 178% and the market is the largest of the investigated Olympic Winter Games.
<table><caption>**Table 39** Sochi 2014 non-OCOG cost evolution of estimates and final from public resources</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 RUB)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final (000 RUB)</th></tr></thead><tbody><tr><td>Olympic Stadium</td><td>0% (3,635,788)</td><td></td><td></td><td>245%</td><td></td><td></td><td></td><td>533% (23,009,190)</td></tr><tr><td>Ski Jumping Hill</td><td>0% (2,066,835)</td><td></td><td></td><td>37%</td><td></td><td></td><td></td><td>286% (7,986,120)</td></tr><tr><td>Sliding Centre</td><td>0% (8,525,996)</td><td></td><td></td><td>-27%</td><td></td><td></td><td></td><td>-7% (7,887,930)</td></tr><tr><td>Ice Stadium</td><td>0% (11,601,332)</td><td></td><td></td><td>22%</td><td></td><td></td><td></td><td>-15% (9,884,460)</td></tr><tr><td>Olympic Village</td><td>0% (7,855,676)</td><td></td><td></td><td>625%</td><td></td><td></td><td></td><td>471% (44,872,830)</td></tr><tr><td>IBC/MPC<sup>18</sup></td><td>0% (17,471,194)</td><td></td><td></td><td>-96%</td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>Total</td><td>0% (33,685,628)</td><td></td><td></td><td>175%</td><td></td><td></td><td></td><td>178% (93,640,530)</td></tr></tbody></table>

Sources: Anti-Corruption Foundation (n. d.); Aumüller (2014); Müller (2014); Sochi 2014 Bid Committee (2006); SOOC (2010)

Compared to Salt Lake City, we find that Sochi had a totally reverse financing system. While Salt Lake City tried to use almost no public money to finance the sports venues, Sochi was mostly financed by public funds. A large part of the cost of venues was significantly more expensive than actually planned. The highest cost overrun was for the construction of the Olympic Stadium, at 533%. But for the Olympic Village (471%) and the ski jumping hill (286%), the costs also exploded. Nevertheless, money could be saved, which happened during the construction of the sliding centre and the ice stadium. In summary, Sochi had a cost overrun of 178% in the construction of its sports-related infrastructure.

Sochi had significant cost overruns. The final data (when available) show much higher costs than estimated in the budget in the bid book. Some venues were severely underestimated, such as the Biathlon and Cross-Country Complex, the ski jump and the Olympic Stadium. Looking at bidding data, it seems that the projected costs are so low that only temporary venues or renovations were planned. The massive cost overruns are all the more surprising, considering that the bid book stated that “expenses are forecast on the ‘high side,’ recognising that expenses for Olympic Winter Games are

<footnote n="18">18 IBC/MPC is not counted in the total amount since the final costs were not available.</footnote>
typically underestimated at this stage” (Sochi 2014 Bidding Committee 2006, 99). As Sochi did not have a sufficient number of venues, it should be asked why no one (and in particular the well informed IOC) put pressure on Sochi to have a more realistic budget. The non-OCOG budget was developed by the Ministry of Development and Trade. However, in our recommendations we will come back to this point.

<figure><img src="image_45.png" /><figcaption>**Fig. 38** Sochi 2014 non-OCOG cost evolution of estimates and final from public resources</figcaption></figure>

Müller (2014) explains some reasons for the cost overruns:

**Changing Masterplan:** The Biathlon and Cross-Country complex had to be relocated and had to have a separate “endurance village” for competing athletes, because of the elevation difference with the Mountain Olympic Village.

**Standards:** Some venues had to conform to international sustainable building standards, a requirement that was introduced after the bid.

**Economic Crises:** In 2009, Russia's GDP lost 7.8% during the financial crisis.

A further burden was the exchange rate and inflation. During the seven years of construction, inflation was very high and almost doubled the prices. But the change
in the exchange rate also had a massive impact, as the US dollar was 30% more expensive, meaning that all imports became more expensive (see methodology section).

## 4.9 Rio de Janeiro 2016

The bidding for these Games began on 28 July 2006, when the Executive Council of the Brazilian Olympic Committee met to nominate a Brazilian city to host the Games in 2016. Only in October 2007 did Rio officials attend the 2016 Applicant Cities Seminar organised by the IOC in Lausanne, where they learnt more about technical areas that would be analysed throughout the application process. In our recommendations we will come back to this point of needed IOC support. Rio officials participated in the Olympic Games Observer Programme from August during the Beijing 2008 Olympic Games and received further insights into the necessary infrastructure etc. for staging the Olympic Games. On 11 February 2009, the Rio de Janeiro bid committee delivered its Candidature File, and later that year, in October 2009, four new sports entered the programme. Thus, additional planning and increased costs became obvious. It was at the same Session in Copenhagen that Rio was elected as the host city.

The Olympic Games in Rio de Janeiro experienced several changes in their master planning after being awarded the Games. The main changes in relation to the original budget were:

1. the impact of the adjustment based on Brazil's Consumer Price Index (IPCA),

2. the inclusion of four new sports (golf, rugby, paracanoe and paratriathlon),

3. new technologies,

4. Games security,

5. average salary increases above inflation,

6. spending on usage and retrofitting of the Olympic Village.

This list shows a quite typical pattern of cost overruns that previous host cities also had. Inflation and salary changes are changes in the environment and happen irrespective of the Games development. Changes to the master plan can also occur, and adding rugby and golf to the Games schedule meant the need for new venues. The most difficult thing to plan is Games security. In Rio, that was resolved at the last minute by putting the military and police in charge. Security has become an important cost issue at the Olympic Games, as it was in Rio.
The Brazilian Ministry of Defence created the Special Advisory Committee for Major Events, to the Joint Staff of the Armed Forces, which used the Joint Operations Centre as the venue for coordination and monitoring of the action to be taken by Brazil's three armed forces. The Brazilian Intelligence Agency, the entity responsible for planning, implementing, coordinating, supervising and controlling intelligence activities in Brazil, was defined as the centralising entity that had to coordinate the work of all other entities of the Brazilian Intelligence System. It was also responsible for preparing risk assessments, producing knowledge, preventing terrorism and disseminating information, which it did through the National Intelligence Centre and the Regional Intelligence Centres established in the host cities of the Games (Social Communication Secretariat 2016, 4).

All investments made in safety and security for the Games had as a basis premise their subsequent return to society as a legacy for the everyday life of public safety. The Ministry of Justice invested BRL 1,500m in security for the major events (BRL 1,170m already spent on the 2014 FIFA World Cup). The Ministry of Defence's budget for security for the Rio 2016 Olympic and Paralympic Games was BRL 704.4m, BRL 275m of which was invested in 2014 and BRL 183.9m in 2015. An additional BRL 150m was provided for in the Annual Budget Law for 2016. In addition a provisional decree was issued, granting an additional BRL 95.5m to the Ministry of Defence. The funds were meant to finalise equipment purchases and fund activities by the armed forces aimed at ensuring the security of the Rio 2016 Games (Social Communication Secretariat 2016, 4).

### 4.9.1 COJOPR Revenue

The Rio 2016 Organising Committee for the Olympic Games (COJOPR) was established on 8 April 2010, with its headquarters in Rio de Janeiro. The Organising Committee has not yet wound up, although this usually happens in the same year of the Games. Therefore, for the present calculation of changes in revenues and expenses, only the budget which was published shortly after the Games has been used, rather than a final budget. The COJOPR operates as a private, non-profit civil society of an educational, cultural, artistic and sports nature, and its principal activity was the promotion, organisation and staging of the Olympic and Paralympic Games in Brazil in 2016. On 23 January 2014, the COJOPR publicly disclosed its first revision of the Games budget following the bid, highlighting a balanced budget using only private resources (COJOPR 2015, 11). This was only two-and-a-half years before the Games started.
The original COJOPR budget as set out in the Candidature File was around USD 2,800m, to be funded by three contributors:

1. the IOC,

2. subsidies from federal, state and municipal governments (divided into equal parts),

3. private funds (sponsorships, licencing and ticket sales) (SCU 2014, 191).

A revised budget was disclosed in January 2014, and it had increased to USD 3,000m. The increase was justified by the inclusion of four new sports. It is interesting to note that the previously planned subsidies (see above point 2) for the COJOPR were eliminated in 2014 (SCU 2014, 192). This was a strategic decision by the COJOPR not to receive government subsidies in order to maintain the “private” funded company status. Instead, the COJOPR was trying to push the government to undertake directly some of the costs, such as sports equipment and energy.

Tab. 40 shows the revenue evolution of the COJOPR estimates.

<table><caption>**Table 40** COJOPR revenue evolution of estimates</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 BRL)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td>IOC Contribution</td><td>0% (2,146,104)</td><td></td><td></td><td>-27%</td><td>-15%</td><td>-7%</td><td>0%</td><td>N/A</td></tr><tr><td>Top Sponsorship</td><td>0% (1,065,104)</td><td></td><td></td><td>-14%</td><td>-23%</td><td>-11%</td><td>-13%</td><td>N/A</td></tr><tr><td>National Sponsorship</td><td>0% (1,891,669)</td><td></td><td></td><td>134%</td><td>133%</td><td>116%</td><td>70%</td><td>N/A</td></tr><tr><td>Ticket Sales</td><td>0% (1,330,514)</td><td></td><td></td><td>76%</td><td>-14%</td><td>3%</td><td>-5%</td><td>N/A</td></tr><tr><td>Licensing</td><td>0% (165,936)</td><td></td><td></td><td>11%</td><td>3%</td><td>14%</td><td>4%</td><td>N/A</td></tr><tr><td>Lotteries</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>Donations</td><td>0% (110,624)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>Disposal of Assets</td><td>0% (120,888)</td><td></td><td></td><td>-7%</td><td></td><td></td><td>-88%</td><td>N/A</td></tr><tr><td>Subsidies</td><td>0% (2,551,966)</td><td></td><td></td><td>-7%</td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>Other</td><td>0% (997,962)</td><td></td><td></td><td>437%</td><td>-67%</td><td>-61%</td><td>-11%</td><td>N/A</td></tr><tr><td>Total</td><td>0% (10,380,766)</td><td></td><td></td><td>24%</td><td>-16%</td><td>-14%</td><td>-17%</td><td>N/A</td></tr></tbody></table>

Sources: COJOPR (2015, 2016a, b); Rio 2016 Candidate City (2008)
In the table above we had difficulty in displaying a percentage of a position that was taken out. However, the total revenue development up to one year before the Games shows that the COJOPR probably had a revenue underrun.

The COJOPR is not yet wound up, so there is no final data available. One year before the Games, it seemed that it had a great income through national sponsors, but almost all other categories took less than first expected.

### 4.9.2 COJOPR Expenditure

As with the revenue, there are no final figures in the expenditure of the COJOPR. The cost underrun was measured as being 17% a year before the Games. However, this means that a part of the budget is still estimated and only the final figures can show how the COJOPR will wind up. However, it looks like money could be saved in the category of workforce. In addition, the other categories show moderate changes. Even with regard to venues, the COJOPR was able to save a lot. One reason was the cutbacks for the city dressing programme. The expenditures seem to have become more predictable than for the previous Games, so the next host cities will benefit from the knowledge of the past ones.

<table><caption>**Table 41** COJOPR expenditure evolution of estimates</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 BRL)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td>Venues</td><td>0% (2,525,870)</td><td></td><td></td><td>-29%</td><td>-94%</td><td>-20%</td><td>-36%</td><td>N/A</td></tr><tr><td>Workforce</td><td>0% (1,260,954)</td><td></td><td></td><td>93%</td><td>45%</td><td>24%</td><td>-73%</td><td>N/A</td></tr><tr><td>Technology</td><td>0% (1,800,592)</td><td></td><td></td><td>16%</td><td>-17%</td><td>-12%</td><td>12%</td><td>N/A</td></tr><tr><td>Services</td><td>0% (1,048,440)</td><td></td><td></td><td>63%</td><td>-63%</td><td>-40%</td><td>-23%</td><td>N/A</td></tr><tr><td>Marketing & Events</td><td>0% (1,609,760)</td><td></td><td></td><td>-29%</td><td>-39%</td><td>-41%</td><td>-21%</td><td>N/A</td></tr><tr><td>Administration & Coordination</td><td>0% (789,066)</td><td></td><td></td><td>-58%</td><td>16%</td><td>45%</td><td>34%</td><td>N/A</td></tr><tr><td>Other</td><td>0% (1,346,086)</td><td></td><td></td><td>149%</td><td>119%</td><td>116%</td><td>13%</td><td>N/A</td></tr><tr><td>Total</td><td>0% (10,380,768)</td><td></td><td></td><td>24%</td><td>-16%</td><td>4%</td><td>-17%</td><td>N/A</td></tr></tbody></table>

Sources: COJOPR (2015, 2016a, b); Rio 2016 Candidate City (2008)
### 4.9.3 Rio 2016 Non-OCOG Costs

Kao (2016) states that construction for the Olympic Games Rio 2016 were subjected to even heavier scrutiny than for previous Games. There were protests over costs; while political unrest, a recession and environmental concerns drew attention to the vast construction undertaking, the cost of which made up a large portion of the overall Rio Games budget.

Here, additional reasons for the cost overruns become obvious:

1. political instability and, connected to that, a high level of corruption in Rio,

2. recession, which meant budget pressure on the government and a higher unemployment rate,

3. environmental concerns, which may translate into additional expenditure to clean the water in Guanabara Bay or fight mosquitos (and fight the Zika virus).

As the Games accounts have not yet been completed, no information can be provided on the final cost. The venues we surveyed showed no cost overruns in the non-final figures that were available to us. Nevertheless, we do not want to rule that out in the other areas – infrastructure and transport cost overruns could have occurred, as has repeatedly been communicated in the media.

## 4.10 PyeongChang 2018

PyeongChang was elected as the host city in Durban on 6 July 2011. Undoubtedly, the train connection from Seoul to PyeongChang was the most expensive project, even though one must question whether this investment is purely Olympic or if the trainline is also useful to connect a recreational area to Seoul.

### 4.10.1 POCOG Revenue

The total projected income of the PyeongChang Organising Committee for the 2018 Olympic & Paralympic Winter Games (POCOG) is KRW 2.273 trillion (Park 2016, 325). The source of this money is, as for previous Games, IOC subsidies, TOP Partners, domestic sponsors, Olympic Torch Relay, tickets, licensing, food and beverage, accommodation, broadcasting rights fees, interest allowance and government subsidies (see table below).
The income for each year has been found to be (Park 2016, 325):

* KRW 49,600m in 2014,

* KRW 206,400m in 2015, and

* KRW 459,000m in 2016.

<table><caption>**Table 42** POCOG revenue evolution of estimates and final total</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 KRW)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>t pre Games</th><th>final (000 KRW)</th></tr></thead><tbody><tr><td>IOC Contribution</td><td>0% (453,635,532)</td><td></td><td></td><td>-8%</td><td>4%</td><td>4%</td><td></td><td>2%</td><td>N/A</td></tr><tr><td>Top Sponsorship</td><td>0% (206,244,726)</td><td></td><td></td><td>-8%</td><td>-8%</td><td>14%</td><td></td><td>23%</td><td>N/A</td></tr><tr><td>National Sponsorship</td><td>0% (642,907,500)</td><td></td><td></td><td>36%</td><td>39%</td><td>36%</td><td></td><td>33%</td><td>N/A</td></tr><tr><td>Ticket Sales</td><td>0% (311,295,812)</td><td></td><td></td><td>-40%</td><td>-44%</td><td>-41%</td><td></td><td>-42%</td><td>N/A</td></tr><tr><td>Licensing</td><td>0% (45,003,525)</td><td></td><td></td><td>-19%</td><td>120%</td><td>130%</td><td></td><td>118%<fnref n="19" /></td><td>N/A</td></tr><tr><td>Lotteries</td><td>0% (19,287,225)</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>Donations</td><td>0% (28,287,930)</td><td></td><td></td><td>627%</td><td>156%</td><td>155%</td><td></td><td>664%</td><td>N/A</td></tr><tr><td>Disposal of Assets</td><td>0% (9,000,705)</td><td></td><td></td><td>-8%</td><td>-6%</td><td>14%</td><td></td><td>123%</td><td>N/A</td></tr><tr><td>Subsidies</td><td>0% (167,155,950)</td><td></td><td></td><td>93%</td><td>97%</td><td>146%</td><td></td><td>194%</td><td>N/A</td></tr><tr><td>Other</td><td>0% (85,763,861)</td><td></td><td></td><td>9%</td><td>73%</td><td>74%</td><td></td><td>92%</td><td>N/A</td></tr><tr><td>Total</td><td>0% (1,968,582,765)</td><td></td><td></td><td>19%</td><td>21%</td><td>27%</td><td></td><td>39%</td><td>27% (2,506,991,500)</td></tr></tbody></table>

Sources: POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010)

<footnote n="19">19 POCOG had reflected the gross coin revenue (unlike other OCOGs), which meant it had a very high revenue and high costs due to production. This representation was not in the Candidature File.</footnote>
As the Olympic Games were in progress at the time of the survey, the last budget projection was produced just before the Games, and, like for Rio 2016, there is also no final data available. The changes for POCOG were much bigger than those in Rio. As a result, 664% more revenue was generated by donations. But most other categories were also able to generate more revenues. Only a single category has not taken as much as was planned in the Candidature File. With ticket sales falling short of the pace seen at past Games, POCOG had a big loss here. However, in a way, that was expected as the shortfall had already been predicted four years before. In total, POCOG had an estimated 39% revenue overrun just before the Games than originally planned.

Based on the recent report of POCOG to the IOC Executive Board and according to the preliminary financial information the POCOG budget has a surplus of about US$55m. Detailed data are not yet known as POCOG is in its final stage of financial reconciliation.

<figure><img src="image_46.png" /><figcaption>**Fig. 39** POCOG revenue evolution of estimates and final total</figcaption></figure>

## 4.10.2 POCOG Expenditure

The total projected expenditure of POCOG is KRW 2.273 trillion, and will therefore balance off the revenues (Park 2016, 326).
Our latest output figures are also estimated editions shortly before the Games. So the figures presented above are not guaranteed to be the final figures. As for the previous Games, expenditure was highest two years before the Games, which was reduced just before the Games. Compared to the revenue of POCOG, the sway is not that strong. Despite this, all categories were more expensive than planned at the time of the Candidature File. The highest cost increase was experienced in the administration & coordination category (82%), whereas the category technology had only a slight increase (5%). In summary, the projection of POCOG's expenditure just before the Games was 38% more expensive than was assumed in the Candidature File.

<table><caption>**Table 43** POCOG expenditure evolution of estimates and final total</caption><thead><tr><th>Categories</th><th>Candidature File (t-8)<br>(000 KRW)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>t pre Games</th><th>final (000 KRW)</th></tr></thead><tbody><tr><td>Venues</td><td>0%<br>(405,803,214)</td><td></td><td></td><td>-5%</td><td>22%</td><td>65%</td><td></td><td>61%</td><td>N/A</td></tr><tr><td>Workforce</td><td>0%<br>(243,404,780)</td><td></td><td></td><td>64%</td><td>4%</td><td>26%</td><td></td><td>17%</td><td>N/A</td></tr><tr><td>Technology</td><td>0%<br>(488,866,863)</td><td></td><td></td><td>5%</td><td>-7%</td><td>6%</td><td></td><td>5%</td><td>N/A</td></tr><tr><td>Services</td><td>0%<br>(201,744,374)</td><td></td><td></td><td>-11%</td><td>-6%</td><td>32%</td><td></td><td>34%</td><td>N/A</td></tr><tr><td>Marketing & Events</td><td>0%<br>(267,063,776)</td><td></td><td></td><td>35%</td><td>45%</td><td>87%</td><td></td><td>76%</td><td>N/A</td></tr><tr><td>Administration & Coordination</td><td>0%<br>(152,754,822)</td><td></td><td></td><td>50%</td><td>70%</td><td>51%</td><td></td><td>82%</td><td>N/A</td></tr><tr><td>Other</td><td>0%<br>(208,944,938)</td><td></td><td></td><td>26%</td><td>64%</td><td>105%</td><td></td><td>21%</td><td>N/A</td></tr><tr><td>Total</td><td>0%<br>(1,968,582,765)</td><td></td><td></td><td>19%</td><td>21%</td><td>48%</td><td></td><td>38%</td><td>24%<br>(2,445,573,000)</td></tr></tbody></table>

Sources: POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010)
<figure><img src="image_47.png" /><figcaption>**Fig. 40** POCOG expenditure evolution of estimates and final total</figcaption></figure>

### 4.10.3 PyeongChang 2018 Non-OCOG Costs

Our most recent indication of non-OCOG costs is one year before the Games took place. The non-OCOG costs appear here as having no cost overruns. This is due to a massive saving on the Olympic Village, which was financed privately, which compensates the other cost overruns. Further savings could be made through fewer costs for the construction of the ice stadium. Costs for the Olympic Stadium and the ski jumping hill were not specified in the Candidature File, which is why these additional costs are only reflected in the total sum. In addition, the sliding centre and the IBC/MPC were more expensive than originally stated. All in all, the basket of venues in PyeongChang came to an estimated 26% cost underrun one year before the Games were staged. However, these are not the final figures.

The IOC tried to save costs and started to look at post-Games utilisation. For example, the IOC may have had awarded the Sliding Centre to Japan in order to save on constructing the new venue in PyeongChang. However, the Koreans wanted to have their own track and, above all, avoid co-hosting an event with Japan. If the Host City Contract had bound South Korea to having the Sliding Centre in Japan, it would not have invested in a venue that most probably will have problems being used in future. This problem is specified in the recommendation part.
<table><caption>**Table 44** PyeongChang 2018 non-OCOG cost evolution of estimates from public resources</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 KRW)</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td>Olympic Stadium</td><td></td><td></td><td></td><td></td><td></td><td></td><td>0%</td><td>N/A</td></tr><tr><td>Ski Jumping Hill</td><td></td><td></td><td></td><td></td><td></td><td></td><td>0%</td><td>N/A</td></tr><tr><td>Sliding Centre</td><td>0% (90,392,795)</td><td></td><td></td><td></td><td></td><td></td><td>26%</td><td>N/A</td></tr><tr><td>Ice Stadium</td><td>0% (129,738,734)</td><td></td><td></td><td></td><td></td><td></td><td>-3%</td><td>N/A</td></tr><tr><td>Olympic Village</td><td>0% (912,671,487)</td><td></td><td></td><td></td><td></td><td></td><td>-57%</td><td>N/A</td></tr><tr><td>IBC/MPC</td><td>0% (64,629,590)</td><td></td><td></td><td></td><td></td><td></td><td>71%</td><td>N/A</td></tr><tr><td>Total</td><td>0% (1,197,432,605)</td><td></td><td></td><td></td><td></td><td></td><td>-26%</td><td>N/A</td></tr></tbody></table>

Sources: Hong (2017); IOC data; PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010)

<figure><img src="image_48.png" /><figcaption>**Fig. 41** PyeongChang 2018 non-OCOG cost evolution of estimations from public resources</figcaption></figure>
## 4.11 Summary of Costs and Revenues of the Olympic Games

All Olympic Games had more revenues and expenses than had been estimated in the candidature file. No OCOGs made any losses. The cost of non-OCOG investments ranged from 29% to 56%.

<table><caption>**Table 45** Total cost and revenue overruns/underruns for the Olympic Games</caption><thead><tr><th></th><th>Sydney 2000</th><th>Athens 2004</th><th>Beijing 2008</th><th>London 2012</th><th>Rio 2016</th></tr></thead><tbody><tr><th>OCOG Revenue</th><td>72%</td><td>51%</td><td>8%</td><td>50%</td><td>N/A</td></tr><tr><th>OCOG Expenditure</th><td>51%</td><td>30%</td><td>4%</td><td>48%</td><td>N/A</td></tr><tr><th>Non-OCOG</th><td>56%</td><td>29%<sup>20</sup></td><td>N/A</td><td>43%</td><td>N/A</td></tr></tbody></table>

<table><caption>**Table 46** Total cost and revenue overruns/underruns for the Olympic Winter Games</caption><thead><tr><th></th><th>Salt Lake City 2002</th><th>Turin 2006</th><th>Vancouver 2010</th><th>Sochi 2014</th><th>Pyeong-Chang 2018</th></tr></thead><tbody><tr><th>OCOG Revenue</th><td>119%</td><td>N.A.</td><td>12%</td><td>-3%</td><td>27%</td></tr><tr><th>OCOG Expenditure</th><td>114%</td><td>58%</td><td>12%</td><td>-6%</td><td>24%</td></tr><tr><th>Non-OCOG</th><td>28%</td><td>20%</td><td>13%</td><td>178%</td><td>N/A</td></tr></tbody></table>

For the Olympic Winter Games, all of them except Sochi 2014 had more revenue and expenses than they had estimated in the candidature file. Again, no OCOGs made a loss. The cost for non-OCOG investments ranged from 13% to 178%. These results indicate that the organisation of the Olympic Winter Games is not as easy as for the Olympic Games.

<footnote n="20">20 Additional venues were considered.</footnote>
<figure><img src="image_49.png" /><figcaption>**Fig. 42** OCOG revenues and expenditures for the Olympic Games and Olympic Winter Games</figcaption></figure>

We can state that all the organising committees received more revenue than they had expenditures, with the exception of Vancouver 2010 and Rio 2016, which had a balanced budget. That means all other Games made a profit. It also becomes clear that all but Sochi 2014 had more income and expenses than they had assumed in the candidature file. Beijing 2008, Vancouver 2010, Sochi 2014 and Rio 2016 were very close to their estimates, while Sydney 2000, Salt Lake City 2002, Athens 2004, Turin 2006, London 2012 and PyeongChang 2018 deviated by more than 24% to almost 120%.
<figure><img src="image_50.png" /><figcaption>**Fig. 43** Non-OCOG investments for the Olympic Games and Olympic Winter Games</figcaption></figure>

From Sydney 2000 to Sochi 2014, the non-OCOG costs were more than estimated in the candidature file. The highest rate was Sochi 2014 with 178%.

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<figure><img src="image_51.png" /></figure>
<figure><img src="image_52.png" /></figure>

In this Results II section, we look separately at OCOG revenue and expenditure categories and also at the individual venues in the non-OCOG budgets. To do so, we first separate the data by distinguishing between the Olympic Games and the Olympic Winter Games. We display for each category the minimum and maximum final deviations from the projected budget to the final budget and its evolution. We added a line representing the average development of the category for the respective five Olympic Games/Olympic Winter Games. Thus, the following graphs show a so-called "uncertainty corridor". The bigger the corridor is, the higher the uncertainty about cost and revenue development. Strong fluctuations in the mean value result mostly from the lack of values at a given time.

## 5.1 Revenue Corridors by OCOG Category

First we will look at the Olympic Games and Olympic Winter Games revenues that were received by the respective OCOGs.

The IOC contribution supports the staging of the Games. This includes direct contribution to the OCOGs (through the share of the television broadcasting rights and TOP rights, support of the OCOG in transfer-of-knowledge activities and expertise to the organisers). From the 2010 Games in Vancouver onwards, the IOC has funded the host broadcaster operations, Olympic Broadcasting Services. These costs were
previously borne by the OCOGs. In addition to this funding, the IOC continues to provide a contribution to the operations of the organising committee. Until Beijing, the IOC contribution was paid as a percentage of revenue from the sale of TV rights. That means the amounts can fluctuate very much and depend on for how much money the TV rights were sold. In addition, exchange rates and the rate of inflation affects the amount actually paid. From Vancouver onwards, an absolute amount was fixed before the application phase. This means that this amount was deflated down to the application year. One reason may be that an incorrect estimated inflation rate has been used. Furthermore, the exchange rate is again an influencing factor.

<table><caption>**Table 47** Olympic Games estimated and final revenues – IOC contribution</caption><thead><tr><th>IOC Contribution</th><th></th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td rowspan="3">Summer</td><td>Max</td><td>0%</td><td>-8%</td><td></td><td></td><td>24%</td><td>32%</td><td>32%</td><td>41%</td><td>SYDNEY</td></tr><tr><td>Mean</td><td>0%</td><td>-8%</td><td>-5%</td><td>5%</td><td>12%</td><td>21%</td><td>10%</td><td>4%</td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td></td><td></td><td>-15%</td><td>-25%</td><td>BEIJING</td></tr><tr><td rowspan="3">Winter</td><td>Max</td><td>0%</td><td>34%</td><td></td><td>36%</td><td>28%</td><td></td><td></td><td>23%</td><td>SALT LAKE</td></tr><tr><td>Mean</td><td>0%</td><td>34%</td><td></td><td>14%</td><td>-1%</td><td>-21%</td><td>-9%</td><td>-12%</td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td>-32%</td><td>-35%</td><td>-38%</td><td>-32%</td><td>SOCHI</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b); Beijing 2008 Olympic Games Bid Committee (2001); BOCOG (n. d., 2007); COJOPR (2015, 2016a, b); IOC Data; LOCOG (2008, 2009 2012); London 2012 Candidate City (2004); OCA (2002); Rio 2016 Candidate City (2008); Sydney Olympics Bid 2000 (1993); SOCOG (1994, 2001, 2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (n. d., 2002); Sochi 2014 Bid Committee (2006); SOOC (2011, 2012, 2013, 2014); Torino Bid Committee (1998); TOROC (2005); Vancouver 2010 Candidate City (2002); VANOC (2007, 2008, 2009, 2014)

**SUMMER:** The IOC contribution to the hosts of the Olympic Games varies from a maximum revenue overrun in Sydney (41%) to a revenue underrun in Beijing (-25%). From Sydney 2000 to Beijing 2008, the OCOGs received an IOC contribution that was dependent on the income from the sale of TV rights. The new regulation, which describes a fixed amount from the signing of the Host City Contract, seems to better assess revenue. This shows that London 2012 and Rio 2016 are not among the extremes. What we observe here is the effect of exchange rates and inflation. It is important to note here that the changes are not based on a better or worse payment from the IOC, but on the economic situation. Nevertheless, we can state that the mean revenues from the IOC contribution produced a revenue overrun of 4%.
WINTER: The IOC contribution was larger than expected for three Games, though two cities had less. Due to strong inflation, Sochi 2014 received 32% (in value) less than announced eight years before. This is offset by positive changes, such as in Salt Lake City 2002 with an increase of 23%. Despite this, on average, the host cities received 12% less IOC contribution for the Olympic Winter Games.

Revenues from TOP rights are partly received in cash, in which case they are recorded in the period the instalments become due, and partly received in the form of goods or services (Value in Kind). Value in Kind is recognised for the USOC, the NOCs and the IOC on a linear basis during the period of the contract. However, for the OCOGs the money is paid only in the year of the Games (IOC 2014, 133).

<table><caption>**Table 48** Olympic Games estimated and final revenues – TOP sponsorship</caption><thead><tr><th>TOP<br>Sponsorship</th><th></th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td rowspan="3">Summer</td><td>Max</td><td>0%</td><td></td><td></td><td>156%</td><td>162%</td><td>154%</td><td>145%</td><td>117%</td><td>ATHENS</td></tr><tr><td>Mean</td><td>0% -8%</td><td>-7%</td><td>46%</td><td>53%</td><td>76%</td><td>60%</td><td>60%</td><td></td><td></td></tr><tr><td>Min</td><td>0%</td><td>-7%</td><td>-5%</td><td>-5%</td><td></td><td>8%</td><td>19%</td><td>LONDON</td><td></td></tr><tr><td rowspan="3">Winter</td><td>Max</td><td>0% 95%</td><td></td><td></td><td>94%</td><td>57%</td><td></td><td></td><td>72%</td><td>SALT LAKE</td></tr><tr><td>Mean</td><td>0% 95%</td><td></td><td></td><td>43%</td><td>9%</td><td>-5%</td><td>25%</td><td>11%</td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td>-44%</td><td>-51%</td><td>-54%</td><td>-45%</td><td>SOCHI</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b); Beijing 2008 Olympic Games Bid Committee (2001); BOCOG (n. d., 2007); COJOPR (2015, 2016a, b); IOC Data; LOCOG (2008, 2009 2012); London 2012 Candidate City (2004); OCA (2002); Rio 2016 Candidate City (2008); Sydney Olympics Bid 2000 (1993); SOCOG (1994, 2001, 2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (n. d., 2002); Sochi 2014 Bid Committee (2006); SOOC (2011, 2012, 2013, 2014); Torino Bid Committee (1998); TOROC (2005); Vancouver 2010 Candidate City (2002); VANOC (2007, 2008, 2009, 2014)

SUMMER: It is easy to see that there has always been a revenue overrun from TOP sponsorship. This illustrates the ongoing success of Olympic marketing. However, in future this revenue source will also be more stable because the IOC now includes the formerly separately paid TOP sponsorship in its IOC contribution. This gives more security to the bid cities, but removes any opportunity to obtain more money or, on the other hand, to lose money. The figure shows that Athens 2004 received almost twice the money than that was planned in its bid book, while London 2012 received only 19% more. From 2000 to 2016, the five Games average was an additional 60%.
WINTER: The TOP Programme generated an average 11% more revenues. The maximum increase in revenue of 72% was achieved for Salt Lake City 2002 as TOP Partners had signed for higher values in 2002. Sochi 2014 was the only host city with a 45% revenue underrun (mainly due to currency and inflation impact, which changed the final revenues value).

The OCOGs also raise additional revenue through domestic commercial activities facilitated by the authorised use of the Olympic marks together with the OCOGs' symbols.

<table><caption>**Table 49** Olympic Games estimated and final revenues – national sponsorship</caption><thead><tr><th>National Sponsorship</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th rowspan="3">Summer</th><th>Max</th><td>0%</td><td></td><td></td><td></td><td></td><td>507%</td><td>382%</td><td>BEIJING</td></tr><tr><th>Mean</th><td>0% -1%</td><td>36%</td><td>55%</td><td>64%</td><td>67%</td><td>140%</td><td>123%</td><td></td></tr><tr><th>Min</th><td>0%</td><td></td><td>-15%</td><td>-1%</td><td>0%</td><td>-4%</td><td>16%</td><td>ATHENS</td></tr><tr><th rowspan="3">Winter</th><th>Max</th><td>0%</td><td></td><td></td><td></td><td>97%</td><td>69%</td><td>72%</td><td>76%</td><td>SOCHI</td></tr><tr><th>Mean</th><td>0% 95%</td><td></td><td>65%</td><td>59%</td><td>47%</td><td>71%</td><td>59%</td><td></td></tr><tr><th>Min</th><td>0%</td><td></td><td></td><td>42%</td><td>36%</td><td>39%</td><td>30%</td><td>VANCOUVER</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b); Beijing 2008 Olympic Games Bid Committee (2001); BOCOG (n. d., 2007); COJOPR (2015, 2016a, b); IOC Data; LOCOG (2008, 2009 2012); London 2012 Candidate City (2004); OCA (2002); Rio 2016 Candidate City (2008); Sydney Olympics Bid 2000 (1993); SOCOG (1994, 2001, 2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (n. d., 2002); Sochi 2014 Bid Committee (2006); SOOC (2011, 2012, 2013, 2014); Torino Bid Committee (1998); TOROC (2005); Vancouver 2010 Candidate City (2002); VANOC (2007, 2008, 2009, 2014)

SUMMER: The revenue from the national sponsorship programmes was also a success story for all Olympic Games. The highest increase of revenues was for Beijing 2008. The revenue from national sponsorship increased by 382%. This can be explained by sponsorship by semi-governmental organisations and a higher number of sponsorships. Between t-2 and t-1, Beijing managed to increase the number of sponsorships by 29 (Södermann & Dolles 2010, 15). Athens, with the lowest revenue overrun, also posted a revenue growth of 16%. The average development of national sponsorship revenues is more than double of what was projected in the candidature files.
WINTER: Here, all Games have achieved more than projected. Sochi 2014 had the highest revenue overrun of 76%, while the lowest was Vancouver 2010 with 30%. Ultimately, on average, about 59% more was reached by Olympic Winter Games hosts.

An essential component of the income of the organising committees is the sale of tickets.

<table><caption>**Table 50** Olympic Games estimated and final revenues – ticket sales</caption><thead><tr><th></th><th></th><th>Ticket Sales</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td rowspan="3">Summer</td><td>Max</td><td>0%</td><td>-8%</td><td></td><td></td><td></td><td>122%</td><td>170%</td><td>173%</td><td>166%</td><td>SYDNEY</td></tr><tr><td>Mean</td><td>0%</td><td>-8%</td><td>15%</td><td>35%</td><td>36%</td><td>59%</td><td>47%</td><td>63%</td><td></td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td></td><td></td><td>-24%</td><td>-22%</td><td>BEIJING</td><td></td></tr><tr><td rowspan="3">Winter</td><td>Max</td><td>0%</td><td>44%</td><td></td><td></td><td>18%</td><td>100%</td><td></td><td></td><td>112%</td><td>SALT LAKE</td></tr><tr><td>Mean</td><td>0%</td><td>44%</td><td></td><td>-11%</td><td>2%</td><td>-22%</td><td>-4%</td><td>32%</td><td></td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td>-37%</td><td></td><td>-6%</td><td>-15%</td><td>SOCHI</td><td></td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b); Beijing 2008 Olympic Games Bid Committee (2001); BOCOG (n. d., 2007); COJOPR (2015, 2016a, b); IOC Data; LOCOG (2008, 2009 2012); London 2012 Candidate City (2004); OCA (2002); Rio 2016 Candidate City (2008); Sydney Olympics Bid 2000 (1993); SOCOG (1994, 2001, 2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (n. d., 2002); Sochi 2014 Bid Committee (2006); SOOC (2011, 2013, 2014); Torino Bid Committee (1998); Vancouver 2010 Candidate City (2002); VANOC (2007, 2008, 2009, 2014)

SUMMER: Beijing 2008 was the only Olympic Games that generated less from ticket sales than projected during the bid. All other hosts were extremely successful in selling their tickets. Sydney 2000 recorded the highest revenue overrun with 166%. On average, host cities between 2000 and 2016 had an increase of around 63%.

WINTER: Estimating the revenues from ticketing is difficult. Salt Lake City 2002 earned 112% more revenue than estimated, but PyeongChang 2018 had a loss of 42%. Sochi 2014 also had smaller revenues than expected. On average, about 32% more revenues were achieved for tickets at the Olympic Winter Games. Factors besides a good or bad estimate that may influence ticket sales are later decisions on the higher capacity of venues, new events staged in the same venues, fewer visitors coming or different ticket prices than calculated before.
The licensing category includes the sale of merchandise items as well as stamps and coins. Licensing agreements will include a royalty advance and a minimum guarantee. The advance is a non-refundable deposit for the licensing rights, while the guarantee is the minimum amount a licensee will pay, against which royalties may be offset.

<table><caption>**Table 51** Olympic Games estimated and final revenues – licensing</caption><thead><tr><th></th><th>Licensing</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th rowspan="3">Summer</th><th>Max</th><td>0%</td><td></td><td></td><td></td><td></td><td></td><td>26%</td><td>66%</td><td>BEIJING</td></tr><tr><th>Mean</th><td>0%</td><td>-8%</td><td>11%</td><td>6%</td><td>2%</td><td>3%</td><td>16%</td><td>26%</td><td></td></tr><tr><th>Min</th><td>0%</td><td>-8%</td><td></td><td></td><td>-24%</td><td>-20%</td><td>-23%</td><td>-14%</td><td>SYDNEY</td></tr><tr><th rowspan="3">Winter</th><th>Max</th><td>0%</td><td></td><td></td><td></td><td></td><td>3%</td><td>16%</td><td>19%</td><td>25%</td><td>VANCOUVER</td></tr><tr><th>Mean</th><td>0%</td><td>8%</td><td></td><td>-2%</td><td>17%</td><td>57%</td><td>61%</td><td>-9%</td><td></td><td></td></tr><tr><th>Min</th><td>0%</td><td>8%</td><td></td><td>15%</td><td>-41%</td><td></td><td></td><td>-28%</td><td>SALT LAKE</td><td></td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b); Beijing 2008 Olympic Games Bid Committee (2001); BOCOG (n. d., 2007); COJOPR (2015, 2016a, b); IOC Data; LOCOG (2008, 2009 2012); London 2012 Candidate City (2004); OCA (2002); Rio 2016 Candidate City (2008); Sydney Olympics Bid 2000 (1993); SOCOG (1994, 2001, 2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (n. d., 2002); Sochi 2014 Bid Committee (2006); SOOC (2011, 2012, 2013, 2014); Torino Bid Committee (1998); TOROC (2005); Vancouver 2010 Candidate City (2002); VANOC (2007, 2008, 2009, 2014)

**SUMMER:** Revenues from licencing are difficult to predict. It depends on the sales at Games time. Licensing revenues had an average revenue increase of 26%. Beijing 2008 had the highest revenue overrun (66%) while Sydney 2000 overestimated its revenues. We will see later that Salt Lake City 2002 also generated smaller revenues than expected during the bid. This shows that this category is one of the most difficult to predict.

**WINTER:** The spectrum of changes is also large. On average, a revenue underrun of 9% was recorded. The maximum additional revenue was achieved in Vancouver (25%). Sochi 2014 and Salt Lake City 2002 were unable to reach their initial estimates, with Salt Lake City having revenue underruns of 28%.
<table><caption>**Table 52** Olympic Games estimated and final revenues – lotteries</caption><thead><tr><th>Lotteries</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td>Olympic Games</td><td>0%</td><td></td><td></td><td>21%</td><td>17%</td><td>14%</td><td>10%</td><td>28%</td><td>ATHENS</td></tr><tr><td>Olympic Winter Games</td><td>0%</td><td></td><td></td><td></td><td>91%</td><td>75%</td><td></td><td></td><td>SOCHI</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b); Beijing 2008 Olympic Games Bid Committee (2001); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Sochi 2014 Bid Committee (2006); SOOC (2011, 2012); Torino Bid Committee (1998)

**SUMMER:** Many Olympic cities cannot use lotteries to fund their OCOG. Only Athens 2004 and Beijing 2008 were host cities that planned revenues from a lottery. Beijing 2008 planned one, but renounced it, or at least we could not find any data. The lottery for Athens 2004 could not be used to finance ATHOC, and the Greek government was obliged to pay these lost revenues.

**WINTER:** For the Olympic Winter Games, Turin 2006 and PyeongChang 2014 planned a lottery in their Candidature Files, but did not succeed. Only Sochi 2014 wanted to generate revenue through a lottery. Two years prior to the Games it wanted to increase the revenue by 75%, but did not manage to receive revenues in the end.

The donations category is very contextual. This type of revenue could be a type of commitment. E.g. in PyeongChang, the telecom supplier was supposed to build the IBC and use it after the Games. Later the idea was dropped, but the telecom supplier was still bound to provide a subsidy to POCOG.
<table><caption>**Table 53** Olympic Games estimated and final revenues – donations</caption><thead><tr><th></th><th></th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td rowspan="3">Summer</td><td>Max</td><td>0%</td><td></td><td></td><td></td><td></td><td>-85%</td><td>-60%</td><td>BEIJING</td></tr><tr><td>Mean</td><td>0%</td><td></td><td>21%</td><td>17%</td><td>-43%</td><td>-65%</td><td>-80%</td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td>21%</td><td>17%</td><td>-43%</td><td>-45%</td><td>-99%</td><td>ATHENS</td></tr><tr><td rowspan="2">Winter</td><td>Olympic</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Winter Games</td><td>0%</td><td></td><td></td><td>3643%</td><td></td><td></td><td>2072%</td><td>SALT LAKE</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b); Beijing 2008 Olympic Games Bid Committee (2001); BOCOG (n. d., 2007); Rio 2016 Candidate City (2008); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (n. d., 2002); Torino Bid Committee (1998); Vancouver 2010 Candidate City (2002)

**SUMMER:** Donations are also a revenue source that is difficult to predict. Very often we could not find data about donations. Sydney 2000 and London 2012 did not anticipate donations when they created their first budget, and that did not change in the process. By contrast, Rio 2016 expected donations and then apparently could not generate any. Often we had no starting figure (as donations were not anticipated) or we had no final figure. The average is based only on the two cases and shows an 80% underrun.

**WINTER:** Here Turin 2006 and Sochi 2018 did not plan revenues. Vancouver 2010 was planning to receive donations when bidding, but did not mention this revenue in the remainder of the preparation progress. The two host cities that received donations averaged more than 1300%. Salt Lake City 2002 had the most revenue overrun, with 2072%, and followed by PyeongChang 2018 with 664%. However, these high percentages were caused by very low and conservative expectations.

The disposal of assets category is very much linked with the procurement and legacy strategy of the OCOG and the agreements with the government. If the OCOG rents most of its equipment, the disposal value is lower. If the OCOG buys the equipment and afterwards donates it to government entities, the revenue might be lower than expected (e.g. Beijing). The key learning is how early the OCOG incorporates its disposal and legacy strategy in its planning that will allow it to have an appropriate budget plan.
<table><caption>**Table 54** Olympic Games estimated and final revenues – disposal of assets</caption><thead><tr><th>Disposal of Assets</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td>Summer Max</td><td></td><td></td><td></td><td></td><td></td><td></td><td>0%</td><td>137%</td><td>SYDNEY</td></tr><tr><td>Mean</td><td>0%</td><td>19%</td><td>6%</td><td>-21%</td><td>175%</td><td>-44%</td><td>4%</td><td></td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td></td><td>-88%</td><td>-73%</td><td>BEIJING</td><td></td></tr><tr><td>Winter Olympic Winter Games</td><td>0%</td><td></td><td></td><td></td><td></td><td></td><td></td><td>315%</td><td>SALT LAKE</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2005a, b); Beijing 2008 Olympic Games Bid Committee (2001); BOCOG (n. d., 2007); COJOPR (2016a, b); IOC Data; LOCOG (2008, 2009 2012); London 2012 Candidate City (2004); OCA (2002); Rio 2016 Candidate City (2008); SOCOG (2001, 2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (2002); Sochi 2014 Bid Committee (2006); Torino Bid Committee (1998); TOROC (2005); Vancouver 2010 Candidate City (2002)

**SUMMER:** Revenues from the disposal of assets are not too difficult to estimate as the average line shows that the final revenues were similar to the bid files. However, Sydney 2000 did not plan revenues until a year before the Games (overrun of 137%). Beijing 2008, on the other hand, could not reach all the goals it wanted to achieve by selling assets (loss of 73%).

**WINTER:** In their candidature files all hosts of the Olympic Winter Games wanted to generate revenues from the disposal of assets. In the end, only Salt Lake City 2002 included them in their revenue structure. The others may have taken it in "others". Salt Lake City 2002 had a revenue overrun of about 315%.
<table><caption>**Table 55** Olympic Games estimated and final revenues – subsidies</caption><thead><tr><th>Subsidies</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td>Summer Max</td><td>0%</td><td></td><td>48%</td><td>47%</td><td>48%</td><td></td><td>106%</td><td>143%</td><td>LONDON</td></tr><tr><td>Summer Mean</td><td>0%</td><td></td><td>48%</td><td>20%</td><td>48%</td><td></td><td>106%</td><td>48%</td><td></td></tr><tr><td>Summer Min</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>0%</td><td>SYDNEY/ ATHENS</td></tr><tr><td>Winter Max</td><td>0%</td><td></td><td>0%</td><td></td><td></td><td></td><td></td><td>1540%</td><td>SALT LAKE</td></tr><tr><td>Winter Mean</td><td>0%</td><td></td><td>47%</td><td>19%</td><td>45%</td><td>-44%</td><td>593%</td><td></td><td></td></tr><tr><td>Winter Min</td><td>0%</td><td></td><td>-59%</td><td>-57%</td><td>-44%</td><td>-42%</td><td>-42%</td><td>SOCHI</td><td></td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2005b); Beijing 2008 Olympic Games Bid Committee (2001); COJOPR (2016a); IOC Data; LOCOG (2008, 2009 2012); London 2012 Candidate City (2004); OCA (2002); Rio 2016 Candidate City (2008); Sydney Olympics Bid 2000 (1993); SOCOG (2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (n. d., 2002); Sochi 2014 Bid Committee (2006); SOOC (2011, 2012, 2013, 2014); Torino Bid Committee (1998); TOROC (2005); Vancouver 2010 Candidate City (2002); VANOC (2014)

**SUMMER:** Sydney 2000 and Athens 2004 did not expect to receive subsidies from the state, region or city. In the end, their budgets showed subsidies. By contrast, Beijing 2008²¹ and Rio 2016²² were planning to obtain subsidies, but they did not receive them. Only London 2012 had consistent recourse to subsidies, which eventually overran by 143%. London's high subsidy revenue overrun explains the high average of 48% for the Olympic Games.

**WINTER:** All Olympic Winter Games OCOGs expected subsidies according to their candidature files. Turin 2006 did not get them. Sochi 2014 had a 42% revenue underrun, while the other cities had a revenue overrun. On average, subsidies led to a 593% revenue overrun, with Salt Lake City 2002 having the highest (1540%) due to low and conservative expectations.

<footnote n="21">21 Beijing 2008 had a successful commercial programme, so it did not use the government subsidies.</footnote>

<footnote n="22">22 Rio 2016 tried to avoid the subsidies in order to maintain its private entity legal status.</footnote>
<table><caption>**Table 56** Olympic Games estimated and final revenues – total</caption><thead><tr><th></th><th></th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td rowspan="3">Summer</td><td>Max</td><td>0%</td><td>-8%</td><td></td><td></td><td>52%</td><td>67%</td><td>63%</td><td>72%</td><td>SYDNEY</td></tr><tr><td>Mean</td><td>0%</td><td>-8%</td><td>26%</td><td>27%</td><td>25%</td><td>31%</td><td>34%</td><td>45%</td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td></td><td></td><td>25%</td><td>8%</td><td>BEIJING</td></tr><tr><td rowspan="3">Winter</td><td>Max</td><td>0%</td><td>51%</td><td></td><td>110%</td><td>96%</td><td></td><td></td><td>119%</td><td>SALT LAKE</td></tr><tr><td>Mean</td><td>0%</td><td>51%</td><td></td><td>65%</td><td>31%</td><td>9%</td><td>18%</td><td>43%</td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td>-5%</td><td>-9%</td><td>-7%</td><td>-3%</td><td>SOCHI</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b); Beijing 2008 Olympic Games Bid Committee (2001); BOCOG (n. d., 2007); COJOPR (2015, 2016a, b); IOC Data; LOCOG (2008, 2009, 2012); London 2012 Candidate City (2004); OCA (2002); Sydney Olympics Bid (1993); Rio 2016 Candidate City (2008); SOCOG (2001, 2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (n. d., 2002); Sochi 2014 Bid Committee (2006); SOOC (2011, 2012, 2013, 2014); Torino Bid Committee (1998); TOROC (2005); Vancouver 2010 Candidate City (2002); VANOC (2007, 2008, 2009, 2014)

**SUMMER:** When considering total revenues, all OCOGs achieved a revenue overrun over the eight years of preparation. The expectations of the cities were greatly exceeded. Sydney 2000 had the highest gain of 72%, while the average overrun was about 45%.

**WINTER:** For the Winter Games, all OCOGs but Sochi 2014 received more revenues than planned in their candidature files. On average, they were able to generate an additional 43%. The highest revenue overrun was Salt Lake City 2002 with 119%, and the only revenue underrun was for Sochi 2014 with 11%. This was mainly caused by a high inflation rate and the exchange rate to the USD.
## 5.2 Expenditure Corridors by OCOG Category

In the following section we will look at the corridors that can be seen in OCOG expenditure categories.

<table><caption>**Table 57** Olympic Games estimated and final expenditures – venues</caption><thead><tr><th>Venues</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td rowspan="3">Summer</td><td>Max</td><td>0%</td><td>-8%</td><td></td><td>89%</td><td>181%</td><td>163%</td><td>203%</td><td>SYDNEY</td></tr><tr><td>Mean</td><td>0%</td><td>-8%</td><td>22%</td><td>-19%</td><td>-13%</td><td>32%</td><td>6%</td><td>40%</td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td></td><td></td><td>-78%</td><td>-54%</td><td>BEIJING</td></tr><tr><td rowspan="3">Winter</td><td>Max</td><td>0%</td><td></td><td></td><td></td><td>-41%</td><td>-46%</td><td>-36%</td><td>-33%</td><td>SOCHI</td></tr><tr><td>Mean</td><td>0%</td><td></td><td></td><td>-3%</td><td>-10%</td><td>-1%</td><td>-43%</td><td>-52%</td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td></td><td></td><td>-49%</td><td>-81%</td><td>TURIN</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b); Beijing 2008 Olympic Games Bid Committee (2001); BOCOG (n. d., 2007); COJOPR (2015, 2016a, b); LOCOG (2008, 2009, 2012, 2013); London 2012 Candidate City (2004); OCA (2002); Rio 2016 Candidate City (2008); Sydney Olympics Bid (1993); SOCOG (2001, 2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); SLOC (1998); Sochi 2014 Bid Committee (2006); SOOC (2011, 2012, 2013, 2014); Torino Bid Committee (1998); TOROC (n. d., 2005); Vancouver 2010 Candidate City (2002); VANOC (2008)

The expenditures for venues show both cost overruns and cost underruns. For the operational expenditures and capital investments of facilities, Sydney 2000 had an overrun of 203%. However, on average, expenditure on venues tends to have cost underruns. Athens 2004, Beijing 2008 and Rio 2016 reduced their costs during the preparations. This is also the result of the agreements concerning the split of responsibilities between the OCOG and government parties. One element is the ongoing optimisation of requirements, but another element is that some responsibilities are shifted to the government. Nevertheless, the average increase in expenditures over the eight years was around 40% for Olympic Games but minus 52% for Winter Games.

**WINTER:** All Winter Games OCOGs, except PyeongChang 2018 which is not finished yet, finally spent less than they had originally expected. Turin 2006 spent 81% less than planned.
<table><caption>**Table 58** Olympic Games estimated and final expenditures – workforce<fnref n="23" /></caption><thead><tr><th></th><th>Workforce</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td rowspan="3">Summer</td><td>Max</td><td></td><td></td><td></td><td>0%</td><td>200%</td><td>82%</td><td></td><td>179%</td><td>ATHENS</td></tr><tr><td>Mean</td><td>0%</td><td>-8%</td><td>154%</td><td>15%</td><td>121%</td><td>23%</td><td>-23%</td><td>30%</td><td></td></tr><tr><td>Min</td><td></td><td></td><td></td><td></td><td></td><td></td><td>0%</td><td>-37%</td><td>BEIJING</td></tr><tr><td rowspan="3">Winter</td><td>Max</td><td></td><td></td><td></td><td>0%</td><td></td><td></td><td></td><td>702%</td><td>SALT LAKE</td></tr><tr><td>Mean</td><td>0%</td><td></td><td></td><td>32%</td><td>11%</td><td>-9%</td><td>3%</td><td>283%</td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td>17%</td><td>7%</td><td>6%</td><td>1%</td><td>SOCHI</td></tr></tbody></table>

Sources: ATHOC (2003, 2004, 2005a, b); BOCOG (n. d., 2007); COJOPR (2015, 2016a, b); LOCOG (2008, 2009, 2012, 2013); London 2012 Candidate City (2004); OCA (2002); Rio 2016 Candidate City (2008); Sydney Olympics Bid (1993); SOCOG (2001, 2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); SLOC (1998); Sochi 2014 Bid Committee (2006); SOOC (2011, 2012, 2013, 2014); Torino Bid Committee (1998); TOROC (n. d., 2005); Vancouver 2010 Candidate City (2002); VANOC (2008)

**SUMMER:** The figure on the left shows that, on average, the changes are great, but tend to be at 30% for the last two years. Athens 2004 had the highest expenditure increase, and started to calculate those only four years before the Games. The other host cities had moderate changes. Beijing 2008, for example, did not report the costs of the workforce separately until a year before the Games and then even underran that projection. BOCOG also didn't include all government staff in the workforce budget. Sydney 2000 and London 2012 also cut costs for the workforce.

**WINTER:** For the Olympic Winter Games, the changes are not as great. However, Salt Lake City 2002 did not show its workforce costs exploding in its Candidature File, which is why the first record was only four years before the Games were staged, and then the estimate was exceeded by 702%. Sochi 2014, on the other hand, only had a slight increase of 1%. The cost overruns of Turin 2006 had a moderate 10% overrun. The five Games average, however, had a 283% overrun caused by Salt Lake City 2002.

<footnote n="23">23 The “workforce” category was presented inconsistently for the different Games editions. Some centralised those costs, whereas others decentralised them. As a result, there are strong fluctuations between the results.</footnote>
<table><caption>**Table 59** Olympic Games estimated and final expenditures – technology</caption><thead><tr><th>Technology</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td rowspan="3">Summer</td><td>Max</td><td>0%</td><td>-5%</td><td>30%</td><td>57%</td><td>60%</td><td>72%</td><td>LONDON</td></tr><tr><td>Mean</td><td>0%</td><td>-5%</td><td>15%</td><td>11%</td><td>1%</td><td>17%</td><td>16%</td></tr><tr><td>Min</td><td></td><td></td><td>0%</td><td>4%</td><td>-9%</td><td>-12%</td><td>-21%</td><td>ATHENS</td></tr><tr><td rowspan="3">Winter</td><td>Max</td><td>0%</td><td></td><td></td><td></td><td></td><td>145%</td><td>277%</td><td>TURIN</td></tr><tr><td>Mean</td><td>0%</td><td></td><td>3%</td><td>5%</td><td>4%</td><td>53%</td><td>72%</td><td></td></tr><tr><td>Min</td><td></td><td></td><td>0%</td><td></td><td></td><td></td><td>-22%</td><td>SALT LAKE</td></tr></tbody></table>

Sources: ATHOC (2003, 2004, 2005a, b); BOCOG (n. d., 2007); COJOPR (2015, 2016a, b); LOCOG (2008, 2009, 2012, 2013); London 2012 Candidate City (2004); OCA (2002); Rio 2016 Candidate City (2008); Sydney Olympics Bid (1993); SOCOG (2001, 2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); SLOC (1998); Sochi 2014 Bid Committee (2006); SOOC (2011, 2012, 2013, 2014); Torino Bid Committee (1998); TOROC (n. d., 2005); Vancouver 2010 Candidate City (2002); VANOC (2007, 2008, 2009, 2014)

**SUMMER:** The development of the expenditures for technology is moderate. In addition to London 2012, which had the highest expenditure increase of 72%, Sydney 2000 also had higher expenditures for technology. The other three cities had cost underruns. It should also be noted that technology costs are not as volatile as other categories. The IOC provides financial info about the key TOP technology partners like OMEGA and Atos because former bid cities used to completely miss out the cost of the key technology components. Apparently, these expenses can be estimated comparatively well. This is also evident from the only slight average cost increase of 16%.

**WINTER:** Technology for the Olympic Winter Games was 72% higher on average. Three OCOGs spent more than expected, but two were able to even save in this category. The highest overrun was for Turin 2006 (277%), while Salt Lake City 2002 optimise its spending by 22%.
<table><caption>**Table 60** Olympic Games estimated and final expenditures – services</caption><thead><tr><th>Services</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td rowspan="3">Summer</td><td>Max</td><td>0%</td><td>-8%</td><td></td><td>240%</td><td>301%</td><td>305%</td><td>103%</td><td>SYDNEY</td></tr><tr><td>Mean</td><td>0%</td><td>-8%</td><td>24%</td><td>11%</td><td>45%</td><td>81%</td><td>60%</td><td>46%</td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td></td><td></td><td>-14%</td><td>9%</td><td>BEIJING</td></tr><tr><td rowspan="3">Winter</td><td>Max</td><td>0%</td><td></td><td>-17%</td><td></td><td></td><td></td><td>712%</td><td>SALT LAKE</td></tr><tr><td>Mean</td><td>0%</td><td></td><td>-14%</td><td>-13%</td><td>40%</td><td>19%</td><td>294%</td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td>-20%</td><td>-28%</td><td>-19%</td><td>-23%</td><td>SOCHI</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b); Beijing 2008 Olympic Games Bid Committee (2001); BOCOG (n. d., 2007); COJOPR (2015, 2016a, b); LOCOG (2008, 2009, 2012, 2013); London 2012 Candidate City (2004); OCA (2002); Rio 2016 Candidate City (2008); Sydney Olympics Bid (1993); SOCOG (2001, 2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (1998); Sochi 2014 Bid Committee (2006); SOOC (2011, 2012, 2013, 2014); Torino Bid Committee (1998); TOROC (n. d.); Vancouver 2010 Candidate City (2002); VANOC (2008)

**SUMMER:** For services, the mean expenditure increase was about 46%. It should be noted that all OCOGs spent more on services than they originally planned. Sydney 2000 even spent twice as much as planned. In fact, a year before the Games, it had even planned four times higher expenditures. Beijing 2008 had the lowest cost increase with only 9%.

**WINTER:** Expenditures for services also became more expensive for all Olympic Winter Games, except for Sochi 2014 (minus 23%). A reason may be that location and market maturity has an impact on costs. The average change was much higher here, with 294%. The highest expenditure increase was for Salt Lake City 2002, with 712%.

In the marketing & events category, the ceremonies and torch relay are also assumed, which are key fundamentals of accounting at the Olympic Games, under the responsibility of the OCOG, which makes a strategic decision on how much it wants to spend.
<table><caption>**Table 61** Olympic Games estimated and final expenditures – marketing & events</caption><thead><tr><th></th><th></th><th>Marketing & Events</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td rowspan="3">Summer</td><td>Max</td><td>0%</td><td></td><td>11%</td><td>38%</td><td>-6%</td><td></td><td>209%</td><td>78%</td><td>LONDON</td></tr><tr><td>Mean</td><td>0%</td><td>-8%</td><td>11%</td><td>22%</td><td>-7%</td><td>-11%</td><td>80%</td><td>32%</td><td></td></tr><tr><td>Min</td><td>0%</td><td>-8%</td><td></td><td></td><td>-48%</td><td>-55%</td><td>-59%</td><td>-46%</td><td>SYDNEY</td></tr><tr><td rowspan="3">Winter</td><td>Max</td><td>0%</td><td></td><td></td><td></td><td>354%</td><td>53%</td><td>381%</td><td>437%</td><td>VANCOUVER</td></tr><tr><td>Mean</td><td>0%</td><td></td><td></td><td>27%</td><td>134%</td><td>42%</td><td>148%</td><td>126%</td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td>19%</td><td></td><td></td><td></td><td>-23%</td><td>SALT LAKE</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b); Beijing 2008 Olympic Games Bid Committee (2001); BOCOG (n. d., 2007); COJOPR (2015, 2016a, b); LOCOG (2008, 2009, 2012, 2013); London 2012 Candidate City (2004); OCA (2002); Rio 2016 Candidate City (2008); Sydney Olympics Bid (1993); SOCOG (2001, 2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (1998); Sochi 2014 Bid Committee (2006); SOOC (2011, 2012, 2013, 2014); Torino Bid Committee (1998); TOROC (n. d., 2005); Vancouver 2010 Candidate City (2002); VANOC (2007, 2008, 2009, 2014)

**SUMMER:** There is quite a lot of variation in the marketing & events category. Sydney 2000 cut expenditures in this category by 46%. Athens 2004, Beijing 2008 and London 2012, on the other hand, spent more than they had indicated in their application documents. In 2011, London 2012 had a threefold expenditure overrun, but finally achieved 78%. For marketing & events, the average increase was 32%. This is easy to explain because many marketing activities and the torch relay are often only planned well after winning a bid.

**WINTER:** Vancouver 2010 had cost overruns of 437% in the final budget. Apart from Sochi 2014 (minus 23%), all other cities had overruns, the average being 126%. In general, American cities have less marketing operation costs because they are in joint venture with the United States Olympic Committee.
<table><caption>**Table 62** Olympic Games estimated and final expenditures – administration & coordination</caption><thead><tr><th>Administration & Coordination</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td rowspan="3">Summer</td><td>Max</td><td>0%</td><td>-8%</td><td></td><td>343%</td><td>294%</td><td>253%</td><td>481%</td><td>SYDNEY</td></tr><tr><td>Mean</td><td>0%</td><td>-8%</td><td>33%</td><td>11%</td><td>96%</td><td>144%</td><td>95%</td><td>153%</td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td></td><td></td><td>25%</td><td>19%</td><td>BEIJING</td></tr><tr><td rowspan="3">Winter</td><td>Max</td><td>0%</td><td></td><td></td><td>-13%</td><td>-16%</td><td>-19%</td><td>-10%</td><td>SOCHI</td></tr><tr><td>Mean</td><td>0%</td><td></td><td>21%</td><td>9%</td><td>22%</td><td>-23%</td><td>-29%</td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td>-9%</td><td></td><td></td><td>-51%</td><td>SALT LAKE</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b); Beijing 2008 Olympic Games Bid Committee (2001); BOCOG (n. d., 2007); COJOPR (2015, 2016a, b); LOCOG (2008, 2009, 2012, 2013); London 2012 Candidate City (2004); OCA (2002); Rio 2016 Candidate City (2008); Sydney Olympics Bid (1993); SOCOG (2001, 2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (1998); Sochi 2014 Bid Committee (2006); SOOC (2011, 2012, 2013, 2014); Torino Bid Committee (1998); TOROC (n. d.); Vancouver 2010 Candidate City (2002); VANOC (2007, 2008, 2009, 2014)

**SUMMER:** Administration and coordination expenses were also higher than planned for all Games. On average, OCOGs spent 153% more, with Sydney 2000 reaching a 481% expenditure overrun. That leads to the relatively high average figure of 70%. The lowest cost increase was Beijing 2008 with 19%.

**WINTER:** Unlike the Olympic Games, the Olympic Winter Games seem to be better planned and controlled in this category. All cities had cost underruns. The average cost reduction was 29%.
<table><caption>**Table 63** Olympic Games estimated and final expenditures – total</caption><thead><tr><th></th><th></th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><td rowspan="3">Summer</td><td>Max</td><td>0%</td><td>-8%</td><td></td><td></td><td>53%</td><td>66%</td><td>63%</td><td>51%</td><td>SYDNEY</td></tr><tr><td>Mean</td><td>0%</td><td>-8%</td><td>26%</td><td>27%</td><td>27%</td><td>36%</td><td>31%</td><td>33%</td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td></td><td></td><td>25%</td><td>4%</td><td>BEIJING</td></tr><tr><td rowspan="3">Winter</td><td>Max</td><td>0%</td><td></td><td></td><td>70%</td><td></td><td></td><td></td><td>114%</td><td>SALT LAKE</td></tr><tr><td>Mean</td><td>0%</td><td></td><td></td><td>45%</td><td>10%</td><td>16%</td><td>18%</td><td>45%</td><td></td></tr><tr><td>Min</td><td>0%</td><td></td><td></td><td></td><td>-5%</td><td>-9%</td><td>-7%</td><td>-6%</td><td>SOCHI</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b); Beijing 2008 Olympic Games Bid Committee (2001); BOCOG (n. d., 2007); COJOPR (2015, 2016a, b); LOCOG (2008, 2009, 2012, 2013); London 2012 Candidate City (2004); OCA (2002); Rio 2016 Candidate City (2008); Sydney Olympics Bid (1993); SOCOG (2001, 2002); POCOG (2014, 2016, 2018); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (1998); Sochi 2014 Bid Committee (2006); SOOC (2011, 2012, 2013, 2014); Torino Bid Committee (1998); TOROC (n. d., 2005); Vancouver 2010 Candidate City (2002); VANOC (2007, 2008, 2009, 2014)

For four out of five of the last Olympic Games we observed expenditure overruns. The five Games average was 33%, with the maximum overrun of 51% for Sydney 2000. The five Games average for Winter Games was about 45%. Salt Lake City 2002 had the biggest changes (114%), but Sochi 2014 only -6%.

## 5.3 Non-OCOG Cost Corridors at Olympic Games

The following section will provide the cost changes for different venues. We will look at the venues in our “basket” but differentiate between the Olympic Games and Olympic Winter Games because the size of the venues and the venues themselves are different.
<table><caption>**Table 64** Olympic Games estimated and final non-OCOG costs – Olympic Stadium</caption><thead><tr><th>Olympic Stadium</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th>Max</th><td>0%</td><td>67%</td><td></td><td></td><td></td><td>79%</td><td>44%</td><td>40%</td><td>LONDON</td></tr><tr><th>Mean</th><td>0%</td><td>67%</td><td></td><td></td><td></td><td>10%</td><td>-9%</td><td>-11%</td><td></td></tr><tr><th>Min</th><td>0%</td><td></td><td></td><td></td><td></td><td>-60%</td><td>-62%</td><td>-61%</td><td>SYDNEY</td></tr></tbody></table>

Sources: Camara dos Deputados (2017); DCMS (2012a, b); House of Commons (2010); London 2012 Candidate City (2004); NSW (2002); OCA (1999, 2002); Rio 2016 Candidate City (2008); Sydney Olympics 2000 Bid Limited (1993); The Audit Office (1999, 2002)

Many media reports say it is surprising that the costs (governmental share) for the Olympic stadiums were on average 11% lower than announced in the candidature files. However, what may have an influence here is that we found only three cities where the costs were properly estimated in the candidature. However, a generalisation is not possible from this because Athens 2004 and Beijing 2008 had cost overruns which are not displayed transparently enough.

Based on solid facts and considering inflation we can state that Sydney 2000 had lower costs by 61%. London 2012 spent 40% more for the construction of its Olympic Stadium.

<table><caption>**Table 65** Olympic Games estimated and final non-OCOG costs – swimming pool</caption><thead><tr><th>Swimming Pool</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th>Max</th><td>0%</td><td>178%</td><td></td><td></td><td></td><td>242%</td><td>225%</td><td>216%</td><td>LONDON</td></tr><tr><th>Mean</th><td>0%</td><td>178%</td><td></td><td></td><td></td><td>121%</td><td>225%</td><td>105%</td><td>(2 cities)</td></tr><tr><th>Min</th><td></td><td></td><td></td><td></td><td></td><td>0%</td><td></td><td>-6%</td><td>SYDNEY</td></tr></tbody></table>

Sources: Camara dos Deputados (2017); DCMS (2012a, b); House of Commons (2010); Kao (2016); London 2012 Candidate City (2004); NSW (2002); OCA (1999, 2002); Rio 2016 Candidate City (2008); The Audit Office (1999, 2002)

For the construction of swimming pools, we also gathered reliable data only from three Games. Regarding the public investments in this venue, London 2012 had the highest increase (216%), while Sydney 2000 constructed its pool even cheaper than its projection two years before the Games. On average, the construction of a swimming pool is 105% more expensive than planned.
<table><caption>**Table 66** Olympic Games estimated and final non-OCOG costs – multipurpose hall</caption><thead><tr><th>Multipurpose Hall</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th>Max</th><td>0%</td><td></td><td></td><td></td><td></td><td>106%</td><td>81%</td><td>75%</td><td>SYDNEY</td></tr><tr><th>Mean</th><td>0%</td><td>120%</td><td></td><td></td><td></td><td>106%</td><td>66%</td><td>61%</td><td></td></tr><tr><th>Min</th><td>0%</td><td>120%</td><td></td><td></td><td></td><td></td><td>50%</td><td>47%</td><td>LONDON</td></tr></tbody></table>

Sources: DCMS (2012a, b); London 2012 Candidate City (2004); NSW (2002); OCA (1999, 2002); Sydney Olympics 2000 Bid Limited (1993); The Audit Office (1999, 2002)

The multipurpose hall is usually the main Olympic facility. We could find valid data for two Games only. Thus the average here is a 61% cost overrun calculated from Sydney (75%) and London (47%).

<table><caption>**Table 67** Olympic Games estimated and final non-OCOG costs – velodrome</caption><thead><tr><th>Velodrome</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th>Max</th><td>0%</td><td></td><td></td><td></td><td></td><td>563%</td><td>539%</td><td>535%</td><td>SYDNEY</td></tr><tr><th>Mean</th><td>0%</td><td>138%</td><td></td><td></td><td></td><td>391%</td><td>360%</td><td>359%</td><td>(2 cities)</td></tr><tr><th>Min</th><td>0%</td><td>138%</td><td></td><td></td><td></td><td>218%</td><td>181%</td><td>182%</td><td>LONDON</td></tr></tbody></table>

Sources: Camara dos Deputados (2017); DCMS (2012a, b); House of Commons (2010); Kao (2016); London 2012 Candidate City (2004); NSW (2002); OCA (1999, 2002); Rio 2016 Candidate City (2008); Sydney Olympics 2000 Bid Limited (1993); The Audit Office (1999, 2002)

In the three reliable data sets, we found an average cost overrun of 359% for the velodrome. In all host cities, the costs were higher than originally planned, in Sydney 2000 more than six fold and London 2012 182%.

<table><caption>**Table 68** Olympic Games estimated and final non-OCOG costs – Olympic Village</caption><thead><tr><th>Olympic Village</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th>Max</th><td>0%</td><td></td><td></td><td></td><td></td><td>127%</td><td></td><td>157%</td><td>SYDNEY</td></tr><tr><th>Mean</th><td>0%</td><td></td><td></td><td></td><td></td><td>127%</td><td>1%</td><td>45%</td><td></td></tr><tr><th>Min</th><td>0%</td><td></td><td></td><td></td><td></td><td></td><td></td><td>-27%</td><td>ATHENS</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); Camara dos Deputados (2017); DCMS (2012a, b); Kasimati (2015); London 2012 Candidate City (2004); NSW (2002); OCA (2002); Rio 2016 Candidate City (2008); Sydney Olympics 2000 Bid Limited (1993); The Audit Office (1999, 2002)
The only host that built the Olympic Village cheaper than planned was Athens 2004 (minus 27%). All others had cost overruns with an average of 45%. The highest cost overrun was in Sydney 2000 at 157%.

For the IBC/MPC, we had data only from London 2012, which had a cost overrun of 103%.

<table><caption>**Table 69** Olympic Games estimated and final non-OCOG costs – total</caption><thead><tr><th>Total</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th>Max</th><td>0%</td><td></td><td></td><td></td><td></td><td>43%</td><td>56%</td><td>SYDNEY</td></tr><tr><th>Mean</th><td>0%</td><td>85%</td><td></td><td></td><td></td><td>82%</td><td>42%</td><td>50%</td></tr><tr><th>Min</th><td>0%</td><td>85%</td><td></td><td></td><td></td><td>120%</td><td>42%</td><td>LONDON</td></tr></tbody></table>

Sources: Camara dos Deputados (2017); DCMS (2012a, b); House of Commons (2010); Kasimati (2015); London 2012 Candidate City (2004); NSW (2002); OCA (1999, 2002); Rio 2016 Candidate City (2008); Sydney Olympics 2000 Bid Limited (1993); The Audit Office (1999, 2002)

The overall cost overruns were calculated as an average of the available data. Two out of two<fnref n="24" /> host cities had cost overruns. Sydney 2000, with 56%, had the highest overrun, London actually spent 43% more than planned. Finally, it can be stated that the construction of sports facilities is about 50% higher than indicated in the candidature file.

<footnote n="24">24 We weren't able to find data for Beijing 2008 and had to use different venues for Athens 2004 because nearly all of our elected venues had no capital investments at the stage of the Candidature File. Similarly, as there is no final budget yet for the Games in Rio, we were unable to show any final figures for them.</footnote>
## 5.4 Non-OCOG Cost Corridors at Olympic Winter Games

<table><caption>**Table 70** Olympic Winter Games estimated and final non-OCOG costs – Olympic stadium</caption><thead><tr><th>Olympic Stadium</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th>Max</th><td>0%</td><td></td><td></td><td>245%</td><td></td><td></td><td></td><td>533% SOCHI</td></tr><tr><th>Mean</th><td>0%</td><td>0%</td><td>16%</td><td>145%</td><td></td><td></td><td></td><td>369%</td></tr><tr><th>Min</th><td>0%</td><td></td><td></td><td></td><td></td><td></td><td></td><td>250% SALT LAKE</td></tr></tbody></table>

Sources: Anti-Corruption Foundation (n. d.); Aumüller (2014); British Columbia Olympic and Paralympic Winter Games Secretariat (2004); IOC Data; Partnerships British Columbia (2007); Salt Lake City Bid Committee (1994); SLOC (2001); Sochi 2014 Bid Committee (2006); SOOC (2010); VANOC (2010a, b)

The Olympic stadiums for the Olympic Winter Games became on average 369% more expensive. Turin 2006 used an existing stadium for its Games, for which no investment was needed. PyeongChang 2018 did not plan to build a new stadium when setting the budget. Sochi 2014 had the highest cost overruns for the Olympic Stadium (533%) and the lowest was in Salt Lake (250%). These results show that the Olympic stadium became significantly more expensive at the Olympic Winter Games.

<table><caption>**Table 71** Olympic Winter Games estimated and final non-OCOG costs – ski jumping hill</caption><thead><tr><th>Ski Jumping Hill</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th>Max</th><td>0%</td><td></td><td></td><td>37%</td><td></td><td></td><td></td><td>286% SOCHI</td></tr><tr><th>Mean</th><td>0%</td><td>-7%</td><td>-1%</td><td>19%</td><td>0%</td><td></td><td></td><td>94%</td></tr><tr><th>Min</th><td>0%</td><td></td><td></td><td></td><td></td><td></td><td></td><td>-3% TURIN</td></tr></tbody></table>

Sources: Anti-Corruption Foundation (n. d.); Aumüller (2014); Bottero et al. (2012); British Columbia Olympic and Paralympic Winter Games Secretariat (2004); Partnerships British Columbia (2007); Sochi 2014 Bid Committee (2006); SOOC (2010); Torino Bid Committee (1998); Vancouver 2010 Candidate City (2002); VANOC (2007, 2010a, b)

The construction of a ski jumping hill seems to be easier to plan and calculate. Only for Sochi 2014 did the originally planned costs have overruns (268%). As with the Olympic Stadium, PyeongChang 2018 did not plan to build a ski jumping hill, and therefore no figures from the planning stage were available. The five-Games average for the construction of a ski jumping hill was a 94% cost overruns.
<table><caption>**Table 72** Olympic Winter Games estimated and final non-OCOG costs – sliding centre</caption><thead><tr><th>Sliding Centre</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th>Max</th><td>0%</td><td>-7%</td><td>31%</td><td>59%</td><td>62%</td><td></td><td></td><td>55% VANCOUVER</td></tr><tr><th>Mean</th><td>0%</td><td>-7%</td><td>31%</td><td>16%</td><td>62%</td><td>26%</td><td>20%</td><td></td></tr><tr><th>Min</th><td>0%</td><td></td><td></td><td>-27%</td><td></td><td></td><td>-20%</td><td>SALT LAKE</td></tr></tbody></table>

Sources: Anti-Corruption Foundation (n. d.); Aumüller (2014); Bottero et al. (2012); British Columbia Olympic and Paralympic Winter Games Secretariat (2004); Partnerships British Columbia (2007); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Roche (1994), Sochi 2014 Bid Committee (2006); SOOC (2010); Torino Bid Committee (1998); Vancouver 2010 Candidate City (2002); VANOC (2007, 2010a, b)

The construction of the Salt Lake City 2002 sliding centre showed cost underruns (20%), while the five-Games average is a cost overrun of 20%. Sochi 2014 was also cheaper than planned. Vancouver 2010 had the highest cost overrun at 55%.

<table><caption>**Table 73** Olympic Winter Games estimated and final non-OCOG costs – ice stadium</caption><thead><tr><th>Ice Stadium</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th>Max</th><td>0%</td><td></td><td></td><td></td><td></td><td></td><td></td><td>53% SALT LAKE</td></tr><tr><th>Mean</th><td>0%</td><td>-19%</td><td>-17%</td><td>2%</td><td>-20%</td><td>-3%</td><td>-4%</td><td></td></tr><tr><th>Min</th><td>0%</td><td></td><td></td><td></td><td></td><td></td><td>-26%</td><td>TURIN</td></tr></tbody></table>

Sources: Anti-Corruption Foundation (n. d.); Aumüller (2014); Bottero et al. (2012); British Columbia Olympic and Paralympic Winter Games Secretariat (2004); Partnerships British Columbia (2007); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (2001); Sochi 2014 Bid Committee (2006); SOOC (2010); Torino Bid Committee (1998); Vancouver 2010 Candidate City (2002); VANOC (2007, 2010a, b)

The ice stadiums have mainly shown cost underruns over the eight years (- the five-Games average is minus 4%). The only overrun was 53% for Salt Lake, while Turin 2006 was able to reduce costs by 26%.
<table><caption>**Table 74** Olympic Winter Games estimated and final non-OCOG costs – Olympic Village</caption><thead><tr><th>Olympic Village</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th>Max</th><td>0%</td><td></td><td>625%</td><td></td><td></td><td></td><td>471%</td><td>SOCHI</td></tr><tr><th>Mean</th><td>0%</td><td>14%</td><td>319%</td><td>12%</td><td>-57%</td><td>179%</td><td></td><td></td></tr><tr><th>Min</th><td>0%</td><td>14%</td><td>13%</td><td>12%</td><td></td><td></td><td>12%</td><td>VANCOUVER</td></tr></tbody></table>

Sources: Bottero et al. (2012); British Columbia Olympic and Paralympic Winter Games Secretariat (2004); Hong (2017); Müller (2014); Partnerships British Columbia (2007), PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); SLOC (2001); Sochi 2014 Bid Committee (2006); SOOC (2010); Torino Bid Committee (1998); Vancouver 2010 Candidate City (2002); VANOC (2007, 2010a, b)

Due to master plan changes for Sochi 2014, the costs for the Olympic Village changed dramatically and ended up being five times more expensive than planned. Vancouver managed the construction of the Olympic Village well and ended with a 12% cost overrun. Due to Sochi 2014, the average of cost overruns for the Villages was 179%.

<table><caption>**Table 75** Olympic Winter Games estimated and final non-OCOG costs – IBC/MPC</caption><thead><tr><th>IBC & MPC</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th>Max</th><td>0%</td><td></td><td></td><td></td><td></td><td></td><td>-11%</td><td>SALT LAKE</td></tr><tr><th>Mean</th><td>0%</td><td></td><td></td><td></td><td></td><td>71%</td><td>-18%</td><td></td></tr><tr><th>Min</th><td>0%</td><td></td><td></td><td></td><td></td><td></td><td>-25%</td><td>TURIN</td></tr></tbody></table>

Sources: Bottero et al. (2012); British Columbia Olympic and Paralympic Winter Games Secretariat (2004); Fay (2018); IOC Data; PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Salt Lake City Bid Committee (1994); Torino Bid Committee (1998)

Salt Lake City 2002 had a decrease of 11% for its IBC/MPC. Turin was also able to save some money from the projected costs (25%). On average, the IBC/MPC was cheaper than planned in the candidature files (18%).
<table><caption>**Table 76** Olympic Winter Games estimated and final non-OCOG costs – total</caption><thead><tr><th>Total</th><th>t-8</th><th>t-6</th><th>t-5</th><th>t-4</th><th>t-3</th><th>t-2</th><th>t-1</th><th>final</th></tr></thead><tbody><tr><th>Max</th><td>0%</td><td></td><td></td><td>175%</td><td></td><td></td><td></td><td>178% SOCHI</td></tr><tr><th>Mean</th><td>0% -8%</td><td>11%</td><td>95%</td><td>12%</td><td></td><td>-26%</td><td>60%</td><td></td></tr><tr><th>Min</th><td>0% -8%</td><td>11%</td><td>14%</td><td>12%</td><td></td><td></td><td>13% VANCOUVER</td><td></td></tr></tbody></table>

Sources: Anti-Corruption Foundation (n. d.); Aumüller (2014); Bottero et al. (2012); British Columbia Olympic and Paralympic Winter Games Secretariat (2004); Fay (2018); Hong (2017); IOC Data; Müller (2014); Partnerships British Columbia (2007); PyeongChang 2018 Olympic & Paralympic Winter Games Bid Committee (2010); Roche (1994); Salt Lake City Bid Committee (1994); SLOC (2001); Sochi 2014 Bid Committee (2006); SOOC (2010); Torino Bid Committee (1998); Vancouver 2010 Candidate City (2002); VANOC (2007, 2010a, b)

For the Olympic Winter Games, the average cost overrun of venues in our basket was around 60%. All host cities<fnref n="25" /> had cost overruns. The cost overruns of Salt Lake City 2002, Turin 2006 and Vancouver 2010 were at a moderate 13-28% though. The highest cost overrun was for Sochi 2014, with 178%.

## 5.5 Summary of Costs and Revenues of Olympic Games Separated by Categories

In considering the various categories, as well as their most positive and negative manifestations, certain differences arise.

In terms of revenue, the IOC contribution is relatively stable. Since Vancouver 2010, this has been a fixed amount that will be paid out in instalments from four years before the Games onwards. Sources of error are therefore to be looked for in the candidature file, as there was possibly a wrong estimated exchange rate and/or level of inflation used. In the earlier years, from Sydney 2000 to Beijing 2008, the amount was a percentage of the sale of TV rights and could change over time due to the late sale of contracts. The revenue from the TOP sponsorship can be significantly higher (Salt Lake City 2002, Athens 2004) and always – with the exception of Sochi 2014 – led to a revenue overrun. Even higher revenues could be achieved in all cases by national sponsors – Beijing 2008 even received almost five times its expected

<footnote n="25">25 PyeongChang 2018 was just running during our data collection, so there are no final figures for PyeongChang, but the collected data influenced the mean during the preparation phase.</footnote>
revenues. However, a closer look has to be taken on whether the sponsors are state
owned, and therefore the sponsorships are indirect subventions. In contrast, revenue
from ticket sales is very difficult to predict. Nevertheless, the Games usually create
a revenue overrun. In comparing Olympic Games and Olympic Winter Games,
the overrun is lower for winter. The revenues of the licensing category are not very
predictable, but lead on average to additional revenue. A barely used and seemingly
outdated category is the lottery. Looking at the 10 Games, not a single host city
actually generated revenues through a lottery. Subsidies are not used everywhere,
but we also found large changes here and almost always came to a revenue overrun.
A big difference between the Olympic Games and the Olympic Winter Games can
be seen in donations. While donations for the Olympic Games are overestimated,
they are underestimated for the Olympic Winter Games. The revenue from the
disposal of assets can certainly increase, but Winter Games also seem to be more
effective than Summer. As previously written, all Games – except Sochi 2014 – had
a revenue overrun. Salt Lake City 2002 had the highest revenue overrun of 119%.

Looking at the expenditures, many categories show differences between the
Olympic Winter Games and the Olympic Games. In the venues, and administration
and coordination categories, spending at the Olympic Games is changing, whereas
for technology and services the fluctuations for the Olympic Winter Games are
larger. The categories in which the Olympic Winter Games had cost underruns were
venues and administration and coordination. Higher spending is often recorded
in the workforce and service categories. The workforce and administration cate-
gories are most often estimated with too low costs because the organisation and
rapid growth of the OCOG is often underestimated. In contrast, marketing and
events is a category in which savings occur, but also cost overruns. Considering all
expenditures, the corridor is smaller for the Summer Games than for the Winter
Games. This suggests that the costs are more predictable for the Olympic Games.

Regarding the non-OCOG budgets, many Olympic Games venues show severe
cost overruns. The swimming pool is on average 105% more costly, the multipur-
pose hall 61% and the velodrome 359%. Among these venues only the swimming
pool for Sydney 2000 was cheaper than planned. The cost of the Olympic stadium
is very much dependent on whether an existing stadium can be used after mod-
ernisation or if a new construction is needed. A new construction often ends with
a cost overrun. The Olympic Village can have cost underruns, such as for Athens
2004, but in general cost overruns have to be expected for this mega venue as well.
In general, the estimate of the Olympic Village and the IBC/MPC is very import-
ant, because they make up the largest part of the overall costs. Thus they highly
influence the total percentage of our basket. On average, summer venues are 50%
more expensive than planned.
The Olympic Winter Games also have great cost overruns. The Olympic stadiums were on average 369% more expensive, the ski jumping hills 94%, the sliding centres 20% and the Olympic Villages 179%. The sliding centre's corridor is very small, and the ski jumping hill and Olympic Village are much larger. It is interesting that two venues had cost underruns. The ice stadiums (-4%) and IBC/MPC (-18%) were both on average cheaper than planned. Despite this, the construction of venues had an overall average of a 60% cost overrun.

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<figure><img src="image_53.png" /></figure>
**6.1 Theoretical Explanations for Olympic Cost Overruns**

In this reflection we offer explanations about the different drivers that initiate cost and revenue overruns. Before we issue our 17 recommendations, we will use several theories that help us to understand why cost and revenue overruns occur. The theory is important to consider because it will emphasise our recommendations.

The reasons for Olympic Games cost overruns are many, and these can be explained by several phenomena. Reasons that trigger cost overruns may be *casual*, happening just *by chance* (at random) or more basic and systematic, *i.e. structural*.

*Casual* causes are:

1. Unpredictable and uncertain factors generate delays in the project achievement – which is often the case in the construction industry. Then the project that is lagging behind schedule must be finished in a rush, which always causes extra costs; therefore $C_t > C_{t-n}$.

2. Mismanagement of the project. This might have happened in some cities that hosted the Olympic Games, although this must be the exception rather than the rule.

3. The project has been conceived and designed with too high expectations in terms of short duration and low (or not too high) cost which is usually due to decision-makers' excessive optimism and/or ambition. Although such a mood
may have surrounded the preparation of some Olympic Games, it cannot be considered as a recurrent source of cost overruns even though excess optimism may lead to one of the two structural causes below.

Consequently, such causes of cost overruns that emerge haphazardly, *at random*, cannot be generalised in terms of an economic analysis of the Olympic Games, even less could they be incorporated into a theoretical approach of the Olympic Games cost overruns.

From an economic standpoint, *structural* causes of cost overruns in long duration Olympic projects can be theorised once they are identified as:

1. *The local Olympic project governance is weak or bad*, which means that (some) local decision-makers who host the Games do consider their budget as rather lax and are ready to envisage that expenditures (costs) could run over budget; and the project is run under a so-called soft budget constraint (Kornaï, Maskin & Roland 2003). Usually economists consider that this managerial misbehaviour has its roots in some inappropriate set of institutions and hence resort to institutional economics. The soft budget constraint is a concept that has already been called into sports economics analysis (Andreff 2007; Storm & Nielsen 2012), though not in the case of mega-sporting events, namely for explaining cost overruns. An alternative attempt at analysing weak governance, i.e. resulting from inappropriate institutions, and the subsequent “structural” managerial misbehaviour, is the PRINCIPAL-AGENT model (Jensen & Meckling 1976; Fama & Jensen 1983; Laffont & Martimort 2003), which has also been applied in sports economics though not for studying the Olympic Games (Miceli 2004; Andreff 2015) either, despite the fact that it seems to be a theoretical framework that helps explain cost overruns. It is therefore adopted below in this study.

2. *The use of public funding and public goods:* The occurrence of soft budget constraints and cost overruns is more probable when public funding is involved in the host city's financing of the Olympic Games. When a non-negligible share of an Olympic project is financed on public funds, then an opportunity emerges for local decision-makers (primarily politicians) to overload the project with expenditures (costs) that would not have been planned otherwise (the famous watchword that “hosting the Games will facilitate and accelerate the building of new non-sporting infrastructures”). With public finance, there is always an incentive to spend without counting (since it is not your own but public money), to bargain additional subsidies and the like. In the worst case of actually bad governance, corruption may arise. Obviously, analysing this facet of cost overruns calls for some references to the public choice theory, in particular free-riding
behaviour in the face of the request for financing public goods. It is therefore
adopted below in this study.

3. *The Olympic project is allocated to host cities through an auction or an auction-like process.* This is the winner's curse theory of Olympic cost overruns (Andreff 2012, 2014), which is briefly recalled below and used as a third theoretical interpretation of the emergence of lasting cost overruns linked to the allocation mode – through an auction-like process – of the Olympic Games. It is therefore adopted below in this study.

In short, we will offer theoretical reflection by using the following theories:

* Neo-institutionalism theory. In this theoretical framework, we will address in particular:

a. The Principal-Agent Theory and its adverse selection problem

b. The Principal-Agent Theory and its moral hazard problem

c. The Public Choice Theory

* The Theory of public goods and its inherent free riding problem

* The Auction theory and in particular the “Winner’s Curse”

* Evolution theory, public interest theory and planning fallacy theory

**6.1.1 The Neo-Institutionalism Theory and Cost/Revenue Overruns**

**Adverse selection problems**

The following explanation is related to the often strategically desired underestimation of costs during the bidding stage. This section explains why we strongly suggest to any reader to interpret cost overruns only after the Games were awarded to a city and the first serious cost estimate was made. This study has clearly shown that a realistic cost estimate can usually be done three to four years before the Games.

Due to the competitive bidding and the Olympic auctioning process, cost estimates requested by the sports governing body is different for each mega project (e.g. Preuss & Schnitzer 2015). Non-sport mega projects tend to have much more controlled and expected cost estimates because they are from one industry. Therefore, it is debatable whether an interpretation of cost and revenue overruns should be taken from the time span of a first (very early) cost estimate or a little later from the official bidding documents or even later from the first cost estimate based on the true knowledge of the project. Reflecting this, we wonder, why does the IOC continue
to demand cost/revenue estimates in the candidature file? If the above reasoning is
right, everyone is supposed to know that this first cost and revenue estimate must
necessarily be wrong and only four years before the Olympic Games the organisers
have a full picture and valid overview. Thus, taking the cost and revenue estimate
from the official candidature files means taking a politically influenced cost/revenue
estimate that is presented to the population, and therefore we can already explain
two factors for cost overruns. One is the political setting of the budget, and the
other is a strong uncertainty about the number and size of projects that are really
needed for the Olympic Games. The overall question here is, whether the cost and
revenue estimate presented to the IOC members (before voting) has an impact on
their decision. If so, the IOC may take this information out.

Based on the information that the local residents/population have about a po-
tential Olympic Games, they want the Games or they reject them (in recent years
many referendums were lost thus indicating that those that are voting do not want
the Games). If the Games seem to be attractive, the population wants to bid for
the Olympic Games and directs their desire towards the “political system” of the
city/NOC. This is a classical *PRINCIPAL-AGENT* situation, which is a “pervasive
fact in economic life” (Arrow 1985a, 37). Constitutional for a *PRINCIPAL-AGENT*
relation is that the utility level of the principal is influenced by the agent’s auction
(Picot, Dietl & Franck 2005, 72). The *AGENT*, here the political system, has better
information about the costs and revenues of the Olympic Games than local res-
idents/population (*PRINCIPAL*). The so-called information asymmetry gives an
advantage to the *AGENT*. The *AGENT* (political system) can take opportunistic
advantage by exaggerating the (own) positive event effects and/or just undermining
costs and other negative effects when reporting to the *PRINCIPAL* (local residents/
population). This is an important observation because the information politics
(which can be pro Olympic opposition or Olympic supporters) influence the out-
come of a public referendum.

Local residents/population acquire their information about the potential bene-
fits of the Olympic Games through various channels (Preuss 2004, 49). These are:

a. Information and advertisements, which are often spread by the *AGENT* (the bid committee or local politicians), but also

b. Information published by the media, and opposing and lobby groups. Due to the complexity of Olympic-related projects, which can easily be more than 200, the cost estimates, including non-Olympic costs, sometimes tend to be extremely high.

c. Information about the event, which was staged in another city. Information is passed on through TV reports, live coverage or print media articles.
d. Personal experiences with other (mega) sporting events at home or abroad in the past.

The information provided to the local residents/population is usually not comprehensive enough for them to reliably assess the potential benefits of the Olympic Games for themselves. Therefore, the local residents/population do not know the real cost-benefit balance of a future mega sport event in their city.

Looking at the interaction between those involved in a bidding process, we can observe a cascade of PRINCIPAL-AGENT relations where the AGENT becomes PRINCIPAL in another relation (see also Picot, Dietl & Franck 2005, 2). In each cascade, the interest in showing the true costs of Olympic Games is not fully explained.

<figure><img src="image_54.png" /><figcaption>**Fig. 44** Cascade of PRINCIPAL-AGENT relations</figcaption></figure>

Opportunistic behaviour of the AGENT is most likely. The PRINCIPALS and AGENTS follow different aims, but the information asymmetry avoids transparency. Even though both want to have successful Olympic Games staged, the benefits and opportunity costs of the Games are different for each group and lead to opportunistic behaviour. The AGENT (in our bidding scenario, the bid committee is better informed) has to follow the objectives of the PRINCIPAL, but will adopt opportu-
nistic behaviour geared towards its objectives. Despite the opportunistic behaviour of the AGENT, the PRINCIPAL usually obtains a benefit from the relation. Both follow a win-win situation, also called non-zero-sum situation, because the main objective (successful Games) is the same without a conflict in this interest. Due to the complexity of Olympic Games projects (investments) and the large number of cost areas, the PRINCIPAL is not able to observe and judge all actions of the AGENT. Additionally, other stakeholder have an influence on the activities of the AGENT (e.g. demand from officials of international federations, mayors of suburbs or related communities, federal politicians/senators) and make the action of the AGENT opaque. Finally, the performance of the AGENT towards a successful bid is insecure, because only one bidding city can win the right to host the Olympic Games. All these factors complicate the PRINCIPAL'S possibility of controlling and judging the importance of the AGENT'S activities. In other words the AGENT can act opportunistically (which means using the Olympic bid) to maximise its own benefits. This can be an additional infrastructure project, higher construction costs (if he participates by a certain percentage based on the overall costs of the construction), the choice of other locations than those being cheaper, etc. All this leads to an increase in the budgets and later to cost overruns.

When bidding for the Olympic Games, the bid committee has the best information. Local politicians have the second best information, followed by the governmental politicians. The local residents/population, finally, have little information. This means that there is great information asymmetry between the PRINCIPALS and AGENTS. The next table displays the different roles and objectives of the PRINCIPALS and AGENTS.

<table><caption>**Table 77** Principal-agent relations in the bidding process for a mega sports event</caption><thead><tr><th>Cascade level</th><th>Principal</th><th>Agent</th></tr></thead><tbody><tr><td>1</td><td>Population (nation)<br>demands the Olympic Games</td><td>Government<br>subsidises the Games (infrastructure of city) and supports the bid, provides financial guarantees</td></tr><tr><td>2</td><td>Government<br>demands the Games, which promote economic growths, international prestige, national presentation, etc.</td><td>Local Government<br>subsidises the Olympic Games and expenditures city development, local representation, provides political support and backs the bid</td></tr><tr><td></td><td>Local residents (city)<br>demand the event</td><td></td></tr></tbody></table>
<table><thead><tr><th>Cascade level</th><th>Principal</th><th>Agent</th></tr></thead><tbody><tr><td>3</td><td>Local Government<br><i>demands profitable organisation of the Games and long-term benefits from the event in regard to the long-term city development, local representation</i></td><td>Bid Committee<br><i>optimises the event organisation and maximises short-term success (event) because success is visible and the PRINCIPAL will rate that</i></td></tr></tbody></table>

The initial initiative to bid for the Olympic Games often comes from private groups or local politicians. Their intention is often different from that of the local residents/ population. For example, the initiative to bid for the Olympic Games in Atlanta for 1996 came from the construction industry seeking new business. The Barcelona politicians wanted the Games to be one (out of many) driver for redeveloping the city, the Catalan government wanted to promote Catalonia as a rival to Madrid, and the central government wanted to control the Olympic Games as Spanish Games (Botella 1995, 143). These objectives were used to justify substantial public investment during the Olympiad and to create within the city and the province of Catalonia the desired impetus to take stock of the long-term under-investment in leisure, culture, sport and transportation during previous decades (Millet 1995, 191).

## Moral hazard problems

Each AGENT – being in another relation PRINCIPAL – will use scarce public resources to promote the Olympic Games and take opportunities to reach its individual targets. In such situation, the AGENT cannot be observed (lack of transparency), which leads to the opportunity for the AGENT to make decisions for its own benefit (moral hazard). These can be, for example, to re-plan parts of the city that are not necessarily needed for the Olympic Games, but the city may manage to get the national taxpayers to pay the bill. The information asymmetry enables the AGENT claiming that this re-planning was necessary for the Games. This happened for example in Athens, when, only three years before the Games, the Olympic Stadium surroundings were nicely upgraded by star architect Calatrava which cost more than EUR 200m covered by the Greek state to incorporate design excellence (Pollalis 2006, 4).

This PRINCIPAL-AGENT theory helps to explain a certain ineffectiveness in investing public resources (national taxpayer perspective) for the Olympic Games. However, for a local taxpayer, this investment paid by national taxpayers is very effective. In contrast for the national taxpayers it tends to be less effective because they do not benefit from local city development since they do not live in the host city.
The problem addressed here is that too many *AGENTS* are involved in the bidding for and preparation of the Olympic Games and all want to benefit from the project, but those who have to pay the bill (taxpayers) do not have enough transparency (a typical moral hazard problem). Thus the opportunistic behaviour of *AGENTS* makes the Olympic Games a mega project that contains hundreds of smaller investment projects to make them benefiting and this finally increases the overall costs.

The many public referendums (see introduction) have shown that taxpayers are concerned about the financial control of such a project. The negative referendums and thus the decrease in the number of bid cities have shown that the *PRINCIPAL* is still very important and the support of local residents and national population is important to win an Olympic bid.

## Public choice theory

Public choice theory can help explain cost and revenue overruns based on political behaviour. In particular we want to refer to conflict of interests. In regard to cost overruns, we need to study self-interested *AGENTS* (politicians, officials from International Sport Federations or city developers) and their interactions. Their position during the bidding stage for the Olympic Games or later on during the construction phases helps explain lower cost expectations by looking at their utility maximisation or the way of decision taking.

The theory on conflicts of interests is also based on the *PRINCIPAL-AGENT* setting. The *AGENT* has to fulfil the job given by the *PRINCIPAL*, but will use information asymmetry to maximise his/her benefits following his/her own agenda.

Politicians or sport officials often have a conflict of interests by having multiple positions/functions or when they have to trade-off between several projects. Rational choice theory teaches us that people consider their preferences, opportunity costs and institutional/cultural/organisational constraints whenever they have to decide between different projects. It is normal for many projects to have conflicting aims. Regarding the construction of sports venues the decision taken may often be in conflict with the best practice for taxpayers. Information asymmetry helps to make a decision against the interest of the taxpayer (*PRINCIPAL*), and often this asymmetry is an incentive to follow a selfish interest. Examples of this are when a local politician gets governmental money for local infrastructure, an architect increases the costs of a project as he/she gets a percentage of the project as his/her salary or someone owns an area and wants an upgrade of the surroundings. For the Olympic Winter Games, people who own ski resorts want better traffic connections or someone who owns construction companies wants contracts.

What the IOC can do is to reduce this information asymmetry by, for example, better informing about the infrastructure required for the Olympic Games. In other
words, if the IOC openly tells the population what is needed or which sports facility is sufficient to stage Olympic Games, this will lower the information asymmetry and diminish the opportunistic behaviour of the agent.

## Public goods and free riding

Most of the capital investments for the Olympic Games are financed from public resources. The reasoning for this is that the infrastructure built and the Olympic Games in general are of national interest. Therefore, public subsidies are justified. However, many stakeholders benefit from the projects but do not have to pay for them. For them, utility maximising means using public resources for their own benefit. This can be:

a. an official of an International Sports Federation who wants to have a new sports venue for his/her sport for training or competition;

b. an architect who earns his/her salary based on a share of the overall contract;

c. a construction company that earns money by adding extras as much as a contract allows it to do so;

d. the hotel and tourism industry that wants more attractions and better infrastructure.

In contrast to the above-mentioned conflicts of interests, here we face the problem that those deciding do not have to pay, but benefit from the decision taken. This leads to an overspend of public money and to cost overruns.

In other words, when a share of an Olympics' project is financed from public funds then an opportunity emerges for local decision makers (primarily politicians) to overload the project with expenditures that would not have been planned otherwise and are not needed for the hosting of the Games. The famous watchword that "hosting the Games will facilitate and accelerate the building of new non-sporting infrastructures". With public finance there is always an incentive to spend without counting (since it is not your own, but public money), to bargain additional subsidies and the like. In the worst case of actually bad governance, corruption appears.

Most revenue overruns – in particular when they take the form of extra-profit or rent – usually accrue to private owners, enterprises, local decision-makers, etc., who are not compelled to invest or consume in the local economy. While cost overruns are often (at least partly) covered by public funds, which means, at the end of the day, by some (local and/or nationwide) taxpayers. When it is so, a well-known outcome in economics emerges: indirectly or directly public funds (then taxpayers) are paying for privately appropriated extra-profit or rent – in other words: "social deficits fuel private profits". If one wants to enhance the acceptability of hosting
the Olympic Games by potential host city populations, this is the kind of situation that must be drastically combatted and cured. That is why, beyond the issue of cost overruns, the appearance of a deficit is even more crucial and, consequently, the emergence of revenue overruns that may or may not cover cost overruns.

### 6.1.2 Auction Theory: The Winner's Curse

Above we have mentioned many causes for cost overruns. However, one more interesting cause can be derived from the auction theory – as long as the Olympic Games are awarded through an auction-like process that can fuel a so-called winner's curse. The latter occurs when the project has been conceived and designed with too high expectations (overestimation), for instance in terms of short duration or significant economic impact and with too low or not high enough costs (underestimation), which is usually due to decision-makers' excessive optimism and/or ambition.

The winner's curse phenomenon was discovered when explaining the unexpected low returns to companies engaged in competitive bidding for oil and gas leases in the Middle East (Capen, Clapp & Campbell 1971). Further on, the winner's curse theorem was demonstrated namely by Richard Thaler, the 2017 Nobel Prize winner in Economics. Thaler (1994) wrote: "In any auction-type setting where the value of the auctioned object is uncertain but will turn out to be the same for all bidders, the party who overestimates the value is likely to outbid the competitors and win the contest".

This theory was applied to explain cost overruns when hosting the Olympic Games (Andreff 2012, 2013, 2014, 2016), now summarised here:

1. Ex-ante (before awarding the Olympic Games), nobody knows the value of hosting the Games.

2. Through the bidding process, the IOC expects to obtain the best possible Olympic Games in terms of quality and is looking through an auction-like award process for a guarantee of well-functioning and secure sports contests, excellent quality Olympic venues and hosting accommodation, impressive opening and closing ceremonies, high-quality media and telecommunications and, increasingly, environmental quality. The problem is that the IOC also (just like the taxpayers above) operates under an information asymmetry about the details of each candidature file.

3. The objective function of bidding cities consists in obtaining the right to host the Games and, for this purpose, in overbidding each other, and eventually outbidding all competing cities. Each bidding city must promise fixed quantities of sporting facilities requested by the IOC. Usually the city also fills its candidature file with a lot of promising general non-sporting infrastructures, which is the
most important trigger of the winner's curse and cost overruns – even though
this kind of costs are not taken on board in the present study.

4. As in all auctions or auction-like allocations of this kind, the winner is the most optimistic bidder, i.e. the one who underestimates the cost (and/or overestimates the benefit, for instance the impact and legacy). Usually an overoptimistic economic impact study, produced by a well-known commercial or marketing agency, is instrumental in highlighting the best features of the bidders' projects and shadowing or blurring the lesser ones. Then the most optimistic bidder wins the bid but will be cursed because it will have to pay for the actual ex-post cost and not for the ex-ante underestimated cost.

5. The bidding process is an auction-like awarding. If there is just one candidate to host the Games, then there is no winner's curse and no (structural) cost overruns.

This theory has been successfully tested in Andreff (2012, see Tables for all Olympic Games from Munich 1972 on and Winter Games since Lake Placid 1980), including the exception that confirms the rule: Los Angeles, the only candidate for hosting the 1984 Olympic Games, did not have any cost overruns. Other studies have exhibited cost overruns, though not in the context of the winner's curse theory, such as Preuss (2004) and Solberg & Preuss (2007), who showed an increase in the operational and construction costs between the first and the last estimate for all Olympic Games from 1972 to 2000.

**6.1.3 Public Interest Theory vs Chicago Theory:
Market Regulation to Favour Public Interest?**

The Public Interest Theory explains in general terms that regulation seeks the protection and benefit of the public at large. The Chicago Theory (also known as the Economic Theory of Regulation), suggests that regulation does not protect the public at large but only the interests of groups (Hantke-Domas 2003, 165).

Public interest can be further described as the best possible allocation of scarce resources for individual and collective goods. In other words, it questions whether the use of public money for the Olympic Games is the best spending for the population. For each Games the answer is different. The better the legacy and the smaller the public money share, the better the Games serve public interest. However, the negative referendums in the past indicate that the public seem to be against the Olympic Games, or at least the bid committees are not able to sell the benefit to be expected from the Games.
In these theories, regulation means the employment of legal instruments for the implementation of social-economic policy objectives. For example, the government can establish economic and social regulations in order to realise goals like allocative efficiency, stabilisation or fair and just income distribution. The question is, if the Olympic Games can be such an instrument.

The Public Interest Theory has two acceptable concepts. The first explains that regulation seeks the protection and benefit of the public at large. The second defines it as a system of ideas, which proposes that, when the market fails, economic regulation should be imposed in order to maximise social welfare (Hantke-Domas 2003, 166).

In modern economies, the allocation of scarce resources is mainly coordinated by the market. In theory, this allocation of resources is optimal, but these conditions are frequently not fulfilled in practice. The allocation of resources is not optimal and there is a need for methods to improve the allocation. Therefore, the IOC should not expect that awarding the Olympic Games will finally benefit the population in the way it is expected. There may be a need for regulation based on a contract to better ensure social welfare provided by a mega project such as the Olympic Games.

One of the methods for achieving efficiency in the allocation of resources is government regulation (Arrow, 1985b). However, the question is if the government can control the Olympic project properly. Thus it was good that Sydney 2000 started to have a ministry coordinating the projects and other host nations followed. This will be shown in our recommendation 9 (see below).

### 6.1.4 Evolution Theory and Planning Fallacy Theory

Furthermore, evolution theory can be used to explain cost overruns. Evolution theory describes the formation and change of units that are the result of a development process in a scientific way (Cambridge Dictionary, n. d.). Cost overruns can be explained using the theory of evolution, as there are changes in scope and definition between the initial phase and the completion of the project (e.g. Odeyinka et al. 2012). For the Olympic Games, these may include technical developments like the support of drones during the Opening Ceremony in PyeongChang. In addition, the network coverage of the country can be improved to allow for better TV transmission or result transmission. These technical changes are associated with evolution. Therefore, it is important to know exactly what is needed. This fact is considered in recommendation 1 (see below).

In addition, the psychologically based planning fallacy theory can also help to explore cost overruns. Planning fallacy theory is a phenomenon that deals with optimistic estimates of temporal predictions of future work. The time required
for tasks to be set up is optimistically underestimated. This theory was first de-
scribed by Kahnemann & Tversky (1979). Although the individual may already
have experience and knowledge of previous similar tasks that have taken more
time than anticipated, this phenomenon occurs in spite of it. Above all, these are
predictions of one's own tasks. Outside observers tend to overestimate the time
required pessimistically. Lovallo & Kahneman complemented the existing theory
in 2003, adding the components of costs and risks that are underestimated while
overestimating the benefits of the action. In summary, the theory describes the
time overruns, cost overruns and benefit shortfalls of tasks and projects, which
in turn can be combined with the auction theory (see Auction Theory chapter).
Recommendation 3 deals with the fact that there should be no strategic cost un-
derestimations to minimise cost overruns.

## 6.2 The Evolution of Olympic Budgets and Their Economic Consequences

### 6.2.1 Evolution of Olympic Budgets

The difficulty in coordinating the organisation of the Olympic Games becomes
obvious when looking at the total number of changes, for example at the Salt Lake
City 2002 Organising Committee (SLOC). Between July 1999 and March 2002,
the SLOC had processed 2,551 change orders<fnref n="26" /> and had to manage 3,780 contracts
(without venue construction) (Hopkins 2002, 15).

<footnote n="26">26 Change orders are the “unilateral written order by a project owner directing the contractor to change contract amount, requirements, or time. Such changes must be within the scope of the contract and in accordance with the contract’s changes clause to be legally implemented without the consent of the contractor” (Businessdictionary, n. d. b).</footnote>
<figure><img src="image_55.png" /><figcaption>**Fig. 45** Number of change orders at SLOC</figcaption></figure>

Source: Hopkins (2002, 15)

Our study of 10 Olympic Games shows that the typical evolution of an OCOG budget is as follows:

1. The bidding budget his very roughly estimated. We found that many smaller projects were not considered, venues were planned too small or in a location that was not feasible enough to be used. That leads to later changes in the master plan.

2. This bidding budget is only slightly adjusted, even after winning the bid, until approximately four years before the Games. In this phase (t-7 and t-4), we found very little data and this could prove that there are not many efforts taken to keep control of the budgets. It seems that the government authorities change the master plan during this time and also follow stakeholders' and politicians' interests. These changes in the master plan are basically because, after winning the bid, the OCOG needs to re-do the planning until it is staffed, people understand the project, build relationships with stakeholders and understand the needs. Changes happen until the plans become more detailed and budgets more accurate.

3. Approximately four years before the Games, the government authorities and the OCOG have a clear view about what exactly is needed and how to satisfy the various stakeholder interests. At this time, the budget usually has high cost overruns. Pressure from the public and political opposition starts.

4. Then, a year before the Games, great efforts are undertaken to reduce costs and try to increase revenues. Financial changes can be expected that usually end in a balanced OCOG budget (through greatly increased revenues and moderate
expenditure overruns), and capital investments also end up with a moderate cost overrun. Interestingly, this is quite different from project to project and depends a lot on changes in the master plan.

The measures taken in step 4 have sometimes been significant. The reduction of costs is often possible because free riders and opportunistic behaviour as well as budget cuts can be made without endangering the Olympic project. The next figure illustrates the gap evolution of the SLOC budget for Salt Lake City 2002. Here the revenue overruns helped to balance the budget during Games time, but most important was the cut in expenditure from USD 1.51m down to USD 1.27m.

<figure><img src="image_56.png" /><figcaption>**Fig. 46** Budget evolution and financial gap at SLOC (2002)</figcaption></figure>

Source: Hopkins (2002, 36)

The budget changes were quite extensive as the next figure shows. Here, SLOC managed to cut the budget by almost 32%, although an increase of almost 23% was later necessary.
<figure><img src="image_57.png" /><figcaption>**Fig. 47** Volatile budget development at SLOC (2002)</figcaption></figure>

Source: Hopkins (2002, 39)

### 6.2.2 Economic Consequences: Cost Overruns, Revenue Overruns and Deficit

If cost overruns are obviously caused by the Olympic Games (preparation, staging and legacy), then we should also observe overruns (ROV) of the revenues:

$$COV \Rightarrow k. ROV$$

An important question is, what does it mean if revenue overruns are equal, higher or lower than cost overruns: $k \ge 1$ or $k < 1$; or whether the below inequality (1) or (2) prevails.

The final outcome (deficit or no deficit) depends on the comparative size of cost overruns and revenue overruns:

(1) If $ROV \ge COV \Rightarrow$ no deficit

(2) If $ROV < COV \Rightarrow$ deficit

The hypothesis that $ROV = COV$ or $k = 1$ may occur only by chance. Otherwise, there is a (multiplier-type) argument in favour of $k > 1$ ($ROV > COV$) which is: increased revenues (overruns) triggered by cost overruns will not be entirely saved, at least a
part being consumed, another one purchasing imports; therefore $k > 1$ – under the usual assumption that $c > e$, where $c$ stands for the marginal propensity to consume locally and $e$ for the marginal propensity to import locally<fnref n="27" />. Other occurrences can emerge that would trigger $ROV < COV$ ($k < 1$):

1. A specific investment within the Olympic Games overall project eventually appears to be more expensive than forecast in the candidature file. Here, cost overruns are simply due to an (unexpected) extra cost without any change in the investment programme. Then unexpected extra revenues usually accrue in the form of profit or extra-profit to some enterprise(s), and this does not necessarily fuel a new other investment (financed on extra profit) in the local economy, and probably never increases local consumption. In such occurrence, probably $k$ is below 1, possibly=0.

2. Delayed completion of an Olympic Games investment is another source of cost overruns. When a project is lagging behind the expected schedule, it must be finished in a rush with higher costs (extra employment, overtime work, etc.). Again, this may increase some enterprises’ turnover and profit without any guarantee of a subsequent increase in consumption, and probably with $k < 1$.

3. Cost overruns, whatever their cause, may be taken over by public authorities through a subsidy. How this affects the local economy will very much depend on how this extra public expenditure is financed. As, with the Olympic Games, it is sometimes financed through an increase in consumers’ and/or investors’ taxation, then it is unlikely that $k > 1$ and it is extremely probable that, through reduced consumption and investment by overloaded taxpayers, $k$ will be lower than 1, maybe equal to zero.

4. At the end of the day, cost overruns may lead to local fiscal deficit and/or public debt. Again, the burden usually falls on the shoulders of taxpayers, and this will reduce $k$ below 1, and sometimes to zero.

5. The worst case (as suspected with the Athens 2004 and Sochi 2014 Games) is when costs run over due to speculation, bribery, black boxes, corruption and the like. Then cost overruns simply fuel extra revenues of a rent-type which, at the end of the day, have no chance of feeding the local economy in any way. For sure, from the standpoint of the local economy $k = 0$.

<footnote n="27">27 In a small economy very much open to trade, it may happen that $c < e$, and thus $k < 1$. We do not discuss this case since none of the editions of the Olympic Games has been hosted in a small open economy since 2000. Even though Athens 2004 is a small economy, it had access to the European market.</footnote>
All in all, the risk is higher that finally *k* < 1, that is *ROV* < *COV* in most Olympic Games non-OCOG budgets because one or several of the above occurrences 1, 2, 3, 4 or 5 is/are at work. One objective and value added of the present study is to check the comparative magnitude of *ROV* and *COV*.

## 6.3 Practical Recommendations to Reduce Cost Overruns

This study brought up several key learnings that can be transformed into recommendations to the IOC, OCOGs, host cities and public authorities. Many of them are suggestions for controlling factors that lead to cost overruns. In the following we do not suggest points for controlling revenue overruns, as an underestimation of revenues is conservative; moreover, contrary to cost overruns, revenue overruns are unexpected good news and basically do not require monitoring.

* R1: Cities need to receive earlier guidance about capital investments required for the Games.

One key learning from this study is that the idea of staging the Olympic Games usually comes from the desire for (political) worldwide recognition, sport organisations and from the wish to develop the host city. Financial planning and full awareness of which investments the Olympic Games require are often only formed during the bid. Usually a first feasibility or impact study is undertaken. Then, in a difficult process of coordinating many stakeholders' interests, a first budget is produced right before the candidature file is submitted to the IOC. The stakeholders' interests can be very controversial. Some demand the minimisation of capital investments. Others like to use the opportunity of hosting the Olympic Games to add many additional projects (park lands, airports and suburbs, rail systems etc.) in the hope that most of that will be paid by the government and not the city community.

The Sydney 2000 financial plan from September 1990 shows how different the first sketch of the Games budget was and how much that already changed in comparison to the Candidature File in 1993.

One main reason for wrong cost estimates is often a lack of knowledge about what exactly is required for hosting the Olympic Games. The IOC should better educate the bid cities about the cost structures and cost overruns witnessed in
previous Olympic cities<fnref n="28" />. It should offer workshops to give better understanding about the needs and complexity of the Games. Furthermore, the IOC could teach (demand) using modern techniques in cost estimates and project planning. Some underestimations of costs can be avoided this way.

► R2: The IOC should alleviate pressure on cities during the bidding stage in order to reduce the risks of a winner's curse.

However, often it also looks like politicians wanted a lack of realism for their initial cost estimates in order not to kill the idea of staging the Games by too high costs. Another reason may be that politicians underestimate the costs of hosting the Olympic Games by overestimating the benefits. This leads to the winner's curse because too many costly promises (e.g. the construction of new sports facilities) are made during the bidding, and later these promises have to be kept.

Therefore, it would be good if the IOC consulted the cities about what infrastructure is really needed for the Olympic Games. The new format of “dialogue” which the IOC has put into place as part of its Olympic Agenda 2020 to ensure the fit of the city to stage the Olympic Games but also more importantly how the Games can fit the city, is a first step. As part of this roadmap, the new approach towards Olympic bidding and hosting, called The New Norm, was launched early 2018 (IOC 2018b). The Olympic candidature and hosting model seems to have evolved with affordability, sustainability, legacy and maximising the use of existing infrastructure being as priorities into the early discussions and requirements of the IOC. The idea is for the process to allow for a continual improvement of each Games project and ensure that the Games best fit a city and region's long-term development plans and ambitions.

If this proves to be put into practice, then the candidate cities will rightly focus on themselves without comparing themselves with the other cities.

► R3: The IOC should work against strategic low-cost estimates to protect the taxpayer and should ensure figures given are as realistic as possible.

This recommendation can avoid two things. The IOC can avoid the strategically set low-cost estimates and thus protect the taxpayer against wrong information;

<footnote n="28">28 The IOC already holds workshops for the bid cities advising on what areas were underestimated or not fully scoped for past Olympic Games.</footnote>
and it can avoid disappointment about budget overruns in the following years. As it is difficult to increase the contingencies (currently they are already around 10% of the total budget) to counteract possible changes in the master plan, the costs should be estimated realistically. This should also be monitored by the IOC and supported by the transfer of knowledge from previous Games.

If the IOC is participating in budget estimates, local politicians and other stakeholders cannot easily add on non-Olympic projects without justification.

* R4: The host city should start constructing the required infrastructure as soon as the Olympic Games are awarded.

The length of construction for mega projects and cost of delays are often underestimated. For the Olympic Games, the deadline for being ready is set, which puts time pressure on several investment projects. Time pressure makes construction expensive; it makes the government vulnerable to corruption and may cause pressure to change policies (e.g. regarding public procurements – as happened in Rio).

If venues are ready earlier than the Games start, the costs of maintaining them is much cheaper than the costs of a delay or the pressure to complete infrastructure in a very short time.

* R5: The IOC should maintain responsibility for the agreed structural changes and enforce its overarching power to avoid unnecessary investments.

Not to criticise the awarding process of the IOC, it is important that, after awarding the Games to a city, the IOC can insist on and monitor those investments promised during the bid. Even though recently several changes led to decreased budgets (e.g. Tokyo 2020), this study showed that changes to the master plan have often increased the costs.

The free-riding mentality of stakeholders that benefit from construction but do not have to pay for it increases the risk that, after winning a bid, some changes would lead to investment in “white elephants”. It is a fact that the IOC loses influence on investment decisions after awarding the Games. The problem is that the nation/city that obtains the right to host the Olympic Games is autonomous in its decisions to invest.

The market and political powers start using the “delivering the best Games possible” argument to add projects or change the project design. Then there is governmental regulation needed to act in the public interest. The problem faced here
is that powerful stakeholders benefit from investments (e.g. construction industry, local communities and local politicians), while the national taxpayer has to finance an overall economically inefficient project.

Local efficiency (city financial output/input) may often be very positive for an Olympic city, while national efficiency (national financial input from taxpayer/ national financial benefit for taxpayers) is debatable. This study showed several examples of master plan changes that raised a concern about the socially fair distribution of national resources and overall opportunity costs (see public interest theory). In this debate, exactly which infrastructure adjustments that are needed for the delivery of the Games and what is just a nice add-on should be considered. Ultimately, the IOC should have the sovereignty to select the sites specified in the candidature file as the actual sports venues for the Games. As a result, sports facilities that were not planned at the beginning should not fall under the burden of the Olympic Games.

► R6: The IOC should ensure that the host city's decision-makers extensive plans regarding the funding of each Olympic "required" investment.

Avoiding free-riding and non-efficient add-on projects which pump up the non-OCOG budgets implies that the IOC should expect a soundly estimated budget for the Games and needs to know who will fund the planned projects.

Mitt Romney, the President of SLOC, stressed this point in a letter to the government saying: "In order to form the foundation of an effective public debate, the participants should understand which spending is actually Olympic required and Olympic related" (GAO 2000, 97). The discussion is complicated by the fact that a unified approach or agreement about the projects to be included in the final cost is often missing, and there is a tendency to also include the cost of capital investments, which would have incurred even if the Olympic Games had not been awarded to the host city (Kitchin, 2007). This also counts for some venue construction. For example, only four years before the Games in Athens, the Olympic stadium was given a nice iconic surrounding which caused high extra costs. It is debatable if this was necessary and counted as part of the needed stadium (sports place) or as an add-on recreational area. Each planner should avoid "unnecessary" additions to the project scope.
► R7: The IOC should ensure that infrastructure costs that would have been incurred in any case are not counted in “Olympic” costs.

Overall, all non-OCOG costs need to be allocated between Olympic and non-Olympic budgets. The non-Olympic budget is not necessarily a matter of the Olympic Games. Another important aspect of cost definition concerns the split of expenditure between the government authorities and the OCOG. There is a grey area of where in practice the public authority's responsibility for venue construction stops (at construction) and the OCOG's responsibility for fitting out the venues starts.

It is suggested that “Olympic” costs be defined as expenditure on new venues and facilities for the Games and the infrastructure associated with them (PricewaterhouseCoopers 2018). “Non-Olympic” costs comprise expenditure on ancillary infrastructure such as the undergrounding of power lines. When starting to differentiate the costs, it should be recognised that the scale of the Olympic programme incurs costs to a range of central and local government bodies. They are to some extent associated with the Games, such as the costs of improving transport links, of policing the host city during the event, and of providing health services in the local area. Seemingly such activities should fall within the scope of pre-existing programmes and would be subject to usual public spending and accountability arrangements at either national or local level. However, these activities could be essential to the success of the Games and funding might be brought forward or be higher than it would otherwise have been.

► R8: Cost and revenue projections should be estimated at the Games-time value. Inflation must be accounted for on the basis of consumer price indices and construction price indices.

Changes in exchange rates and inflation rate are often unheeded, as are geographical risk, and quantity and price changes. In this study it became obvious that the handling of inflation and currency fluctuations was a major issue when discussing cost overruns. The currency used for budget projections cannot be recommended here. On the one hand, many of the revenues will be in USD, but then need to be transferred into local currency. For the construction budget projections, we recommend using local currency. The problem remains that future rates have to be estimated.
► R9: The host government should appoint a professional executive leadership.

Coordinating the multiple (public) contributions to the Olympic Games is a key task. The government Olympic executive's leadership role is crucial. It is recommended that the executive needs the government authority and technical skills to challenge and influence all Olympic projects effectively. The executive has to be able to oversee the administratively and logistically complex Olympic programme. In contrast to this recommendation, for example, Beijing 2008 and Sochi 2014 each had only one person dealing with it. This may have led to higher costs for Sochi 2014, but also to no record for Beijing 2008.

► R10: The host government should report to the parliament annually on the estimates of non-OCOG costs.

The need for strong financial management and control on the Olympic programme is plain. It is particularly important to monitor the performance of the Olympic projects by facilitating timely decision-making on the most important projects. A regular report to the parliament, which is the representative of the taxpayers, is recommended as is providing regular public information to make the process more transparent. This means the future host governments should produce an annual report of what was spent in one year, but also an annual report of estimates of what the final costs will be. For example, the Olympic law passed by the French Parliament in February 2017 states that every year until 2024 the public auditor (*Cour des Comptes*) of all public expenditures in France will be in charge of elaborating on, publicising and publishing an annual report covering the actual costs and revenues accounting for the 2024 Olympic Games in the currently reported year.

► R11: Workforce and administration need to be budgeted with higher contingencies.

The Olympic Games always contain technological innovation. Examples include the construction of an iconic stadium or the OCOG depending on high-tech IT and media equipment. Technological development tends to lead to cost increases. This study revealed that these are often not adequately accounted for in initial cost estimates. This study is limited to show the cost increase for technology for the OCOGs only. However, the technology needed for Olympic venues showed no severe cost overruns even though the organisers always had concerns. For the Olympic
Games, it was proven that workforce and administration and coordination seem to be those categories with highest cost overruns and therefore here contingencies should be planned higher at the bidding stage.

* R12: Legacy transformation costs need to be planned and budgeted from the very beginning.

The post-Olympic use (legacy) of each (sporting and non-sporting) venue should be defined from the moment the bid file is being put together and finalised in the initial phase of Olympic preparation, in line with the (revised, if necessary) master plan of the host city. This suggestion is useful to stick to the planned projects and their long-term use. This could at least hinder excessive extensions of the sub-projects. However, the study showed many cases where flexibility was needed and adjustments of the master plan were good.

* R13: Host cities/the IOC should insist on maximising legacy through capacity reduction and post-event planning.

Further, the seating capacities of the Olympic venues should be adjusted to their anticipated use in the post-Olympic period. They may be only temporarily enlarged for the Olympic Games. Additionally, in cooperation with the International Federations, the IOC could take the lead in trying to schedule a number of international (sporting and non-sporting) events as early as possible in the post-Olympic period. This would help to sustain the momentum and facilitate the integration of the Olympic venues into city life (Cartalis 2015). However, if no event can be dedicated, this may be an early sign that the venue will not have a great legacy. The post-Games use would add revenues without having new high costs. Then the revenue generation would also be post-Games.

* R14: The IOC should undertake measures together with the host government with a view to increasing transparency in relation to budget, cost and revenue changes.

This study has shown that the financing of the Olympic Games means coordinating a high number of projects (not all of them infrastructure) and also means coordinating many shareholders with different interests and agendas. Information
asymmetry is huge, and even investigative journalism is almost unable to illustrate
a full picture of the Games. When public money is involved, the taxpayers have
expectations regarding a post-Games benefit. However, we observed that some
stakeholder interests led to opportunistic behaviour. It may be a way to start in-
cluding cost-specific (e.g. escalation) clauses as a part of contract agreements. Those
who are in power or the free riders that benefit from the Olympic Games but do not
pay for it often are interested in increasing information asymmetry (which means
increasing the lack of transparency).

► R15: The delivery authority has to maintain a clear focus on the need for timely decision-making individually and collectively on an Olympic programme, in particular when there are multiple stakeholders and interests.

In order not to lose control over the project interests and to always reflect whose money is spent and who are the beneficiaries of the Olympic Games, a delivery authority has to keep a clear focus. Legacy plans need to be produced. Decision-making is important at all stages in the project life cycle cost. The authority should act in the public interest.

► R16: The IOC should create a consistent financial category system.

When sifting and putting together the budgets of the different host cities, many
discrepancies in the presentation were noticed. Especially in previous years of
the Games, no uniform categorisation was used by the organising committees.
In Sochi, at least the comparability within a Games edition was possible because
a uniform categorisation was used. Nevertheless, this comparability between the
Games has been difficult until now. A more detailed categorical system should
be developed that clearly identifies which components belong to a category. After
that, this category system must also be applied to the candidature file to be more
comparable over the whole preparation process.

► R17: A first serious budget estimate should be made only once there is a valid overview of the overall project.

As our results show, budget estimates change when the organising committee is
founded. The initial estimate of the organising committee is usually found four
years before the Games were staged. Everyone involved can assume that the budget set up in the candidature file does not cover the actual costs, so why it is still required? This recommendation might be problematical for the population, since their approval can only be given if they are informed about the costs.

* R18: The IOC should ensure that the Organising Committee conducts, in collaboration with relevant partners, a cost-benefit analysis before and after the Olympic Games.

Cost and revenues are only the tangible economic dimension of sustainable development. The social, environmental and intangible economic implications are ignored in economic impact studies. Cost-benefit analysis (CBA) investigate the expected balance of benefits and costs, including an account of the status quo (to not stage the Olympics). A CBA helps predict whether the benefits of the target to be achieved by the Olympic Games (e.g. by the legacy plan) outweigh its costs, and by how much, relative to other alternatives or the not hosting of the Games. It is difficult to conduct accurate CBA. Thus a standard should be defined by IOC before the host cities undertake an analysis. At the end a CBA offers an informed estimate (if conducted prior to the Games) or a more complete cost-benefit ratio (after the Games) including intangible effects. However, a perfection in terms of economic efficiency and social welfare is not guaranteed but the IOC, the host population and politicians are much better informed about the outcome of the Games.

## 6.4 Summary and Outlook

With Olympic Agenda 2020, the IOC has developed the process and the form of the Olympic Games. The IOC implemented 40 recommendations which should be in action until 2020 (IOC n. d.). Some of these recommendations refer to our practical recommendations to reduce cost overruns.

The first recommendation of Olympic Agenda 2020 relates to the shaping of the bidding process as an invitation and includes the selection of the best project which matches most in terms of sports, economic, social and environmental long-term requirements in the planning. Furthermore, the IOC will provide an assistance phase for cities that want to apply for the Olympic Games to get a better understanding of hosting the Olympic Games. This recommendation includes the will to maximise the use of existing venues and temporary facilities. There is also the possibility to