# Cost and Revenue Overruns of the Olympic Games
## 2000–2018

Wladimir Andreff, Maike Weitzmann, Holger Preuss

► To cite this version:

Wladimir Andreff, Maike Weitzmann, Holger Preuss. Cost and Revenue Overruns of the Olympic Games 2000–2018. Gabler Verlag. Springer, 2019, Event- und Impaktforschung, Holger Preuß; Markus Kurscheidt, 978-3-658-24995-3. 10.1007/978-3-658-24996-0. hal-03231936

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Holger Preuß · Wladimir Andreff

Maike Weitzmann

Cost and Revenue
Overruns of the
Olympic Games
2000–2018

OPEN

<figure><img src="image_2.png" /></figure>

Springer Gabler
# Event- und Impaktforschung

Reihe herausgegeben von

H. Preuß, Mainz, Deutschland

M. Kurscheidt, Bayreuth, Deutschland
Die Reihe bietet ein Forum für empirische Studien zur ökonomischen Wirkungs-analyse von Großveranstaltungen in Sport, Kultur und Tourismus. Die Bände beleuchten gleichermaßen die Effekte der Großereignisse auf ihr sozioökonomisches Umfeld als auch den Einfluss von Standortfaktoren auf die Wettbewerbsfähigkeit und Governance der Eventwirtschaft. Die Themenfelder umfassen alle Stakeholder von Events und reichen von Primärerhebungen zum Reise- und Konsumverhalten von Eventbesuchern sowie zu Werbe- und Imagewirkungen von Großveranstaltungen über den gesellschaftlichen Beitrag von Events, etwa zum Volunteering, bis zu Analysen der Eventinfrastruktur wie Stadien- und Ligenmärkte oder Finanzierungsquellen. Die Schriftenreihe richtet sich an Lehrende und Studierende der Wirtschafts-, Sport- oder Tourismuswissenschaft sowie an Praktiker und öffentliche Entscheidungsträger in eventbezogenen Handlungsfeldern.

**Reihe herausgegeben von**

Prof. Dr. Holger Preuß
Universität Mainz, Deutschland

Prof. Dr. Markus Kurscheidt
Universität Bayreuth, Deutschland

Weitere Bände in der Reihe http://www.springer.com/series/12513
Cost and Revenue
Overruns of the Olympic
Games 2000–2018

<figure><img src="image_3.png" /></figure>
Holger Preuß

Johannes Gutenberg-University Mainz

Mainz, Germany

Wladimir Andreff

Ledignan, France

Maike Weitzmann

Johannes Gutenberg-University Mainz

Mainz, Germany

<figure><img src="image_4.png" /></figure>

Event- und Impaktforschung

ISBN 978-3-658-24995-3

ISBN 978-3-658-24996-0 (eBook)

https://doi.org/10.1007/978-3-658-24996-0

Library of Congress Control Number: 2018965931

Springer Gabler

© The Editor(s) (if applicable) and The Author(s) 2019. This book is an open access publication.

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# Contents

<table><tr><td>Executive Summary</td><td>IX</td></tr><tr><td>List of Abbreviations</td><td>XIX</td></tr><tr><td>List of Tables</td><td>XXI</td></tr><tr><td>List of Figures</td><td>XXV</td></tr></table>

1 **Introduction** 1

2 **Literature Review** 7

2.1 Cost Overruns in General 7

2.1.1 What are Cost Overruns? 7

2.2.2 Cost Overruns in Mega Projects and at Olympic Games 8

2.2 Comparative Issues 16

2.3 Olympic Games and Mega Sports Events 18

3 **Methodology** 21

3.1 Availability of Financial Data from the Olympic Games 23

3.2 Preparation of Data 27

3.3 Quality of Data and Building of Categories 34

3.4 Problems in the Preparation of Data 35

3.5 Building of OCOG and Non-OCOG Budget Categories 37

4 **Results I** 43

4.1 Sydney 2000 43

4.1.1 SOCOG Revenue 46

4.1.2 SOCOG Expenditure 49

4.1.3 Sydney 2000 Non-OCOG Costs 50
<table><tbody><tr><td>4.2 Salt Lake City 2002</td><td>52</td></tr><tr><td>4.2.1 SLOC Revenue</td><td>54</td></tr><tr><td>4.2.2 SLOC Expenditure</td><td>55</td></tr><tr><td>4.2.3 Salt Lake City 2002 Non-OCOG Costs</td><td>57</td></tr><tr><td>4.3 Athens 2004</td><td>60</td></tr><tr><td>4.3.1 ATHOC Revenue</td><td>62</td></tr><tr><td>4.3.2 ATHOC Expenditure</td><td>64</td></tr><tr><td>4.3.3 Athens 2004 Non-OCOG Costs</td><td>66</td></tr><tr><td>4.4 Turin 2006</td><td>70</td></tr><tr><td>4.4.1 TOROC Revenue</td><td>72</td></tr><tr><td>4.4.2 TOROC Expenditure</td><td>73</td></tr><tr><td>4.4.3 Turin 2006 Non-OCOG Costs</td><td>75</td></tr><tr><td>4.5 Beijing 2008</td><td>76</td></tr><tr><td>4.5.1 BOCOG Revenue</td><td>76</td></tr><tr><td>4.5.2 BOCOG Expenditure</td><td>78</td></tr><tr><td>4.5.3 Beijing 2008 Non-OCOG Costs</td><td>80</td></tr><tr><td>4.6 Vancouver 2010</td><td>80</td></tr><tr><td>4.6.1 VANOC Revenue</td><td>81</td></tr><tr><td>4.6.2 VANOC Expenditure</td><td>83</td></tr><tr><td>4.6.3 Vancouver 2010 Non-OCOG Costs</td><td>84</td></tr><tr><td>4.7 London 2012</td><td>86</td></tr><tr><td>4.7.1 LOCOG Revenue</td><td>89</td></tr><tr><td>4.7.2 LOCOG Expenditure</td><td>91</td></tr><tr><td>4.7.3 London 2012 Non-OCOG Costs</td><td>93</td></tr><tr><td>4.8 Sochi 2014</td><td>96</td></tr><tr><td>4.8.1 SOOC Revenue</td><td>98</td></tr><tr><td>4.8.2 SOOC Expenditure</td><td>99</td></tr><tr><td>4.8.3 Sochi 2014 Non-OCOG Costs</td><td>101</td></tr><tr><td>4.9 Rio de Janeiro 2016</td><td>104</td></tr><tr><td>4.9.1 COJOPR Revenue</td><td>105</td></tr><tr><td>4.9.2 COJOPR Expenditure</td><td>107</td></tr><tr><td>4.9.3 Rio 2016 Non-OCOG Costs</td><td>108</td></tr><tr><td>4.10 PyeongChang 2018</td><td>108</td></tr><tr><td>4.10.1 POCOG Revenue</td><td>108</td></tr><tr><td>4.10.2 POCOG Expenditure</td><td>110</td></tr><tr><td>4.10.3 PyeongChang 2018 Non-OCOG Costs</td><td>112</td></tr><tr><td>4.11 Summary of Costs and Revenues of the Olympic Games</td><td>114</td></tr></tbody></table>
5 **Results II** .................................................. 117

5.1 Revenue Corridors by OCOG Category .................... 117

5.2 Expenditure Corridors by OCOG Category .................... 128

5.3 Non-OCOG Cost Corridors at Olympic Games .................... 134

5.4 Non-OCOG Cost Corridors at Olympic Winter Games ............ 138

5.5 Summary of Costs and Revenues of Olympic Games
Seperated by Categories ........................................ 141

6 **Reflections** .................................................. 145

6.1 Theoretical Explanations for Olympic Cost Overruns ............ 145

6.1.1 The Neo-Institutionalism Theory and Cost/Revenue
Overruns .................................................... 147

6.1.2 Auction Theory: The Winner's Curse .................... 154

6.1.3 Public Interest Theory vs Chicago Theory:
Market Regulation to Favour Public Interest ............ 155

6.1.4 Evolution Theory and Planning Fallacy Theory ............ 156

6.2 The Evolution of Olympic Budgets and their Economic
Consequences .................................................... 157

6.2.1 Evolution of Olympic Budgets .......................... 157

6.2.2 Economic Consequences: Cost Overruns,
Revenue Overruns and Deficit ............................ 160

6.3 Practical Recommendations to Reduce Cost Overruns ............ 162

6.4 Summary and Outlook ........................................ 170

References .......................................................... 173
Executive Summary

The Olympic Games are the largest worldwide multi-sport event and are a signif-
icant and complex undertaking. More than 300 projects in distinct industries/
branches and different communities/cities need to be coordinated, often involving
more than 50 stakeholders. The resources to organise the event and finance new or
renovate/upgrade existing infrastructure come from different bodies, different levels
of government, private entities and external investments into the local economy.

The scale of attention and visibility, combined with the uniqueness of the task, have inevitably provoked many discussions about the costs and benefits of such an event, and how to assess them carefully. Part of this conversation has been a recurring focus on the cost overruns<fnref n="1" /> of the Games and how they compare with the original estimates. This debate cannot take place without also looking at the revenues that finance a substantial part of the event and the benefits of the event, which are often intangible.

The objective of this study is to investigate the cost and revenue overruns of Olym-
pic Games<fnref n="2" /> from Sydney 2000 to PyeongChang 2018, as the size and organisational

<footnote n="1">1 Cost overruns are “the amount by which the actual cost exceeds the budgeted, estimated or target cost” (BusinessDictionary, n.d. a).</footnote>

<footnote n="2">2 Since host cities are committed to hosting the Paralympic Games together with the Olympic Games, the costs and revenues taken on board in this study encompass the Paralympic Games as well, even though for the sake of brevity we write “Olympic Games”.</footnote>
dimension (number of athletes, venues and events) have been relatively constant for that period and provide the best overview of how the Games are managed today.

To provide a base for future host cities, we concentrated our research on the core Olympic costs and revenues. This means we evaluated the development of the expenditure and revenues of the Organising Committees for the Olympic Games (OCOGs), which covers the operations of the event, and the investment of public money for the main Olympic venues (non-OCOG budget).

In addition to these two budgets, host countries, regions or cities often use the Olympic Games as an opportunity to carry out some of their long-term development projects, linked to urban renewal, transport and infrastructure for example, that are often not necessarily needed to stage the Games. This makes the criteria for considering what the actual cost of the Olympic Games is vary widely depending on where they are being organised, the period of the preparation and who is compiling the expenditures (government bodies, independent studies, academic research, media, etc.). These non-Olympic general development projects also have cost overruns, and these are notably often mentioned in media reports. However, these projects have not been considered for the purpose of this study as they are not needed to stage the Games.

This study also shows why attempts to come up with and compare overall capital costs for different Olympic Games editions are misleading. There are many public authorities and private investors involved, which makes it extremely difficult to find all project data from the candidature phase eight years before the Games (t-8) until Games time (t). If during this period any data are left out, cost overrun calculations will be like comparing apples and oranges.

The four main findings of our study were as follows:

1. For all 10 Games editions, we found that the costs of organising the Olympic Games (OCOG budget) are usually covered by revenues, which are almost entirely private resources plus the International Olympic Committee (IOC)'s contribution.

2. The OCOGs usually significantly overran their expenditures during the first few years, but then all OCOGs managed to save during the last two years and all of them finally balanced the budget or even generated a profit.

3. All Games underestimated their revenues and had revenue overruns.

4. The core Olympic capital investments considered in this study show cost overruns, but they are similar to the cost overruns of other (non-sporting) mega projects.
Methodologically, we must differentiate between three budgets:

* the expenditures and revenues of the OCOGs, because they are the centre of Olympic Games organisation;

* Olympic-related capital investments on venues, which are needed to stage the Olympic Games. We were very careful to display homogenised data by using the respective GDP deflators and construction price indices to consider inflation, and an average exchange rate to consider different currencies;

* non-Olympic infrastructure projects (airports, metro, roads, urban parks) for the long-term benefit of the city and region that are not required for the organisation of the Games, but which are often mistakenly mixed into the Games-related costs. These projects have not been considered in our study.

All results in this study are presented as percentages because the aim is to reveal the variations of the OCOG expenditures and revenues and the non-OCOG capital investments over time from bidding (t-8) to staging the Olympic Games (t). Shown in percentages, the absolute value of the costs is unnecessary and has no influence on the comparisons. Furthermore, the use of percentages has allowed this study to compare and contrast the 10 editions of the Olympic Games that were analysed. This has been done by categorising the expenditures and revenues of the OCOG and building a fixed set of Olympic venues (hereafter referred to as a “basket of venues”) that are definitely needed and consistent across every Games edition for the non-OCOG capital investments. This “basket of venues” plays a similar role to the “basket of consumer goods” for tracking purchasing power (cost variation over time) in an economy. It also allows for a coherent comparison between different editions of the Games. Finally, the selection of venues represents a variety of capital investments and thus contains different potentials for cost overruns. The diversity of the basket ensures that the cost variations of these representative investments are relatively the same as those that a larger or full sample of all Olympic investments would create.

The “core” basket reflects with high probability the “performance” of the full basket with some conservative distortions due to the fact that the “core” basket represents the highest level of project size and complexity. However, given that we have over-proportionally considered more venues financed using public money, the cost overruns are probably higher in our study than for the overall investments. Thus we take a conservative estimation here. The basket contains the Olympic Stadium, Olympic Village, IBC/MPC, swimming pool, multipurpose hall, velodrome, ski jumping hill, sliding centre and ice stadium. In other words, it can reasonably be assumed that almost all capital investments in sports venues were publicly financed
anyhow and that private investors are less likely to accept (or manage) cost overruns than public fund providers. Overall, the rate of cost overruns should be higher for public funding and, by often not including the share of private investment in this study, we are taking a conservative approach, as the overruns would tend to be reduced otherwise.

Tables 1 and 2 summarise the main findings. For all 10 Games editions analysed, we found that the operational costs of organising the Olympic Games (OCOG budget) are usually covered by revenues, which are almost entirely private resources and the IOC's contribution, which stems from the sale of media rights and international sponsorships.

<table><caption>**Table 1** Total cost overruns/underruns from 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 2016³</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%<fnref n="4" /></td><td>N/A</td><td>43%</td><td>N/A</td></tr></tbody></table>

Table 1 shows the percentage change in the budget estimated eight years before the Games to the final budget. It clearly shows that, relatively, revenues are underestimated more than costs. In particular, for Sydney 2000 and Athens 2004, OCOG revenues were used to balance the public costs of the host cities. A small final profit was then shared between the National Olympic Committees (NOCs), the city and the IOC, in accordance with the Host City Contract. PyeongChang 2018 is the first host that can keep its profit (US$ 55m) entirely, without a share going to the IOC. This study will have considerable information about the “N/A” fields; however, for this table we were not able to produce a final figure due to a missing final budget from (t).

<footnote n="3">3 The accounts for the Olympic Games Rio 2016 have not yet been formally closed at the time of our book, so there are no final numbers available.</footnote>

<footnote n="4">4 Additional venues were considered.</footnote>
The “basket of venues” used to measure the non-OCOG budgets demonstrates that the Olympic Games between 2000 and 2012 caused cost overruns from 29% to 56%. Rio 2016 managed to reduce the costs for the Olympic Stadium and its multipurpose hall, which was partly renovated for the Pan American Games in 2007. The public share of costs for the six core Olympic venues in Rio that are considered in our “basket” look low in comparison to media reports; however, there may have been large cost overruns for non-Olympic general infrastructural enhancements. The non-OCOG finances of Rio 2016 are not finalised, thus we have no comparable figure in Table 1.

<table><caption>**Table 2** Total cost overruns/underruns from 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<sup>5</sup></th></tr></thead><tbody><tr><td>OCOG Revenue</td><td>119%</td><td>N/A</td><td>12%</td><td>-3%</td><td>27%</td></tr><tr><td>OCOG Expenditure</td><td>114%</td><td>58%</td><td>12%</td><td>-6%</td><td>24%</td></tr><tr><td>Non-OCOG</td><td>28%</td><td>20%</td><td>13%</td><td>178%</td><td>N/A</td></tr></tbody></table>

The cost and revenue development for the Olympic Winter Games shows a similar pattern. Salt Lake City 2002 experienced major changes in its OCOG budget, while Vancouver 2010’s variation was much lower. For all Olympic Winter Games editions, the OCOGs also managed to balance the expenditures and revenues. A key result is that over the 10 Olympic Games evaluated, the OCOGs always managed to end up with either a balanced budget or a surplus.

The non-OCOG cost overruns of Salt Lake City 2002, Turin 2006 and Vancouver 2010 were at a moderate 13-28%. The outlier was Sochi 2014 with 178%. Other than Sochi 2014, PyeongChang 2018 seems to have managed a reduction of its total costs. One year ahead of the Games the estimates were below the projections made eight years before. However, while the OCOG budget ended with a profit, we do not yet have the final budget for investments, which explains the N/A for these Games.

<footnote n="5">5 The accounts for the Olympic Winter Games PyeongChang 2018 have not yet been formally finalised at the time of our book, so there are no final numbers for non-OCOG budget.</footnote>
<figure><img src="image_5.png" /><figcaption>**Fig. 1** Total cost overruns/underruns of the Organising Committees for the Olympic Games for which final numbers are available at the time of our book</figcaption></figure>

Figure 1 compares all the 10 Games editions used in this study. It shows that the percentage of cost and revenue overruns became lower after Turin 2006, which indicates better planning and management. For OCOG revenues, all OCOGs except Rio 2016 (not definitively confirmed) and Sochi 2014 achieved a revenue overrun against their projection eight years before. The expectations of all other eight cities were greatly exceeded. According to the recent report by PyeongChang 2018 to the IOC Session in Buenos Aires on 8 October 2018, the OCOG achieved a surplus of US$ 55m. Sydney 2000 had the highest difference (72%) for the Olympic Games; and Salt Lake City 2002, with 119%, was the highest for the Olympic Winter Games.

Eight out of the 10 OCOGs analysed also had expenditure overruns. Rio 2016 (according to the data we have) managed to keep up with the prognosis in its Candidature File, and Sochi 2014 spent even less than predicted due to the high inflation during the time of preparation.

Another finding in this study is that the first few years of an OCOG's lifecycle is the period in which they significantly overrun their expenditures. However, all OCOGs achieved savings during the last two years, thereby balancing the budget. An important contribution to balancing the budget is the high revenue overruns. This can be explained by the ever-increasing revenues of the Olympic Movement and the often conservative revenue estimate in the candidature files.
Regarding capital investments (Fig. 2), this study shows that core Olympic in-
vestments (non-OCOG budgets) have cost overruns similar to other mega projects.
However, we demonstrated that some Olympic venues were able to reduce projected
costs while others had severe overruns. In our discussion, we explain other reasons.

<figure><img src="image_6.png" /><figcaption>**Fig. 2** Total cost overruns of the non-OCOG budgets for which final numbers are available at the time of our book</figcaption></figure>

Although it was possible to conclude that the capital costs of the non-OCOG
budget do not present higher overruns than projects in other industries and busi-
nesses, this study offers empirical evidence that a comparison of the Games or of
Games investments as a whole with other mega projects cannot be reliable and is
methodologically and academically questionable because of the following factors:

1. The Olympic Games are unique in their composition of construction (stadium, sewage supply, telecommunications and power plants, airports and villages,
parks, etc.) and societal projects (education programmes, nation building and tourism advertisement, etc.), and thus no other branch can be compared to them.

2. The Olympic Games and all construction projects are unique for each country – thus making it impossible to compare the construction of a stadium in Brazil with one in Australia – due to different political and economic systems and public support levels, or national financial crises and inflation.

Our literature review provides a complete picture of reasons for cost overruns in mega projects and at the Olympic Games. The results show systematically that cost/expenditure/revenue changes per Games edition, per expenditure/revenue category and per infrastructure. Thus, we illustrate that at the same Games edition, different categories have different overruns. In most cases we were able to give logical explanations as to why these happened.

Overall in our study, we have been able to logically and theoretically explain which patterns caused cost overruns. These are not explained in the executive summary owing to their complexity. However, one of the main reasons for OCOG and non-OCOG cost overruns is the change of scope relating to expenses that were not planned at the beginning or that changed in the preparatory process, both on the side of the OCOG budget and for non-OCOG costs. Another reason is time pressure, which arises when the construction of venues begins too late.

We end with 18 recommendations for the IOC, OCOGs, host cities and public authorities:

R1 Host cities need to receive earlier guidance about the capital investments required for the Games.

R2 The IOC should alleviate pressure on cities during the bidding stage in order to reduce the risks of a “winner’s curse” (i.e. overestimating their benefits).

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

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

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

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

R7 The IOC should ensure that infrastructure costs that would have been incurred in any case are not counted in the “Olympic” costs.
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.

R9 The host government should appoint a professional executive leadership.

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

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

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

R13 The host city and the IOC should insist on maximising legacy through capacity reduction and post-event planning.

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.

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.

R16 The IOC should create a consistent financial category system to detect changes during and between Games.

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

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.
List of Abbreviations

ATHOC Athens 2004 Organising Committee for the Olympic Games

B.C. British Columbia

BOCOG Beijing Organising Committee for the Games of the XXIX Olympiad

COJOPR Rio 2016 Organising Committee for the Olympic Games

COV cost overrun

DCMS Department for Culture, Media and Sport

EXPO Exposition Mondiale

FIFA Fédération Internationale de Football Association

FIS Fédération Internationale de Ski

GAO Government Accountability Office

GDP gross domestic product

IBC International Broadcasting Centre

IF International Sports Federation

IOBE Foundation for Economic & Industrial Research

IOC International Olympic Committee

LOCOG London Organising Committee of the Olympic Games and Paralympic Games

MPC Main Press Centre

NOC National Olympic Committee

NSW New South Wales

OCA Olympic Coordination Authority

OCOG Organising Committee for the Olympic Games

ODA Olympic Delivery Authority

OSC Olympic Studies Centre

OSCC Olympic Security Demand Centre

PIP Public Investment Programme

POCOG PyeongChang Organising Committee for the 2018 Olympic & Paralympic Winter Games
<table><tr><td>PPP</td><td>Public Private Partnership</td></tr><tr><td>RIOU</td><td>Russian International Olympic University</td></tr><tr><td>ROV</td><td>revenue overrun</td></tr><tr><td>SLOC</td><td>Salt Lake Organising Committee</td></tr><tr><td>SOCOG</td><td>Sydney Organising Committee for the Olympic Games</td></tr><tr><td>SOOC</td><td>Sochi 2014 Organising Committee</td></tr><tr><td>TOROC</td><td>Turin Organising Committee</td></tr><tr><td>USOC</td><td>United States Olympic Committee</td></tr><tr><td>VANOC</td><td>Vancouver Organising Committee for the 2010 Olympic and Paralympic Winter Games</td></tr><tr><td>YPEHODE</td><td>Ministry of Environment, Physical Planning and Public Works</td></tr></table>
List of Tables

<table><tr><td>Table 1</td><td>Total cost overruns/ underruns from the Olympic Games</td><td>XII</td></tr><tr><td>Table 2</td><td>Total cost overruns/underruns from the Olympic Winter Games</td><td>XIII</td></tr><tr><td>Table 3</td><td>Cost overruns in infrastructure projects (April 1992 – March 2009 in India)</td><td>16</td></tr><tr><td>Table 4</td><td>Cost overruns in rail projects in different countries</td><td>17</td></tr><tr><td>Table 5</td><td>Experts contacted to gather data</td><td>25</td></tr><tr><td>Table 6</td><td>Comparison of estimated and real inflation of the total OCOG revenues</td><td>28</td></tr><tr><td>Table 7</td><td>Definition of “baskets” for the non-OCOG budget</td><td>32</td></tr><tr><td>Table 8</td><td>Percentage of public costs of the total costs of Olympic Games venues</td><td>33</td></tr><tr><td>Table 9</td><td>Percentage of public costs of the total costs of Olympic Winter Games venues</td><td>33</td></tr><tr><td>Table 10</td><td>Construction Price Index at Olympic host nations</td><td>35</td></tr><tr><td>Table 11</td><td>GDP deflators in Olympic host nations</td><td>36</td></tr><tr><td>Table 12</td><td>Exchange rates in the Olympic Games countries t-8 to t</td><td>37</td></tr><tr><td>Table 13</td><td>Grouping of OCOG revenues</td><td>38</td></tr><tr><td>Table 14</td><td>Grouping of OCOG expenditures</td><td>39</td></tr><tr><td>Table 15</td><td>Grouping of non-OCOG investments</td><td>40</td></tr><tr><td>Table 16</td><td>Comparison of cost estimates for Sydney 2000 pre-bidding</td><td>45</td></tr><tr><td>Table 17</td><td>SOCOG revenue evolution of estimates and final</td><td>47</td></tr><tr><td>Table 18</td><td>SOCOG expenditure evolution of estimates and final</td><td>49</td></tr><tr><td>Table 19</td><td>Sydney 2000 non-OCOG costs evolution of estimates and final from public resources</td><td>51</td></tr><tr><td>Table 20</td><td>SLOC revenue evolution of estimates and final</td><td>54</td></tr><tr><td>Table 21</td><td>SLOC expenditure evolution of estimates and final</td><td>56</td></tr></table>
<table><tr><td>Table 22</td><td>Salt Lake City 2002 non-OCOG cost evolution of estimates and final from public resources</td><td>59</td></tr><tr><td>Table 23</td><td>ATHOC revenue evolution of estimates and final</td><td>63</td></tr><tr><td>Table 24</td><td>ATHOC expenditure evolution of estimates and final</td><td>65</td></tr><tr><td>Table 25</td><td>Athens 2004 non-OCOG cost evolution of estimates and final from public resources</td><td>67</td></tr><tr><td>Table 26</td><td>TOROC revenue evolution of estimates</td><td>72</td></tr><tr><td>Table 27</td><td>TOROC expenditure evolution of estimates and final</td><td>74</td></tr><tr><td>Table 28</td><td>Turin 2006 non-OCOG cost evolution of estimates and final from public resources</td><td>75</td></tr><tr><td>Table 29</td><td>BOCOG revenue evolution of estimates and final</td><td>77</td></tr><tr><td>Table 30</td><td>BOCOG expenditure evolution of estimates and final</td><td>79</td></tr><tr><td>Table 31</td><td>VANOC revenue evolution of estimates and final</td><td>81</td></tr><tr><td>Table 32</td><td>VANOC expenditure evolution of estimates and final</td><td>83</td></tr><tr><td>Table 33</td><td>Vancouver 2010 non-OCOG cost evolution of estimates and final from public resources</td><td>85</td></tr><tr><td>Table 34</td><td>LOCOG revenue evolution of estimates and final</td><td>90</td></tr><tr><td>Table 35</td><td>LOCOG expenditure evolution of estimates and final</td><td>92</td></tr><tr><td>Table 36</td><td>London 2012 non-OCOG evolution of estimates and final from public resources</td><td>94</td></tr><tr><td>Table 37</td><td>SOOC revenue evolution of estimates and final</td><td>98</td></tr><tr><td>Table 38</td><td>SOOC expenditure evolution of estimates and final</td><td>100</td></tr><tr><td>Table 39</td><td>Sochi 2014 non-OCOG cost evolution of estimates and final from public resources</td><td>102</td></tr><tr><td>Table 40</td><td>COJOPR revenue evolution of estimates</td><td>106</td></tr><tr><td>Table 41</td><td>COJOPR expenditure evolution of estimates</td><td>107</td></tr><tr><td>Table 42</td><td>POCOG revenue evolution of estimates and final total</td><td>109</td></tr><tr><td>Table 43</td><td>POCOG expenditure evolution of estimates and final total</td><td>111</td></tr><tr><td>Table 44</td><td>PyeongChang 2018 non-OCOG cost evolution of estimates from public resources</td><td>113</td></tr><tr><td>Table 45</td><td>Total cost and revenue overruns/underruns for the Olympic Games</td><td>114</td></tr><tr><td>Table 46</td><td>Total cost and revenue overruns/underruns for the Olympic Winter Games</td><td>114</td></tr><tr><td>Table 47</td><td>Olympic Games estimated and final revenues – IOC contribution</td><td>118</td></tr><tr><td>Table 48</td><td>Olympic Games estimated and final revenues – TOP sponsorship</td><td>119</td></tr></table>
<table><tr><td>Table 49</td><td>Olympic Games estimated and final revenues – national sponsorship</td><td>120</td></tr><tr><td>Table 50</td><td>Olympic Games estimated and final revenues – ticket sales</td><td>121</td></tr><tr><td>Table 51</td><td>Olympic Games estimated and final revenues – licensing</td><td>122</td></tr><tr><td>Table 52</td><td>Olympic Games estimated and final revenues – lotteries</td><td>123</td></tr><tr><td>Table 53</td><td>Olympic Games estimated and final revenues – donations</td><td>124</td></tr><tr><td>Table 54</td><td>Olympic Games estimated and final revenues – disposal of assets</td><td>125</td></tr><tr><td>Table 55</td><td>Olympic Games estimated and final revenues – subsidies</td><td>126</td></tr><tr><td>Table 56</td><td>Olympic Games estimated and final revenues – total</td><td>127</td></tr><tr><td>Table 57</td><td>Olympic Games estimated and final expenditures – venues</td><td>128</td></tr><tr><td>Table 58</td><td>Olympic Games estimated and final expenditures – workforce</td><td>129</td></tr><tr><td>Table 59</td><td>Olympic Games estimated and final expenditures – technology</td><td>130</td></tr><tr><td>Table 60</td><td>Olympic Games estimated and final expenditures – services</td><td>131</td></tr><tr><td>Table 61</td><td>Olympic Games estimated and final expenditures – marketing & events</td><td>132</td></tr><tr><td>Table 62</td><td>Olympic Games estimated and final expenditures – administration & coordination</td><td>133</td></tr><tr><td>Table 63</td><td>Olympic Games estimated and final expenditures – total</td><td>134</td></tr><tr><td>Table 64</td><td>Olympic Games estimated and final non-OCOG costs – Olympic Stadium</td><td>135</td></tr><tr><td>Table 65</td><td>Olympic Games estimated and final non-OCOG costs – swimming pool</td><td>135</td></tr><tr><td>Table 66</td><td>Olympic Games estimated and final non-OCOG costs – multipurpose hall</td><td>136</td></tr><tr><td>Table 67</td><td>Olympic Games estimated and final non-OCOG costs – velodrome</td><td>136</td></tr></table>
<table><tbody><tr><td>Table 68</td><td>Olympic Games estimated and final non-OCOG costs – Olympic Village</td><td>136</td></tr><tr><td>Table 69</td><td>Olympic Games estimated and final non-OCOG costs – total</td><td>137</td></tr><tr><td>Table 70</td><td>Olympic Winter Games estimated and final non-OCOG costs – Olympic stadium</td><td>138</td></tr><tr><td>Table 71</td><td>Olympic Winter Games estimated and final non-OCOG costs – ski jumping hill</td><td>138</td></tr><tr><td>Table 72</td><td>Olympic Winter Games estimated and final non-OCOG costs – sliding centre</td><td>139</td></tr><tr><td>Table 73</td><td>Olympic Winter Games estimated and final non-OCOG costs – ice stadium</td><td>139</td></tr><tr><td>Table 74</td><td>Olympic Winter Games estimated and final non-OCOG costs – Olympic Village</td><td>140</td></tr><tr><td>Table 75</td><td>Olympic Winter Games estimated and final non-OCOG costs – IBC/MPC</td><td>140</td></tr><tr><td>Table 76</td><td>Olympic Winter Games estimated and final non-OCOG costs – total</td><td>141</td></tr><tr><td>Table 77</td><td>Principal-agent relations in the bidding process for a mega sports event</td><td>150</td></tr></tbody></table>
List of Figures

Fig. 1 Total cost overruns/underruns of the Organising Committees for the Olympic Games for which final numbers are available at the time of our book .................................... XIV

Fig. 2 Total cost overruns of the non-OCOG budgets for which final numbers are available at the time of our book .................... XV

Fig. 3 Number of participating countries in the Olympic Games from 1896 to 2016 .................................................... 3

Fig. 4 Number of sports at the Olympic Games from 1896 to 2016 ............ 4

Fig. 5 Number of participating athletes at the Olympic Winter Games from 1988 to 2018 .................................... 4

Fig. 6 Factors causing cost overruns .................................... 8

Fig. 7 Costs EXPO 2015 in billions of euros announced by different media .. 24

Fig. 8 Chronology of data collection .................................... 24

Fig. 9 Methodology of data conversion .................................... 30

Fig. 10 Organisations involved in the Sydney 2000 Olympic Games ............ 45

Fig. 11 SOCOG revenue evolution of estimates and final .................... 48

Fig. 12 SOCOG expenditure evolution of estimates and final ............ 50

Fig. 13 Sydney 2000 non-OCOG cost evolution of estimates and final from public resources .................................... 51

Fig. 14 Total direct cost for projects and activities related to planning and staging the 2002 Olympic and Paralympic Winter Games in Salt Lake City .................................... 53

Fig. 15 SLOC revenue evolution of estimates and final .................... 55

Fig. 16 SLOC expenditure evolution of estimates and final .................... 57

Fig. 17 Salt Lake City 2002 non-OCOG cost evolution of estimates and final from public resources .................................... 59

Fig. 18 Expenditure for the preparation of the 2004 Olympic Games by Ministry .................................... 61
<table>
  <tbody>
    <tr>
      <td>Fig. 19</td>
      <td>ATHOC revenue evolution of estimates and final</td>
      <td>64</td>
    </tr>
    <tr>
      <td>Fig. 20</td>
      <td>ATHOC expenditure evolution of estimates and final</td>
      <td>65</td>
    </tr>
    <tr>
      <td>Fig. 21</td>
      <td>Athens 2004 non-OCOG cost evolution of estimates and final from public resources</td>
      <td>68</td>
    </tr>
    <tr>
      <td>Fig. 22</td>
      <td>TOROC revenue evolution of estimates</td>
      <td>73</td>
    </tr>
    <tr>
      <td>Fig. 23</td>
      <td>TOROC expenditure evolution of estimates and final</td>
      <td>74</td>
    </tr>
    <tr>
      <td>Fig. 24</td>
      <td>Turin 2006 non-OCOG cost evolution of estimates and final from public resources</td>
      <td>76</td>
    </tr>
    <tr>
      <td>Fig. 25</td>
      <td>BOCOG revenue evolution of estimates and final</td>
      <td>78</td>
    </tr>
    <tr>
      <td>Fig. 26</td>
      <td>BOCOG expenditure evolution of estimates and final</td>
      <td>79</td>
    </tr>
    <tr>
      <td>Fig. 27</td>
      <td>VANOC revenue evolution of estimates and final</td>
      <td>82</td>
    </tr>
    <tr>
      <td>Fig. 28</td>
      <td>VANOC expenditure evolution of estimates and final</td>
      <td>84</td>
    </tr>
    <tr>
      <td>Fig. 29</td>
      <td>Vancouver 2010 non-OCOG cost evolution of estimates and final from public resources</td>
      <td>86</td>
    </tr>
    <tr>
      <td>Fig. 30</td>
      <td>Authorities/Organisations involved in delivering and controlling the Olympic Games 2012</td>
      <td>87</td>
    </tr>
    <tr>
      <td>Fig. 31</td>
      <td>Funding for the Olympic and Paralympic Games in London 2012</td>
      <td>88</td>
    </tr>
    <tr>
      <td>Fig. 32</td>
      <td>LOCOG revenue evolution of estimates and final</td>
      <td>91</td>
    </tr>
    <tr>
      <td>Fig. 33</td>
      <td>LOCOG expenditure evolution of estimates and final</td>
      <td>93</td>
    </tr>
    <tr>
      <td>Fig. 34</td>
      <td>London 2012 non-OCOG cost evolution of estimates and final from public resources</td>
      <td>95</td>
    </tr>
    <tr>
      <td>Fig. 35</td>
      <td>Financing of the Winter Games Sochi 2014</td>
      <td>97</td>
    </tr>
    <tr>
      <td>Fig. 36</td>
      <td>SOOC revenue evolution of estimates and final</td>
      <td>99</td>
    </tr>
    <tr>
      <td>Fig. 37</td>
      <td>SOOC expenditure evolution of estimates and final</td>
      <td>100</td>
    </tr>
    <tr>
      <td>Fig. 38</td>
      <td>Sochi 2014 non-OCOG cost evolution of estimates and final from public resources</td>
      <td>103</td>
    </tr>
    <tr>
      <td>Fig. 39</td>
      <td>POCOG revenue evolution of estimates and final total</td>
      <td>110</td>
    </tr>
    <tr>
      <td>Fig. 40</td>
      <td>POCOG expenditure evolution of estimates and final total</td>
      <td>112</td>
    </tr>
    <tr>
      <td>Fig. 41</td>
      <td>PyeongChang 2018 non-OCOG cost evolution of estimations from public resources</td>
      <td>113</td>
    </tr>
    <tr>
      <td>Fig. 42</td>
      <td>OCOG revenues and expenditures for the Olympic Games and Olympic Winter Games</td>
      <td>115</td>
    </tr>
    <tr>
      <td>Fig. 43</td>
      <td>Non-OCOG investments for the Olympic Games and Olympic Winter Games</td>
      <td>116</td>
    </tr>
    <tr>
      <td>Fig. 44</td>
      <td>Cascade of PRINCIPAL-AGENT relations</td>
      <td>149</td>
    </tr>
    <tr>
      <td>Fig. 45</td>
      <td>Number of change orders at SLOC</td>
      <td>158</td>
    </tr>
    <tr>
      <td>Fig. 46</td>
      <td>Budget evolution and financial gap at SLOC (2002)</td>
      <td>159</td>
    </tr>
    <tr>
      <td>Fig. 47</td>
      <td>Volatile budget development at SLOC (2002)</td>
      <td>160</td>
    </tr>
  </tbody>
</table>
In many countries the interest in the Olympic Games seems to have changed. The media raises the question whether cities will compete to host the Olympic Games in the future (Bull 2016). It is evident that some applicant cities have withdrawn their bids for different reasons. The insecurity about cost overruns and the overall size of costs during the bidding, mixed with political discussions over host government spending of public money (Lundy 2013; Newman 2007) have led to concerns in western societies as regard the benefits of the Olympic Games for the host region (Coakley & Souza 2013). This explains why many politicians attach the continuation of their bid to a positive public referendum. This is critical because, over the past six years, nearly every referendum has failed (Munich 2013, St. Moritz 2013, Vienna 2013, Kracow 2014, Hamburg 2015, Graubünden 2017, Innsbruck 2017 and Sion 2018) (Bull 2016; Reuters 2014). Some cities even withdrew their bid before they had a referendum because of a lack of public or politicl support (Barcelona 2013, Oslo 2014, Boston 2014, Stockholm 2014, Rome 2016 and Budapest 2017). Consequently, there is an increasing number of cities that are resigning from a bidding process or not entering the bidding process (Könecke & Nooij 2017).

In this context, the phenomenon of cost overruns is important to raise (Zimbalist 2015). One of the most prominent studies on cost overruns of the Olympic Games is by Flyvbjerg, Stewart & Budzier (2016), the so-called “Oxford study”, in which the authors start thinking about the reasons for cost overruns. The “Oxford study” compared total costs out of operational costs and capital investment costs of Olympic-related infrastructure from the candidature file to the final costs published
for the Olympic Games from 1960 to 2016. When looking at the overall economic costs of the Olympic Games for the public, one has, however, to also assess whether the revenues of the Organising Committee for the Olympic Games (OCOG) seem to overrun. Therefore the research we started here is threefold:

1. What are the OCOG cost overruns and cost overruns on other capital investments for the Olympic Games and Olympic Winter Games?

2. What are the OCOG revenue overruns?

3. How can the cost and revenue overruns be best explained?

Cost overruns are “the amount by which the actual cost exceeds the budgeted, estimated or target cost” (Business Dictionary, n. d.). The allegedly rising cost overruns on which the media is reporting are bothering citizens, as a result of which candidate cities have revised their application for the Olympic Games (Oberli 2017).

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

$$COV \Rightarrow k \cdot ROV$$

That will partly or entirely compensate for (and finance) cost overruns. This is the only way to explain why, despite recurrent cost overruns ($C_t > C_{t-n}$) at all Games, some Olympic Games ended up with a deficit while others made a profit. Indeed, starting from an ex-ante balanced Olympic Games budget such as:

$$C_{t-n} = R_{t-n}$$

where $C_{t-n}$ ($R_{t-n}$) stands for the ex-ante announced cost (revenue) and $C_t$ ($R_t$) for the achieved ex-post cost (revenue) measured in the same year's price index.

Cost overruns should create a deficit since:

$$C_{t-n} + COV > R_{t-n}$$

However, it might not be the case if the OCOG budget or some non-OCOG budget succeeds in collecting more revenues than expected ex-ante, that is:

$$ROV = R_t - R_{t-n}$$

Then the final outcome (deficit or no deficit) depends on the comparative size of cost overruns and revenue overruns:
If $ROV \geq COV (1) \Rightarrow$ no deficit

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

In other words, an increase in the Olympic Games costs translates itself into higher expenditures for the OCOG, other hosting authorities and enterprises involved, but these additional expenditures should boil down to increased revenues for someone in the local economy (PricewaterhouseCoopers 2018). At the end of the day, hosting the Games may end up in a deficit or not depending on the comparative magnitude of cost overruns and revenue overruns.

There are a number of published articles about cost overruns in the literature, but none about the Olympic Games revenue overruns (at least with such a title). One value added of the present study is to check both.

The objective of this study is to investigate the cost and revenue overruns of the Olympic Games from Sydney 2000 to PyeongChang 2018. This provides a good overview of the Olympic Games as they are managed today. The size of the Olympic Games from Sydney 2000 onwards marks a relative stable size in terms of athletes, venues and events and therefore it is worth comparing and learning from this comparison for future Games. The following tables indicate the relative stability in size regarding the number of athletes, sports and participating nations. These are important to argue why we decided to look only at the Olympic Games from Sydney 2000.

<figure><img src="image_7.png" /><figcaption>Fig. 3 Number of participating countries in the Olympic Games from 1896 to 2016</figcaption></figure>

Source: IOC (2018)
<figure><img src="image_8.png" /><figcaption>**Fig. 4** Number of sports at the Olympic Games from 1896 to 2016</figcaption></figure>

Source: IOC (2018)

<figure><img src="image_9.png" /><figcaption>**Fig. 5** Number of participating athletes at the Olympic Winter Games from 1988 to 2018</figcaption></figure>

Source: IOC (2018)
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The images or other third party material in this chapter are included in the chapter's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

<figure><img src="image_10.png" /></figure>
## 2.1 Cost Overruns in General

### 2.1.1 What are Cost Overruns?

In any investment or other economic project that is going to last over several years between its inception date $t-n$ and its delivery date $t$ on time, the effectively achieved (ex-post) cost in $t$ may happen to be higher than the announced (ex-ante) cost in $t-n$. The longer $n$ is, the higher the risk that such a difference will emerge. This is clearly shown in our literature review in which we listed many reasons for that.

The definition of cost overruns COV is thus:

$$COV = C_t - C_{t-n} > 0$$

where $C_{t-n}$ stands for the ex-ante announced cost and $C_t$ for the achieved ex-post cost measured in the same year's price index. We have compiled all our data by using the respective GDP deflator. Thus we discounted $C_{t-n}$ at a rate equal to the cumulative inflation rate between $t-n$ and $t$. We explain that in our methodology section.
### 2.2.2 Cost Overruns in Mega Projects and at Olympic Games

Cost overruns are a common phenomenon for major and mega projects. At bidding stage the International Olympic Committee (IOC) requires a robust analysis of public spending and the resulting economic benefits. Only transparency about cost overruns will help considering the criticism about uncontrollable Olympic Games costs.

Mega sport events are not the only project affected by cost overruns (Cantarelli, Flyvbjerg & Buhl 2012; Flyvbjerg, Holm & Buhl 2002; Kostka & Anzinger 2015; Lundberg, Jepanitsub & Pyddoke 2011; McKinsey 2015; Odeck 2004; Pickrell 1990; Singh 2010; Sovacool, Enevoldsen, Koch & Barthelmie 2016). Delays in project implementations and cost overruns have repeatedly been a problem for public sector projects (Satyanarayana 1974). Studies on cost overruns deal primarily with infrastructure projects involving the construction of railways, bridges and tunnels, roads, wind farms and buildings in general (Abdulkadir, Muhammad, Gidado & Nuruddeen 2017; Abusafiya & Suliman 2017; Ali, Ali Mangi, Sohu, Jamali & Kateemullah 2017; Cantarelli et al. 2012; Flyvbjerg 2009; Flyvbjerg, Holm & Buhl 2002; Kostka & Anzinger 2015; Lundberg et al. 2011; Odeck 2004; Pickrell 1990; Singh 2010; Sovacool et al. 2016). Infrastructure projects are mainly financed by public money. Nevertheless, literature is lacking on research into organisational projects such as events or the Olympic Games.

<figure><img src="image_11.png" /><figcaption>**Fig. 6** Factors causing cost overruns</figcaption></figure>

Source: modified according to Abdel-Hafeez et al. (2016)
The reasons for cost overruns are manifold. The general factors causing cost overruns can be roughly categorised into technical, economic, managerial, political, environmental aspects and project resources (Abdel-Hafeez, El-Attar & Abdel-Hafez 2016). In addition, these factors may be supplemented by specific event-related factors.

### Technically-based cost overruns

Technically-based cost overruns can be divided into design, construction, experience, site and scope. Changes in the design and bad overviews of drawings for the project are related to design aspects that can lead to cost overruns (Ali, Ali Mangi, Sohu, Jamali & Kateemullah 2017, 30; Berechman & Chen 2011; Creedy 2004; Creedy, Skitmore, & Wong 2010; Flyvbjerg, Bruzelius & Rothengatter 2003; Le-Hoai, Dai Lee & Lee 2008; Jackson 2002; Miller & Lessard 2000; Morris & Pinto 2004). In addition, construction-related causes, such as poor technical performance, changes or disagreements that occur in the construction period, as well as the technical complexity of projects, or multiple tasks in different fields and delays in the project handover, can lead to cost increases (Abd-Karim, Memon, & Abdul-Rahman 2013; Alinaitwe, Apolot, & Tindiwensi 2013; Banaitiene & Banaitis 2012; Bruzelius, Flyvbjerg & Rothengatter 1998; Flyvbjerg 2011, 322; Flyvbjerg, Bruzelius & Rothengatter 2003; Flyvbjerg, Garbuio & Lovallo 2009; Gajewska, & Ropel 2011; Kwak, Walewski, Sleeper & Sadatsafavi 2014; Lu, Luo, Wang, Le & Shi 2015; Memon, Abdul Rahman & Abdul Azis 2011; Miller & Lessard 2000; Morris 1990; Morris & Pinto 2004; Toh, Ting, Ali, Aliagha, & Munir 2012; Williams 2003, 2004; Zujo, CarPusic, & Brkan-Vejzovic 2010). For the Olympic Games the following problems concerning construction could be found: side costs of major construction projects, e.g. the road and parking arrangements around venues and contractors' problems with handling the size of the project (e.g. architect leaves, static problems, iconic venues are expensive to construct, size of the project; National Audit Office 2007a). Another potential cost overrun in the design aspect is the experience in technical terms. Especially in the decision-making phase during the tendering process, the lack of experience and delays in the design and procurement phases are decisive (Alfouzan 2013; Bageis & Fortune 2009; Banaitiene & Banaitis 2012; Khodeir & Hamdy 2015; Mahamid & Bruland 2011; Shaqour 2014). Another aspect for potential cost overruns is the site. On the one hand, the site conditions can be unpredictable; on the other hand, the organisation of the site can be poor (Shanmuganathan, & Baskar 2015; Singh 2011). A last factor in the technical area is the scope. This means that additional work has been requested by the owner, the order of the project has changed and there is an inadequate definition of the scope (Ali et al. 2017, 30; Alinaitwe et al. 2013; Berechman & Chen 2011; Creedy 2004; Creedy, Skitmore, &Wong 2010; Flyvbjerg 2011, 322; Gajewska, & Ropel 2011; Gomez Arcila 2012; Halloum &
Bajracharya 2012; Khodeir & Hamdy 2015; Morris 1990; Senouci, Alsarraj, Gunduz & Eldin 2016, 1; Shaqour 2014). An example for this factor for the Olympic Games is the Atlanta Organising Committee, which forgot to include the space that was needed in the surroundings of the Olympic facilities (warm-up gyms, parklands, offices, etc.). E.g. for Atlanta 1996, the need for warm-up courses, extra parking and the demolition costs of the old Fulton Stadium were not calculated in (ACOG 1994). But also the change in technology and a varying demand for technology might lead to cost overruns for the Olympic Games.

## Economically-based cost overruns

Factors that may cause cost overruns based on economics can be divided into financial contractors, financial policy, external and internal factors. Considering financial contractors they tend to select the lowest price, the lack of experience in contractors and poor contractor management can be responsible for price increases (Abd-Karim et al. 2013; Banaitiene & Banaitis 2012; Gomez Arcila 2012; Khodeir & Hamdy 2015; Koushki, Al-Rashied & Kartam 2005; Le-Hoai, Lee & Lee 2008; Mahamid & Bruland 2011; Shanmuganathan & Baskar 2015; Shaqour 2014; Singh 2011). In addition, bad investment decisions, insufficient funding, methods of financing and payment problems for finished work are the causes of higher costs in the area of financial policy (Abusafiya & Suliman 2017, 35; Ali et al. 2017, 30; Gomez Arcila 2012; Khodeir & Hamdy 2015; Koushki, Al-Rashied & Kartam 2005; Shaqour 2014). We found some evidence regarding financial policy that occurs during the planning phase of the Olympic Games: planning the finance as regards when and how much money needs to be taken from the market and the late founding of or a too small OCOG (regarding the construction control of venues to match Olympic needs). Other cost increases can occur owing to external factors such as changes in the currency exchange rate, foreign companies and subsidies that dominate the construction industry, government policies like laws and regulations and economic instability (Alinaitwe et al. 2013; Ameh, Soyingbe & Odusami 2010; Khodeir & Hamdy 2015; Morris 1990; Shaqour 2014; Siemiatycki 2015). In terms of the Olympic Games, it is almost to be expected that changes in exchange rates will occur, and therefore more or less money (in domestic currency) will have to be paid for debts or to international partners, topether with possible changes in interest or inflation rates. Ultimately, in the field of economics, internal factors such as poor contractor management, organisational variables and characteristics of the project and client may lead to cost overruns (Alfouzan 2013; Bageis & Fortune 2009; Khodeir & Hamdy 2015; Mahamid & Bruland 2011; Shaqour 2014). For example, for Barcelona 1992 and Athens 2004, many private land owners increased prices before the construction could start (Botella 1995, 28). Therefore, the stakeholder
response (in particular to encourage all stakeholders to support the project) has been recognized as an internal factor in the Olympic Games.

### Managerially-based cost overruns

On the managerial side, there are cost overruns in different phases, starting with the estimate process, followed by the planning, the monitoring and control and the communication. During the estimate/planning process, an inaccurate or bad estimate of the final costs, or the use of incorrect or inappropriate methods for estimating costs and the risk of the process can arise (Flyvbjerg et al. 2009; Halloum & Bajracharya 2012; Jackson 2002; Khodeir & Hamdy 2015; Mahamid & Bruland 2011; Shaqour 2014, Vanston & Vanston 2004, 33). This is complemented by the theory of optimism bias established by Kahneman & Tversky (1979). “The optimism bias is defined as the difference between a person’s expectation and the outcome that follows. If expectations are better than reality, the bias is optimistic; if reality is better than expected, the bias is pessimistic” (Sharot 2011, R941). Problems in estimating the Olympic Games were mainly recorded in these areas:

* the practical examples of Olympic Games can be found in overestimating the size of existing infrastructure and its fit for the Games in the planning stage in terms of limited knowledge about size and scope,

* underestimating the need for accommodation for visitors and the Olympic family (the use of ships as accommodation in Sydney, Athens, London and Sochi; Golden 2013),

* underestimating transport infrastructure and parking space.

After the estimation process, various factors in the planning phase, such as an insufficient project analysis, unsuitable planning and scheduling or changes in the planning and scheduling and also wrong planning can lead to cost overruns (Abd-Karim et al. 2013; Al-Jurf & Beheiry 2010; Alinaitwe et al. 2013; Banaitiene & Banaitis 2012; Doloi 2013; Khodeir & Hamdy 2015; Gajewska, & Ropel 2011; Gomez Arcila 2012; Mahamid & Bruland 2011; Memon et al. 2011; Shanmuganathan & Baskar 2015; Shaqour 2014; Singh 2011; Toh et al. 2012). Olympic-specific examples are:

* forgetting the space needed surrounding Olympic facilities (warm-up gyms, parklands, offices, etc.). E.g. for Atlanta 1996, the need for warm-up courses, extra parking and the demolition costs of the old Fulton Stadium were not calculated in (ACOG 1994),
* poor planning and construction of venues (e.g. tennis courts faced the wrong direction (towards the sun) and had to be turned around, the swimming pool was not suitable, so they constructed a new one,

* long decision-making processes and late realisation (e.g. delays in Athens (The Guardian 2003)),

* difficulties in finishing negotiations (partners speculate and use time pressure) or public procurements.

In the monitoring and control phase, one can observe poor site management, insufficient cost control, the complexity of the organisational structure, the lack of construction cost data, fraudulent behaviour and bribes causing cost increases (Abd-Karim et al. 2013; Abusafiya & Suliman 2017, 35; Alfouzan 2013; Alinaitwe et al. 2013; Ameh et al. 2010; Bordat, McCullouch, Labi & Sinha 2004; Le-Hoai et al. 2008; Doloi 2013; Mahamid & Bruland 2011; Memon et al. 2011; Toh et al. 2012). Furthermore, insufficient and poor risk management can result in higher costs (Baldry 1998; Halloum & Bajracharya 2012; Kwak & Smith 2009; Patanakul 2014). An example is London 2012, which had problems with contractors handling the size of the project (e.g. the architect left, static problems, iconic venues were expensive to construct, size of the project; National Audit Office 2007a). Finally, further problems can occur in the communication. These factors are: poor coordination between the project participants and a lack of management knowledge (Alinaitwe et al. 2013; Halloum & Bajracharya 2012; Shaqour 2014). Aspects of the lack of communication within the organisation, but also with external groups, were also identified in the case of the Olympic Games.

## Politically- and regulation-based cost overruns

Further factors that have an influence on cost overruns can be found in politics and regulation. The political situation is crucial in order not to increase the costs. Therefore, non-supportive governmental policy, delays in decision-making by the government, lack of governmental control and regulations may support cost overruns (Ameh et al. 2010; Kasimu & Abubakar 2012; Khodeir & Hamdy 2015; Mahamid & Bruland 2011; Morris 1990; Siemiatycki 2014; Shaqour 2014). These factors are supported by the theory of strategic misrepresentation. People systematically underestimate the costs and overestimate the resulting benefits (Flyvbjerg, Holm & Buhl 2002, 2005; Wachs 1989), which relates to the “winner’s curse”, which we will explain later in detail. Examples of political and regulatory difficulties with the Olympic Games are:

* host city expectation of governmental or sponsor support,
* missing governmental guarantees at bid stage may turn out not to be provided, e.g. in Seoul the government had withdrawn its financial support in 1987 but was persuaded to return to support the Games,

* political changes and new agenda-setting (e.g. changed decision-making competencies),

* avoidance of responsibility or difficulties in defining responsibilities and competencies,

* conflicts of interests regarding the Games investment and legacy plans,

* missing flexibility.

### Cost overruns based on project resources

Project resources can be divided into material, labour and equipment. Regarding materials, the changes in the cost of building materials, the lack of construction materials in markets and material problems can lead to higher costs (Al-Jurf et al. 2010; Alfouzan 2013; Ameh et al. 2010; Bageis & Furtune 2009; Kasimu & Abubakar 2012; Khodeir & Hamdy 2015; Insja & Sihombing 2016; Mahamid & Bruland 2011; Shanmuganathan & Baskar 2015; Shaqour 2014; Singh 2011). For example, for Rio 2016 an oil crisis occurred during the preparation period of the Games (Osborn 2017), but also steel delivery crises have taken place. In addition to the material, labour can also lead to cost increases. This happens when workers are absent or unqualified or have no experience (Ali et al. 2017, 30; Kasimu & Abubakar 2012; Khodeir & Hamdy 2015; Mahamid & Bruland 2011; Morris 1990). Labour problems have occurred in the Olympic Games preparations where there is poor timing and recruitment of skilled personnel (suboptimal contracting) and workers' strikes (e.g. in Sarajevo; Helbing 2015). For increased costs, the equipment may be responsible if the machines are too expensive or equipment is missing (Abd-Karim et al. 2013; Memon et al. 2011; Toh et al. 2012). So missing technical equipment from a stadium and other facilities might lead to higher costs.

### Environmentally-based cost overruns

The last general category represents the environment, which is related to weather and location. On the one hand, unforeseen weather conditions may incur cost overruns; on the other hand, unsuitable climate conditions for working may be responsible (Doloi 2013; Singh 2011). For London 2012, for example, weather led to delays and brought timing under pressure. In concrete terms, this can be the need to clear snow or the construction ground being too wet or frozen (e.g. too-wet ground in London; Magnay 2012). In the end, poor field investigations, decisions for the wrong sites, land expropriation costs and relocation of inhabitants or busi-
nesses are the reasons why the location leads to cost overruns. In addition, costs for a sustainable site may have an impact on the overall costs (Alinaitwe et al. 2013; Ameh et al. 2010; Morris, 1990).

## Event-specific-based cost overruns

Some incidents that have occurred during the Olympic Games cannot be divided into the other categories. Therefore, the model was supplemented by the category event-specific factors. The event-related factors are:

* renovation of already existing stadiums – e.g. the roof of the Olympic Stadium in Barcelona was leaking even though it was newly built in 1989 (Botella 1995, 28),

* size of follow-up costs to transform competition sites into its final use (legacy transformation),

* effects of marketing campaigns to sell tickets or attract sponsors,

* cost effects caused by distance between the Olympic Village, the media village and sporting facilities (e.g. the lack of large plots of land in Athens 2004 (Richter 2012a) and Tokyo 1964 (Richter 2012b)),

* time pressure because of a fixed delivery date (e.g. for the FIS World Cup, architects described the lack of planning and the delays this caused; Strande 2009),

* contractors being late in obtaining more money for speedy construction (e.g. for Atlanta 1996, the construction company for the Olympic harbour in Savannah quit and a new company had to be found),

* changing or adding events by International Federations (IFs) (in terms of licensed equipment, etc.; e.g. new events in snowboarding, Alpine skiing, speed skating and curling in PyeongChang and new events in athletics, swimming and basketball in Tokyo 2020; CBC 2015; Homewood 2017),

* sudden unexpected need for an increased security level (e.g. Athens after 9/11 and the growing risks of terrorist attacks in Sochi; Sanburn 2012; Müller 2014, 634),

* illness (epidemic) (e.g. Zika virus in Rio; Zagorsky 2016),

* inappropriate speed of growth of the OCOG and its structures.

Flyvbjerg (2011) mentions the underestimation of risks due to complexity, and changing scope during the implementation period as the major reasons for cost overruns. Jackson (2002) supports this view by saying that the most serious problem in project management is planning a budget for future investments estimated with inadequate information. According to Jackson, it is necessary and important for good planning to define the scope and complexity of the project in a clear manner from the earliest stages.
The 2012 FIS World Ski-Flying Championship in Vikersund, Norway, showed that a major reason for cost overruns was that, after the awarding of the event was made, priorities were often given to other things than constructing sports venues (see Solberg & Preuss 2015).

Another trigger of costs turning out higher than planned is based on underestimated costs for the many capital investment promises that must be made during the bidding process. In the past, one could observe that the city that offered the “best” Games won and had to deliver. Cost underestimation would then lead to seriously higher costs than estimated, which is the so-called “winner’s curse” (Andreff 2012). Massive cost overruns cause economic inefficiency. If investment decisions are based on underestimated costs, inputs may not be allocated to the most profitable projects. Major events are often supported financially by the public sector, and if politicians are guided wrongly by incorrect cost budgets, they may support events that they would otherwise have rejected if the information had been correct. We come back to this theoretical perspective in our results section.

Another factor of cost overruns has its roots in changing the overall project scope by adding detailed investment projects that are not really necessary for the Olympic Games, though host city politicians like to use the Olympic Games as an argument to get them financed. These constructions are not required by the IOC, e.g. the renovation of a post office, new hospital or theatre, a programme to renovate the historical or architectural patrimony. Additionally, often those who support the construction of infrastructure and sport venues are free riders who do not share in funding the venues, but benefit from them (see Solberg & Preuss 2015). Often a major reason why massive cost overruns occur are extensions of the objectives after the events have been awarded. This applied to both the FIFA World Cup 2010 in South Africa and the World Skiing Championship 2012 in Norway, for which a number of stakeholders entered the scene after the events were awarded, with other objectives than just building sports venues. We come back to this theoretical perspective in our results section.

Finally the *PRINCIPAL-AGENT* theory helps explain cost overruns at mega sporting events that are awarded through bidding. The *AGENT* (the city) has quite realistic knowledge of the overall costs. However, due to information asymmetry towards the public (*PRINCIPAL*, as they are taxpayers) and the need for the public to support the bid, the city (*AGENT*) announces lower costs than expected. Right after being awarded the Games, much higher costs are announced, as happened for London 2012, for example. Preuss & Schnitzer (2012) explain a similar situation for the FIFA World Cup. We come back to this theoretical perspective in our results section.
## 2.2 Comparative Issues

In this study we also intended to compare cost overruns at the Olympic Games with those observed for other public projects. However, looking into the literature we have two concerns in doing this comparison:

1. Cost overruns differ for different projects. This means that cost overruns for road construction cannot be compared with cost overruns for housing projects.

To provide evidence, we looked for studies that investigated cost overruns in different branches, but in the same cultural area. Singh (2010, 45) shows that cost overruns are different in various project types in India. In total, India has an average rate of cost overruns of 15.2%, but there are some areas where costs appear to be smaller than first estimated (e.g. coal, mines and telecommunication). By contrast, there are areas in which costs increase even faster than the country's average (e.g. finance, health and family welfare).

<table><caption>**Table 3** Cost overruns in infrastructure projects (April 1992 – March 2009 in India)</caption><thead><tr><th rowspan="2">Sector</th><th rowspan="2">Number of Projects</th><th colspan="3">% Cost Overrun</th></tr><tr><th>Mean</th><th>Std. Dev.</th><th>% of Projects with Positive Cost Overrun</th></tr></thead><tbody><tr><td>Atomic energy</td><td>12</td><td>15.05</td><td>113.12</td><td>25.00</td></tr><tr><td>Civil aviation</td><td>47</td><td>-2.27</td><td>40.52</td><td>42.55</td></tr><tr><td>Coal</td><td>95</td><td>-19.90</td><td>73.85</td><td>22.11</td></tr><tr><td>Fertilisers</td><td>16</td><td>-12.57</td><td>28.92</td><td>25.00</td></tr><tr><td>Finance</td><td>1</td><td>132.91</td><td>0</td><td>100.00</td></tr><tr><td>Health and family welfare</td><td>2</td><td>302.30</td><td>92.96</td><td>100.00</td></tr><tr><td>I & B</td><td>7</td><td>14.00</td><td>62.97</td><td>42.86</td></tr><tr><td>Mines</td><td>5</td><td>-33.16</td><td>20.65</td><td>0.00</td></tr><tr><td>Petrochemicals</td><td>3</td><td>-12.22</td><td>25.92</td><td>33.33</td></tr><tr><td>Petroleum</td><td>123</td><td>-16.10</td><td>28.96</td><td>20.33</td></tr><tr><td>Power</td><td>107</td><td>51.94</td><td>272.50</td><td>46.73</td></tr><tr><td>Railways</td><td>122</td><td>94.84</td><td>178.86</td><td>82.79</td></tr><tr><td>Road transport and highways</td><td>157</td><td>15.84</td><td>62.46</td><td>54.14</td></tr><tr><td>Shipping and ports</td><td>61</td><td>-1.35</td><td>84.35</td><td>31.15</td></tr><tr><td>Steel</td><td>43</td><td>-15.88</td><td>47.78</td><td>18.60</td></tr><tr><td>Telecommunication</td><td>69</td><td>-32.09</td><td>57.59</td><td>15.94</td></tr><tr><td>Urban Development</td><td>24</td><td>12.31</td><td>50.27</td><td>41.67</td></tr><tr><td>Total</td><td>894</td><td>15.17</td><td>132.27</td><td>40.72</td></tr></tbody></table>

Source: Singh (2010, 45)
The comparison of studies about cost overruns in public sector projects shows differences in the amount and occurrence of cost overruns regarding the same kind of projects. There are also differences in the significance of the various factors worldwide when it comes to developing countries (Abdel-Hafeez et al. 2016; Aftab, Ismail, Noor & Ahmad 2014; Aibiniu & Jagbonon 2002; Flyvbjerg 2009; Inuwa, Saiva & Alkizim 2014; Singh 2010). Comparing studies that analysed cost developments of investment projects in different countries makes it clear that country-specific differences exist.

2. Cost overruns differ for different countries. This means that the same construction projects cause different cost overruns in different countries.

To find evidence, we now need to focus on studies that investigated the same industry but in different nations. Comparing cost overruns of railway projects in different countries, big differences are noticeable. The highest cost overruns of approximately 95% are witnessed in India (Singh 2010). Whereas the smallest cost increase points at the Netherlands with only 10.6% (Cantarelli, Flyvbjerg & Buhl 2012). Flyvbjerg et al. (2002) compared cost overruns in Europe with those in the U.S. and other geographical areas, and came up with the conclusion that there are differences between other geographical areas (64.4%) and Europe as well as the U.S. Even considering only one country, there are some differences in terms of cost escalations (Flyvbjerg et al. 2002; Love, Ahiaga-Dagbui, Welde & Odeck 2017; Pickrell 1990).

<table><caption>**Table 4** Cost overruns in rail projects in different countries</caption><thead><tr><td>Country</td><td>Cost Overrun (%)</td><td>Source</td></tr></thead><tbody><tr><td>Australia</td><td>23.00</td><td>Love, Zhou, Edwards, Irani & Sing 2017</td></tr><tr><td>India</td><td>94.84</td><td>Singh 2010</td></tr><tr><td>Netherlands</td><td>10.60</td><td>Cantarelli, Flyvbjerg & Buhl 2012</td></tr><tr><td>Sweden</td><td>17.00</td><td>Riksrevisionsverket 1994</td></tr><tr><td>South Korea</td><td>48.00</td><td>Lee 2008</td></tr><tr><td rowspan="3">United States</td><td>50.00</td><td>Pickrell 1990</td></tr><tr><td>42.00</td><td>Love, Ahiaga-Dagbui, Welde & Odeck 2017</td></tr><tr><td>40.80</td><td>Flyvbjerg, Holm & Buhl 2002</td></tr><tr><td>Europe</td><td>34.00</td><td>Flyvbjerg, Holm & Buhl 2002</td></tr><tr><td>20 countries on 5 continents</td><td>44.70</td><td>Flyvbjerg, Holm & Buhl 2002</td></tr></tbody></table>
The Olympic Games are a mega project with very different investment structures. It includes transport infrastructure, IT infrastructure, housing infrastructure, fairground construction, park construction, sport venue construction and in a way some iconic architecture.

Additionally, the Olympic Games are moving from country to country and cultural area to cultural area. This means that there are various options for calculating the costs, the intensity of corruption in a country, and changes in political interests that use the Olympic Games as an engine for triggering side effects. Therefore, it seems that there are no solid scientific grounds for research comparing the Olympic Games with any other mega project in the same country and with any similar mega sporting project from a different country.

In general, the challenge in project management is to minimise the risks of cost overruns and thus keep the project on budget (Abusafiya & Suliman 2017). Nevertheless, it proves to be difficult and only with a good reason scientifically possible to compare infrastructure projects with the Olympic Games, because there are not only construction projects, but rather a complex project with a variety of project management mechanisms in construction and organisation. This fact was proven by the comparison made by Baloyi and Bekker (2011), who focused on categorising the causes of cost overruns, in an analysis framework developed by Odeh and Battaineh (2002) for general projects. In the case of stadiums at the FIFA World Cup 2010 in South Africa, they concluded that there were significant differences between those factors that trigger cost overruns for general projects and those for the construction of stadiums in South Africa for the FIFA World Cup 2010.

## 2.3 Olympic Games and Mega Sports Events

When looking at the Olympic Games, there are different kinds of costs and revenues. Generally, the budget is divided into organisational and infrastructural costs/ revenues. The organisational budget is included in the budget of the Organising Committee of the Olympic Games (OCOG). It is also split into a revenue and a cost side. The main revenues an OCOG can generate are the IOC contribution from selling television rights, revenues from TOP sponsorship, local sponsorship and official suppliers, the revenues from ticket sales and merchandise, and subsidies from the government, if applicable. On the expenditure side of the OCOG budget are capital investments for transforming sports facilities and the operational costs for staging the Olympic Games, such as rental costs, Games workforce, technology and telecommunications, ceremonies, catering, transport, security and adminis-
trative costs. The OCOG budget is mainly financed by private funds. In addition to the OCOG budget there is a so-called non-OCOG budget that is mostly financed by the city, regional or state authorities, but also by the private sector. These investments are capital investments and include the building and renovation of the airport, roads, accommodation, sports venues, and Olympic and media villages (IOC 2010)<fnref n="6" />. Cost underestimation in the budget usually is about investment cost in general infrastructure and Olympic sporting infrastructure. In a very small number of cases, these underestimates occur in the organisation costs (Andreff 2016).

Usually the Olympic Games are expensive if the host city plans intensive investment in traffic infrastructure, communication systems, housing and sports facility construction (e.g. Sydney 2000, Barcelona 1992, Seoul 1988, Montreal 1976 and Munich 1972). If costs are mainly based on organising and staging the Games, they will be modest (e.g. Atlanta 1996 and Los Angeles 1982) (Preuss 2006). Nevertheless, mega sporting events are often used to leverage urban development, renovation or refurbishing (Preuss 2004). If infrastructural projects happen to be delayed and cannot stick to the time schedule, they usually generate cost overruns (Andreff 2016).

<footnote n="6">6 In recent times, airports and transport infrastructure are no longer listed in the Olympic Games Candidature File.</footnote>
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<figure><img src="image_12.png" /></figure>
It is not easy to collect financial data for a complex event such as the Olympic Games. During our research it very soon became clear that often the financial data of capital investments disappeared or were hidden or in ever-changing mixed categories. Furthermore, we learnt during our research that the reliable collection of all data regarding the Olympic Games is not possible for the following reasons:

1. Capital investments are not made by one authority and are not all displayed in a regular reporting system.

2. Capital investments are often a Public Private Partnership (PPP) and the private part is not published.

3. Costs and revenues are accounted differently.

4. The Olympic Games and Olympic Winter Games are different with regard to capital investments.

5. Information is not always clear about the particular time for which the amount displayed was projected.

As we explained above, we define a cost overrun COV if the OCOG budget or some non-OCOG budget does not succeed in collecting more revenues than expected ex-ante:

$$COV = R_i - R_{i-n}$$
In Flyvbjerg's (2011) view, a comparison of bid budget to final budget is valid. Like Flyvbjerg et al. (2016), we use the first serious projection (displayed in the candidature files), as that is the promise to the population, and compare it to the last budget, which covers the final revenues, expenditures and capital costs.

However, we follow a different method than Flyvbjerg et al. (2016) because, when we consider only cost overruns by looking at costs from bid book files and compare them to the final costs (wherever they can be found), we will not picture the reality for the following reasons:

1. OCOG budget: If we compare only OCOG expenditures with final OCOG expenditures we forget to consider the final OCOG revenues, which are also in fact often higher than final expenditures and result in a balanced or even surplus budget. A cost calculation should be connected to a revenue calculation.

2. Non-OCOG budget: If we take a very first bid concept (master plan) we tap into the politically desired cost underestimation, which was tactically relevant to position the city better in the bid race. Then we have to decide if a study like this would measure the actual cost overrun of the project or the cost overruns that arise due to bidding tactics.

3. Non-OCOG budget: If we take the official bid concept (from the candidature file), we have an acceptable starting point, as that is the budget promised to the public. However, we still have the concern (see point 2). The other problem is to find reliable bid data for all venues and the final budget that is really based on capital costs of the Olympic project. Our concern is that many non-Olympic infrastructural developments become connected to the Games and appear in some statements about final costs (often in media articles). If we take cost statements that have many non-Olympic related capital investments included, we are no longer talking about cost overruns. If we do that, we try to compare a totally different scope of projects. The problem here is that Olympic Games are not one infrastructure project but many. The reality is that there is often no final cost displayed for all the venues and infrastructural changes in official documents.

Overall the research design for this study will adopt the following delineation:

1. We evaluate the OCOG costs and revenues over a period of eight years (from the candidature file to the final cost statement).

2. We acknowledge the recurrent changes in the Olympic Games project and its so-called gigantism. Therefore, the research is limited to the past five Olympic Games (Sydney 2000 to Rio 2016) and past five Olympic Winter Games (Salt Lake City 2002 to PyeongChang 2018).
3. We divide the cost/revenue overruns into three budgets, the OCOG costs, the OCOG revenues and a set of directly Olympic-related non-OCOG costs.

4. The non-OCOG costs are selected to create a “basket” of different infrastructural projects, such as an Olympic Stadium, a multipurpose hall, an Olympic Village and the International Broadcasting Centre (IBC) and Main Press Centre (MPC). This basket provides a good mixture of key infrastructure projects needed for all Games editions, representative of the type (competition venue/housing), the size and the complexity of most of the venue-related infrastructure projects.

It became clear that the OCOG budget can consist of up to 300 accounting positions and the revenues of 100. Due to the different display of costs from Games to Games, we decided to categorise them. These categories are then comparable from Games to Games and provide information about the cost/revenue overruns.

**3.1 Availability of Financial Data from the Olympic Games**

The gathering of reliable financial data about the costs and revenues of the Olympic Games is extremely difficult. Data published in media reports are often estimates or relying on wrong information or wrong data. The wrong information are given from those that want to spread the message that the event is cheap respectively expensive.

The following figure illustrates the public display of costs in billions of euros regarding the world exposition (EXPO) in Milan in 2015. The announced costs vary from EUR 1 billion to 18 billion. Furthermore, the figures show that different costs were taken into account from one estimate to the other. Similar findings were found for the Olympic Games.
<figure><img src="image_13.png" /></figure>

Legend: brown = total costs / red = investments / blue = operation costs

<caption>**Fig. 7** Costs EXPO 2015 in billions of euros announced by different media</caption>

Source: Massiani (2018)

Data collection for this study was organised manifold to use the highest possible variety of information sources from which we gathered the figures. This is important for several reasons:

1. To make sure we obtain at least some data.

2. If available, to crosscheck the data and avoid using wrong information that may have been copied from a particular political party or any kind of vested interests.

3. To avoid being dependent on one single source of information.

The next figure visualises data collection implemented for this study. It shows the chronology followed to access the data.

<figure><img src="image_14.png" /><figcaption>**Fig. 8** Chronology of data collection</figcaption></figure>
First we started with literature research and used our own private Olympic data collection as we do Olympic research for more than 25 years. Then we contacted several experts (Olympic scholars). The following table shows all experts who were contacted as well as their function and the data they could provide.

<table><caption>**Table 5** Experts contacted to gather data</caption><thead><tr><th></th><th>Name</th><th>Function</th><th>Useful Data</th></tr></thead><tbody><tr><td rowspan="2">Sydney 2000</td><td>Rizakos, Angie</td><td>Assistant Manager, SOCOG</td><td>Non relevant data</td></tr><tr><td>Taylor, Tracy</td><td>Professor, University of Technology<br>Sydney</td><td>Non relevant data</td></tr><tr><td rowspan="2">Salt Lake 2002</td><td>Bullock, Fraser</td><td>COO Salt Lake Organising Committee 2002</td><td>Useful data</td></tr><tr><td>Fay, Ted</td><td>Professor, SUNY Cortland</td><td>Useful data</td></tr><tr><td rowspan="6">Athens 2004</td><td>Cartalis, Kostas</td><td>Professor, University of Athens / formerly Minister of Culture in charge of Athens 2004</td><td>Useful data</td></tr><tr><td>Gargalianos, Dimitrios</td><td>Professor, Democritus University of Thrace</td><td>Non relevant data</td></tr><tr><td>Georgiadis, Kostas</td><td>Professor, University of Peloponnese</td><td>Non relevant data</td></tr><tr><td>Panagiotopoulou, Roy</td><td>Professor, University of Athens</td><td>Useful data</td></tr><tr><td>Bondonio, Piervincenzo</td><td>Past-president, OMERO, Inter-departmental Research Centre on Urban and Events Studies, University of Turin</td><td>Useful data</td></tr><tr><td>Bottero, Marta</td><td>Associate Professor in Project Appraisal and Planning Evaluation, Politecnico di Torino</td><td>Useful data</td></tr><tr><td rowspan="4">Turin 2006</td><td>Castellani, Valentino</td><td>Former Mayor of Turin (in 2006) Professor at the University of Turin</td><td>Non relevant data</td></tr><tr><td>Guala, Chito</td><td>OMERO Group – sociology professor</td><td>Non relevant data</td></tr><tr><td>Solberg, Arne</td><td>Professor, Trondheim Business School</td><td>Non relevant data but several journal papers</td></tr><tr><td>Hu, Xiaoqian Richard</td><td>Professor, Xinhua University Beijing</td><td>Non relevant data</td></tr><tr><td>Beijing 2008</td><td>Lin, Xinpeng</td><td>Professor, Beijing Sport University</td><td>Non relevant data</td></tr></tbody></table>
<table><thead><tr><th></th><th>Name</th><th>Function</th><th>Useful Data</th></tr></thead><tbody><tr><td>Vancouver 2010</td><td>Parent, Milena</td><td>Professor, University of Ottawa</td><td>Useful data</td></tr><tr><td rowspan="2">London 2012</td><td>Girginov, Vassil</td><td>President European Association for Sport Management</td><td>Non relevant data</td></tr><tr><td>Rizakos, Angie</td><td>Olympic Delivery Authority (ODA)</td><td>Non relevant data</td></tr><tr><td rowspan="6">Sochi 2014</td><td>Aivazyan, Sima</td><td>Head or PR Department, Olymp-stroy</td><td>Non relevant data</td></tr><tr><td>Belousov, Lev</td><td>Rector of Russian International Olympic University (RIOU)</td><td>Non relevant data</td></tr><tr><td>Bocharnikova, Evgeniia</td><td>Media Relations, Sochi OCOG</td><td>Non relevant data</td></tr><tr><td>Dobis, Michael</td><td>Head of Unit Science and Research, German Embassy Moscow</td><td>Non relevant data</td></tr><tr><td>Macharadze, Iya</td><td>Head of the whole Master's, RIOU</td><td>Non relevant data</td></tr><tr><td>Peshin, Nikolay</td><td>Vice-Rector for research at RIOU Sochi OCOG</td><td>Non relevant data</td></tr><tr><td rowspan="2">Rio 2016</td><td>Braga, Tania</td><td>Head of Sustainability, Accessibility and Legacy, Rio OCOG</td><td>Useful data</td></tr><tr><td>Payne, Michael</td><td>Consultant, Rio Candidate City</td><td>Non relevant data</td></tr><tr><td>PyeongChang 2018</td><td>Hong, Seok-Pyo</td><td>Professor, Kangwon National University, Chuncheon, OSC</td><td>Useful data</td></tr></tbody></table>

Experts from former host cities were contacted to gather data that may be hidden in local archives.

The next step was to visit the IOC Olympic Studies Centre (OSC) in Lausanne and the National Olympic Academy in Frankfurt in order to access a huge collection of sources about the Olympic Games. The IOC OSC and Finance Department supported this research intensively and provided us with access to public and non-public archives for OCOG and non-OCOG budgets.

The ProProjekt GmbH agency, which was managing several candidate cities, including the two German bids (Munich 2018 and Hamburg 2024), supported our research. They provided us with their database on the OCOG and non-OCOG
budgets of several previous Games. These data were extremely useful and were in particular used to crosscheck the data we had collected before.

The final step was to contact the ministries and official departments in host cities, requesting data about the non-OCOG budgets. However, most of them could not or did not want to provide data. It proved to be difficult receiving useful data on non-OCOG budgets.

## 3.2 Preparation of Data

The preparation of data started with a differentiation of data required. We wanted to avoid mixing categories or considering data that are not related to the Olympic Games. In this study we distinguish between:

1. OCOG revenues = revenues the OCOG receives, including the IOC contribution.

2. OCOG costs = all operational expenditures of the OCOG, including royalties paid to the IOC.

3. Non-OCOG costs = investments in a selection of key infrastructure projects needed for hosting the Games, as described in the “Methodology” section.

Available data about Olympic Games costs and revenues in the sources are neither homogeneous by currency nor by date. For example, in older candidature files (until the 2012 candidature process) the budgets are in USD at the time of writing the candidature file. This makes at least eight years before the Olympic Games were staged and still many years before the investments were made. Until the 2012 candidature process, these figures did not take inflation into account and if they did, they must have taken the right inflation rate. Estimating the rate of inflation can also be seen as a source of error.

The bid process has changed significantly over time. Since 2006⁷, the IOC has requested in candidature files that the budget must be provided in both USD and the local currency. Thus Rio 2016 were the first Games to stick to this new procedure and consequently provide transparent data about the exchange rates

<footnote n="7">7 The Candidature File for Sochi 2014 mentioned only that the existing tables with local currency and inflation adjusted figures were in the annexes of the document. These were not accessible to us. It was only since the Candidature Process for the Olympic Games 2016 that the tables in the candidature file had to include national currency and inflation adjusted figures.</footnote>
used. Additionally, the IOC expects the budget to be displayed in two tables, one with current values and one with inflation-adjusted values. In the present study, for the eight Olympic Games investigated before Rio 2016, the values had to be adjusted for inflation. However, even the data provided for Rio 2016 and Pyeong-Chang 2018 needed to be re-adjusted because the budgets projected were based on inflation rates estimated at the time of bidding; at this time, the candidature committees did not know the real inflation rates and construction price index of the future. Tab. 6 shows the revenue of the Rio 2016 and PyeongChang 2018 OCOGs and compares the real inflation with the estimated inflation by the bid committee. Thus, Rio 2016 underestimated the inflation rate, which led to 27% lower costs than were finally incurred, while PyeongChang 2018 overestimated the inflation rate and had at the end 12% less costs. This shows the power of inflation on perceived cost overruns. However, it will remain tricky if not impossible to estimate the true inflation rate, but bid committees should put more effort into using realistic rates.

<table><caption>**Table 6** Comparison of estimated and real inflation of the total OCOG revenues</caption><thead><tr><th></th><th>Estimated Inflation</th><th>Real Inflation</th><th>Difference</th><th>%</th></tr></thead><tbody><tr><td>Rio 2016</td><td>7,557,992,000 BRL</td><td>10,380,766,000 BRL</td><td>2,822,774,000 BRL</td><td>27%</td></tr><tr><td>Pyeong-Chang 2018</td><td>2,195,923,000,000 KRW</td><td>1,968,582,765,000 KRW</td><td>-227,340,235,000 KRW</td><td>-12%</td></tr></tbody></table>

Reports that contain data for post-bidding years though these data pertain to earlier years than when the final costs and revenues are known and usually publish figures in local currency. Revenues and costs in the bid documents before Rio 2016 were usually in USD. To minimise conversion errors, we decided to convert the OCOG budget from the candidature file into local currency by using the current exchange rate at that time. After converting all available data into one currency, the host country's GDP deflator for the respective years was used to adjust revenues and costs to one base year. Thus a comparison of the data from the candidature file with data published during the preparation period and data available on the final revenues and costs has been made possible.
For the OCOG budget, we opted to take an overall inflation rate (the GDP deflator), while for investments in infrastructure, we opted for construction price indices. In countries where we could not find a construction price index, we used the GDP deflator of the respective country. Missing inflation inevitably translates into an overestimation of perceived cost overruns which do not exist in reality. For example, investment in a stadium with a relatively normal construction price index of 4% p.a. over six years (from bidding to construction two years prior to the Games) results in a 25% cost increase simply due to inflation. Therefore, any study that ignored inflation rates would wrongly exhibit higher costs than the actual costs. On the other hand, the IOC contribution (revenue) that is paid only in instalments over time, with a large portion in the Games year, needs to be deflated. If revenues were not discounted at the bidding time, they would be announced with a too-optimistic value.

In this study we will only show the percentage changes compared to the initial budget, because the intention is not to show which Olympic Games have been the most costly or the cheapest. Nonetheless, the percentages are based on real cost figures. Using the percentage changes enables us to show and interpret a “five-Games” average of costs and revenue overruns in total and by category. This provides some insights into the areas where costs and revenue overruns emerge the most often.

There are some cases where, at the time of bidding, there was no information on certain categories of OCOG and non-OCOG revenues and expenditure. When the category was first mentioned, we took that value as the starting value. When it was in the final budget only, a cost overrun of 0% occurred. However, even though that happened often, we then took the real value of that cost into our cost overrun calculation as that was always done based on real figures. In other words, the final costs of the unlisted category were taken into the total final costs, but they were based on zero in the bid stage (as it was not mentioned there), and therefore huge nominal cost overruns occurred. Thus, even if some categories are displayed only with 0% cost overruns in the final budget, the overall percentage figure reflects the cost overrun that occurred at the end.
<figure><img src="image_15.png" /><figcaption>**Fig. 9** Methodology of data conversion</figcaption></figure>

It is difficult to obtain information about non-OCOG costs. Non-OCOG costs include all capital investments that need to be delivered for the Olympic Games. It is highly debatable which of the capital investments are really needed and which are added simply because the Olympic Games open up an opportunity and provide good arguments for incorporating into the Games event some investment projects that were planned regardless of the Games.

The Olympic Games are a complex event with more than 300 projects to be coordinated, involving several administrative levels of a country. The resources to finance the new or to refurbish the old infrastructure come from many different authorities and often even from different communities, private investors or state authorities. This complex situation makes it impossible to collect a comprehensive set of infrastructure costs. Often even a single project (e.g. Olympic Stadium) attracts financing from different entities (e.g. the state pays for ground work, accessibility; the city for the construction, a private investor for the VIP areas). The non-OCOG budget here includes all capital investments that are needed for staging the Olympic Games, but does not encompass general infrastructure improvements such
as road, metro or railway construction, new harbours and airports or a general re-urbanisation of cities by planting trees, creating beaches, building museums or pedestrian zones and public recreation areas. Given that different stakeholders are in charge of the different venues for the Olympic Games, we decided to compose a subset of exemplary venues (see table below) and look at the cost overruns for their construction. We avoided a selection bias by taking a variety of very different venues and not looking at who was investing.

Our investment sample (hereinafter referred to as “basket”) represents a fair mix of venues that are definitely needed for staging the Olympic Games. The rationale behind this procedure is that a good bundle (basket) of investment projects, such as an Olympic Village or an Olympic Stadium, triggers many possible cost overruns that can be expected for the Olympic Games. In other words, cost overruns of the well selected exemplary investments will show relatively the same cost overruns that a larger or a full sample of all Olympic investments would create. This is the reason why we display all the results only in percentages, as the nominal costs would represent only the basket and not the entire costs of the Games.

The rationale behind the method to work with a representative “basket” was taken from economics and enables us to:

a. Manage the problem of lacking financial information about all capital investments in the Olympic Games;

b. Avoid misinterpretation regarding the fact that the Olympic Games are not one single mega project, but a bundle featuring a high number of separate (mega) projects. It is to be expected that several projects get added and change over the eight years of preparations (so-called changes to the master plan). However, even though one can argue we should label these costs as overruns, it only shows a small part of them, namely those based on project changes. Here the “basket” of investments contains the same projects over the entire period and therefore displays the cost overruns in a comparative way;

c. The basket contents venues that are financed considerably by public money (see next table). Projects financed by public money cause higher cost overruns than private investments (see discussion below and chapter discussion and rationale on the *PRINCIPAL-AGENT* theory). 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.

The venues picked for research into the Olympic Winter Games and Olympic Games are listed below. All of them are large venues and address different industries such as housing, technology, special architecture (iconic buildings), special construction (ski
jump, velodrome), etc. Furthermore, this basket represents the most iconic venues of the Games, which are often the most expensive ones and consequently one can expect the highest cost overruns. Thus, the data of our basket may lead rather to an overestimation of the cost overruns than being too low (conservative approach).

<table><caption>**Table 7** Definition of “baskets” for the non-OCOG budget</caption><thead><tr><td>Basket of venues for the Olympic Winter Games</td><td>Basket of venues for the Olympic Games</td></tr></thead><tbody><tr><td>Olympic Stadium</td><td>Olympic Stadium</td></tr><tr><td>Ski Jumping Hill</td><td>Swimming Pool</td></tr><tr><td>Sliding Centre</td><td>Multipurpose Hall</td></tr><tr><td>Ice Stadium</td><td>Velodrome</td></tr><tr><td>Olympic Village</td><td>Olympic Village</td></tr><tr><td>IBC/MPC</td><td>IBC/MPC</td></tr></tbody></table>

For the former Olympic cities of Sydney and London, we looked only at the costs of the public sector, as the figures we had were only those from public money. For Sydney 2000, therefore, we considered in the Candidature File only the proportion of public money. In the case of London 2012, the Candidature File stated that all Olympic-related costs would be paid by the government. Due to changes in the master plan, the costs severely increased, and some parts of the venues were covered by private funds. Nevertheless, for our calculation, we took at the beginning (candidature file) and at the end (final report) only the amount of public money. The total nominal costs of London 2012 that were available to us were largely found in newspapers and therefore did not seem reliable to us. In the cases of Athens 2004 and Rio 2016, we took the total costs, although almost all venues were completely financed by public money. The exact percentage of the public costs of the individual venues of the Olympic Games is entered in the following table.
<table><caption>**Table 8** Percentage of public costs of the total costs of Olympic Games venues</caption><thead><tr><th></th><th>Sydney</th><th>Athens</th><th>Beijing</th><th>London</th><th>Rio***</th></tr></thead><tbody><tr><td>Olympic Stadium</td><td>19%</td><td>100%</td><td>N/A</td><td>88%</td><td>100%</td></tr><tr><td>Swimming Pool</td><td>N/A</td><td>100%</td><td>N/A</td><td>93%</td><td>100%</td></tr><tr><td>Multipurpose Hall</td><td>72%</td><td>100%</td><td>N/A</td><td>100%</td><td>32%**</td></tr><tr><td>Velodrome</td><td>100%</td><td>100%</td><td>N/A</td><td>94-98%*</td><td>100%</td></tr><tr><td>Olympic Village</td><td>N/A</td><td>Non-residential constructions implemented with public funds</td><td>N/A</td><td>80%</td><td>0%</td></tr><tr><td>IBC/MPC</td><td>N/A</td><td>100%</td><td>N/A</td><td>99%</td><td>32%**</td></tr></tbody></table>

* range of percentages due to different sources

** Multipurpose Hall Carioa Arena and IBC/MPC are listed together because the report has summarised it, as it is located at the same area

*** Official final costs are not available as the Games had not been formally wound up at the time of writing.

Sources: ATHOC (n. d.); Camara dos Deputados (2017); Department for Culture, Media and Sport (2012b); Detail (2012); Gibson (2011); Kim (2011); Panagiotopoulou (2014); SOCOG (2001); StadiumDB (n. d.); The Guardian (n. d.)

For Salt Lake City 2002, it seems that some of the venues were totally financed by private sources (see chapter on Salt Lake 2002), whereas the Olympic Village and IBC/MPC were totally financed by public money. The venues of the other host cities of the Olympic Winter Games were almost exclusively financed by public funds. The exception is the Olympic Village for PyeongChang 2018, which was totally financed by private investors. Tab. 9 shows the exact breakdown.

<table><caption>**Table 9** Percentage of public costs of the total costs of Olympic Winter Games venues</caption><thead><tr><th></th><th>Salt Lake City</th><th>Turin</th><th>Vancouver</th><th>Sochi</th><th>Pyeong-Chang****</th></tr></thead><tbody><tr><td>Olympic Stadium</td><td>75%</td><td>N/A</td><td>100%</td><td>100%</td><td>100%***</td></tr><tr><td>Ski Jumping Hill</td><td>0%</td><td>100%</td><td>100%</td><td>100%**</td><td>100%***</td></tr><tr><td>Sliding Centre</td><td>0%</td><td>100%</td><td>100%</td><td>100%</td><td>100%***</td></tr><tr><td>Ice Stadium</td><td>33%</td><td>100%</td><td>100%</td><td>100%</td><td>100%***</td></tr><tr><td>Olympic Village</td><td>100%</td><td>100%</td><td>100%*</td><td>100%**</td><td>0%</td></tr><tr><td>IBC/MPC</td><td>100%</td><td>100%</td><td>N/A</td><td>N/A</td><td>N/A</td></tr></tbody></table>

* 9% were funded by governmental contributions; 91% were funded by municipal contributions

** funded by State-secured loan

*** 75% were funded by central government and 25% by local government

**** Official final costs are not available as the Games had not been formally wound up at the time of writing.

Sources: Bottero, Sacerdotti & Mauro (2012); Hong (2017); Müller (2014); SLOC (2001); VANOC (2010b)
Due to the presentation of cost overruns by percentage, we took great care that the data collected over the years always addressed public money. Therefore, an extension of works that were covered by private sources does not appear, but in turn the extension of investments when private investors dropped out increased the cost overruns. In this case, the overall costs may not have overrun, but it appears as overrun due to additional public money being invested.

## 3.3 Quality of Data and Building of Categories

The available data about the costs and revenues of the Olympic Games and in particular investments for Olympic venues is limited. This study has collected more than 220 sources, but still many data are missing and may not be available at all.

We were able to gather at least for all Games cost estimates from the candidature files and, in most cases, final costs as presented in the official reports. The exceptions are Rio 2016 and PyeongChang 2018, whose Organising Committees are not yet closed, and thus there is no final financial data for the Games. Several times we found cost estimates during the preparation period or the final cost statements in other sources than the official report. We collected them all to display the development of cost and revenue overruns. Missing data could be partly completed by internal data that were made available to us by the IOC Finance Department.

Whenever there was any doubt, we checked for the institution that published the data or started more in-depth research ourselves. For example, we found two different final figures for Sochi 2014 non-OCOG costs: one from the Anti-Corruption Foundation and one from Müller (2014, 631f.). Our research observed that Müller's citation of data did not contain the data he cited from (we used a native Russian speaker to seek and check the sources). Furthermore, none of the official documents about the non-OCOG costs of the 2014 Sochi Winter Games were accessible. Another example is the final costs for Athens 2004. We used the data from Panagiotopoulou (2014), as she had data from the government, which we trusted more than the data from Kasimati (2015).

Categories on OCOGs' costs and revenues were often built differently in various sources. They lacked consistency because the accounting systems were different from Games to Games. Sometimes we even found changes at the same Games when comparing the candidature file to the final cost statements and in-between they sometimes also changed. Then in another official source, costs and revenues were again displayed in a different bundle or even missing. Overall, we found many examples of a missing consistency of data display.
## 3.4 Problems in the Preparation of Data

Data comparability is possible only when all data are adjusted to a same base year. To do this, we used GDP deflators for OCOG budgets and construction price indexes for non-OCOG budgets.

A construction price index is not available for all countries, and additionally the price index of the different countries is based on different baskets. For our study, that is important because the comparison of the different Games is not our main purpose. As long as we use a consistent “basket” for each Olympic Games, we have robust results to compare the cost and revenue overruns. Further, we could not use one index, because the respective index is always based on the construction situation and material prices in each country. Therefore, it is preferable to use an individual index for each nation.

<table><caption>**Table 10** Construction Price Index at Olympic host nations</caption><thead><tr><th></th><th>t-8</th><th>t-7</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</th><th></th></tr></thead><tbody><tr><td>Australia</td><td>50.2</td><td>49.6</td><td>51.2</td><td>53.5</td><td>55.3</td><td>57.3</td><td>59.6</td><td>61.8</td><td>63.9</td><td>Non-dwelling construction - New building</td></tr><tr><td>United States</td><td>474</td><td>492</td><td>505</td><td>525</td><td>549</td><td>570</td><td>595</td><td>613</td><td>619</td><td>Turner Building Cost Index</td></tr><tr><td>Greece</td><td>85.1</td><td>89.5</td><td>94.7</td><td>98.1</td><td>100</td><td>102.2</td><td>103.8</td><td>106.2</td><td>108.7</td><td>Work categories price indices for new residential buildings construction</td></tr><tr><td>Italy</td><td>66.8*</td><td>68*</td><td>70.0</td><td>71.5</td><td>74.3</td><td>76.6</td><td>79.8</td><td>83.0</td><td>85.3</td><td>new residential buildings</td></tr><tr><td>China</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>Canada</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>United Kingdom</td><td>160</td><td>171</td><td>181</td><td>193</td><td>196</td><td>186</td><td>188</td><td>195*</td><td>199*</td><td>All Construction Tender Price Index</td></tr><tr><td>Russia</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>Brazil</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>Korea</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>N/A</td></tr></tbody></table>

Sources: Australian Bureau of Statistics (2018); data360 (2008); Department for Business Innovation and Skills (2012); Eurostat (2018); National Statistical Service of Greece (2007); Turner (n. d.)

<footnote>* the value used is interpolated from previous or later values.</footnote>
However, for the countries for which no construction price index was available, we used the GDP deflator of the respective country.

Inflation is taken into account using the GDP deflators as displayed in the table below.

<table><caption>**Table 11** GDP deflators in Olympic host nations</caption><thead><tr><th></th><th>t-8</th><th>t-7</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</th></tr></thead><tbody><tr><td>Australia</td><td>56.0</td><td>56.4</td><td>57.0</td><td>58.3</td><td>59.8</td><td>60.6</td><td>61.3</td><td>61.6</td><td>63.1</td></tr><tr><td>Brazil</td><td>194.0</td><td>208.2</td><td>225.7</td><td>244.5</td><td>263.9</td><td>283.8</td><td>306.0</td><td>330.2</td><td>357.7</td></tr><tr><td>Canada</td><td>82.0</td><td>84.7</td><td>87.5</td><td>90.2</td><td>92.6</td><td>95.7</td><td>99.5</td><td>97.2</td><td>100.0</td></tr><tr><td>China</td><td>58.0</td><td>59.1</td><td>59.5</td><td>61.0</td><td>65.3</td><td>67.8</td><td>70.5</td><td>76.0</td><td>82.0</td></tr><tr><td>Greece</td><td>63.1</td><td>67.2</td><td>70.7</td><td>73.2</td><td>74.4</td><td>77.0</td><td>79.5</td><td>82.3</td><td>84.8</td></tr><tr><td>Italy</td><td>76.9</td><td>78.1</td><td>79.7</td><td>82.0</td><td>84.8</td><td>87.5</td><td>89.7</td><td>91.4</td><td>93.1</td></tr><tr><td>Korea</td><td>100.0</td><td>101.6</td><td>102.6</td><td>103.5</td><td>104.1</td><td>106.6</td><td>108.6</td><td>111.8</td><td></td></tr><tr><td>Russian Federation</td><td>51.7</td><td>58.9</td><td>69.4</td><td>70.8</td><td>80.9</td><td>100.0</td><td>109.1</td><td>115.0</td><td>123.6</td></tr><tr><td>United Kingdom</td><td>86.9</td><td>89.2</td><td>91.9</td><td>94.3</td><td>97.0</td><td>98.5</td><td>100.0</td><td>102.0</td><td>103.6</td></tr><tr><td>United States</td><td>72.9</td><td>74.4</td><td>75.8</td><td>77.1</td><td>77.9</td><td>79.1</td><td>80.9</td><td>82.7</td><td>84.0</td></tr></tbody></table>

Sources: The World Bank (2018a); Trading economics (2018)

The Olympic Games in Athens (2004) and Turin (2006) were held in Europe, but at the time of planning their budget (1996 and 1998) the euro was not an official currency. We used the first official exchange rate between dollars and euros, which was published in 1999, since no other conversion to the euro was possible.
<table><caption>**Table 12** Exchange rates in the Olympic Games countries t-8 to t</caption><thead><tr><th></th><th>t-8</th><th>t-7</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</th></tr></thead><tbody><tr><td>Australia</td><td>1.462</td><td>1.471</td><td>1.368</td><td>1.349</td><td>1.278</td><td>1.347</td><td>1.592</td><td>1.550</td><td>1.725</td></tr><tr><td>Brazil</td><td>1.833</td><td>1.999</td><td>1.759</td><td>1.673</td><td>1.953</td><td>2.156</td><td>2.353</td><td>3.327</td><td>3.491</td></tr><tr><td>Canada</td><td>1.569</td><td>1.401</td><td>1.301</td><td>1.212</td><td>1.134</td><td>1.074</td><td>1.067</td><td>1.143</td><td>1.030</td></tr><tr><td>China</td><td>8.279</td><td>8.277</td><td>8.277</td><td>8.277</td><td>8.277</td><td>8.194</td><td>7.973</td><td>7.608</td><td>6.949</td></tr><tr><td>Greece</td><td>N/A</td><td>N/A</td><td>N/A</td><td>0.939</td><td>1.085</td><td>1.118</td><td>1.063</td><td>0.886</td><td>0.805</td></tr><tr><td>Italy</td><td>N/A</td><td>0.939</td><td>1.085</td><td>1.118</td><td>1.063</td><td>0.886</td><td>0.805</td><td>0.804</td><td>0.797</td></tr><tr><td>Korea</td><td>1156.0</td><td>1108.2</td><td>1126.5</td><td>1094.9</td><td>1053.0</td><td>1131.2</td><td>1160.4</td><td>N/A</td><td>N/A</td></tr><tr><td>Russian Federation</td><td>27.19</td><td>25.58</td><td>24.85</td><td>31.74</td><td>30.37</td><td>29.38</td><td>30.84</td><td>31.84</td><td>38.38</td></tr><tr><td>United Kingdom</td><td>0.546</td><td>0.550</td><td>0.543</td><td>0.500</td><td>0.544</td><td>0.642</td><td>0.647</td><td>0.624</td><td>0.633</td></tr><tr><td>United States</td><td>1</td><td>1</td><td>1</td><td>1</td><td>1</td><td>1</td><td>1</td><td>1</td><td>1</td></tr></tbody></table>

Source: The World Bank (2018b)

## 3.5 Building of OCOG and Non-OCOG Budget Categories

A comparison of the various Games is very difficult, because each OCOG establishes a different reporting categorisation based on the tradition of their accounting systems. To overcome this difficulty, we grouped all data in a way that the various Games can be compared on the basis of an identical grouping of cost (revenue) categories. The table below shows which costs and revenues are included in each group. The group names will be used in the analysis in the results section.

The following tables show a collection of all nominations of positions in the candidature and later files on the left side. We collected all of them in order to build categories that contain the same information. The category names are shown on the right.
<table><caption>**Table 13** Grouping of OCOG revenues</caption><thead><tr><td>Categories of the budget listing</td><td>Summarised categories</td></tr></thead><tbody><tr><td>Television Rights</td><td>IOC Contribution<sup>a</sup></td></tr><tr><td>Revenues from TOP Programme</td><td>TOP Sponsorship</td></tr><tr><td>Local Sponsorship</td><td>National Sponsorship</td></tr><tr><td>Local/Domestic Sponsorship</td><td></td></tr><tr><td>Official Suppliers</td><td></td></tr><tr><td>National Sponsors (1st tier)</td><td></td></tr><tr><td>National Sponsors (2nd tier)</td><td></td></tr><tr><td>National Sponsors (3rd tier)</td><td></td></tr><tr><td>Revenues from Ticket Sales</td><td>Ticket Sales</td></tr><tr><td>Ticket Sales/Ticketing</td><td></td></tr><tr><td>Licensing Merchandise</td><td>Licensing</td></tr><tr><td>Licensing & Merchandising/Retail</td><td></td></tr><tr><td>Consumer Products</td><td></td></tr><tr><td>Philately</td><td></td></tr><tr><td>Olympic Coin Programme</td><td></td></tr><tr><td>Revenues from national and other lotteries</td><td>Lotteries</td></tr><tr><td>Donations received from third parties without any attached sponsorship or marketing rights</td><td>Donations</td></tr><tr><td>Revenues from post-Games sales of capital investments</td><td>Disposal of assets</td></tr><tr><td>Car & remaining equipment sales</td><td></td></tr><tr><td>Subsidies received from municipal, regional and state authorities</td><td>Subsidies</td></tr><tr><td>Subsidies – national government</td><td></td></tr><tr><td>Subsidies – regional government</td><td></td></tr><tr><td>Subsidies – local government</td><td></td></tr><tr><td>Cultural Activities/Events</td><td>Other</td></tr><tr><td>Event Revenues</td><td></td></tr><tr><td>Signature Events</td><td></td></tr><tr><td>Torch relay Revenues</td><td></td></tr><tr><td>Paralympic Revenue</td><td></td></tr><tr><td>Sponsor Hospitality</td><td></td></tr><tr><td>Sport Publication</td><td></td></tr><tr><td>Sport Sciences Congress</td><td></td></tr><tr><td>Accommodation Fees</td><td></td></tr><tr><td>Food and Beverage Services</td><td></td></tr><tr><td>Foreign Exchange Revenue</td><td></td></tr><tr><td>Interest Income</td><td></td></tr><tr><td>Rate Card Revenue</td><td></td></tr><tr><td>Mixed Categories</td><td></td></tr><tr><td>Other</td><td></td></tr></tbody></table>

<footnote n="8">8 The inflation was calculated in such a way that the total sum of the IOC contribution was paid in the year of the Games. In reality, the payments start four years before, but the largest sum is paid just before the Games.</footnote>
<table><caption>**Table 14** Grouping of OCOG expenditures</caption><thead><tr><td>Categories of the budget listing</td><td>Summarised categories</td></tr></thead><tbody><tr><td>Capital Investments</td><td>Venues</td></tr><tr><td>Sports Facilities/Venues</td><td></td></tr><tr><td>Olympic Village</td><td></td></tr><tr><td>Design & Overlay</td><td></td></tr><tr><td>Energy Services</td><td></td></tr><tr><td>Venue Development</td><td></td></tr><tr><td>Venue Operation</td><td></td></tr><tr><td>Education</td><td>Workforce</td></tr><tr><td>Human Resources</td><td></td></tr><tr><td>Staffing</td><td></td></tr><tr><td>Volunteers</td><td></td></tr><tr><td>Workforce</td><td></td></tr><tr><td>Technology</td><td>Technology</td></tr><tr><td>Information Systems</td><td></td></tr><tr><td>Results Technology Services</td><td></td></tr><tr><td>Telecommunications</td><td></td></tr><tr><td>Internet</td><td></td></tr><tr><td>Medical Services</td><td>Services</td></tr><tr><td>Catering or Food Services</td><td></td></tr><tr><td>Transport</td><td></td></tr><tr><td>Security</td><td></td></tr><tr><td>Waste Management/Environment Management</td><td></td></tr><tr><td>Sustainability & Legacy</td><td></td></tr><tr><td>Ceremonies and Culture</td><td>Marketing & Events</td></tr><tr><td>Torch Relay</td><td></td></tr><tr><td>Advertising & Promotion</td><td></td></tr><tr><td>Brand Management</td><td></td></tr><tr><td>Marketing</td><td></td></tr><tr><td>Sponsorship</td><td></td></tr><tr><td>Media</td><td></td></tr><tr><td>Communication</td><td></td></tr><tr><td>Games Management</td><td></td></tr><tr><td>Look of the Games</td><td></td></tr><tr><td>Ticketing</td><td></td></tr><tr><td>Sports</td><td></td></tr><tr><td>Administration</td><td>Administration & Coordination</td></tr><tr><td>CEO Office</td><td></td></tr><tr><td>Finance</td><td></td></tr><tr><td>Pre-Olympic Events & Coordination</td><td></td></tr><tr><td>Governmental Integration</td><td></td></tr><tr><td>City Liaison</td><td></td></tr><tr><td>Protocol</td><td></td></tr></tbody></table>
<table><thead><tr><td>Categories of the budget listing</td><td>Summarised categories</td></tr></thead><tbody><tr><td>Accommodation</td><td>Other</td></tr><tr><td>Accreditation</td><td></td></tr><tr><td>Broadcasting</td><td></td></tr><tr><td>Contingency</td><td></td></tr><tr><td>Fixed Payments</td><td></td></tr><tr><td>Foreign Exchange Gain/Loss</td><td></td></tr><tr><td>Rate Card</td><td></td></tr><tr><td>IOC/HOC Royalties</td><td></td></tr><tr><td>Mixed Categories<sup>9</sup></td><td></td></tr><tr><td>Other</td><td></td></tr></tbody></table>

The table above is already a reduction of cost items we found in the documents. Overall we found more than 300 different cost items for the 10 Olympic Games we investigated.

<table><caption>**Table 15** Grouping of non-OCOG investments</caption><thead><tr><td>Categories of the budget listing</td><td>Summarised categories</td></tr></thead><tbody><tr><td>Olympic Stadium</td><td>Olympic Stadium</td></tr><tr><td>National Stadium</td><td></td></tr><tr><td>Swimming Pool</td><td>Swimming Pool</td></tr><tr><td>Aquatic Centre</td><td></td></tr><tr><td>Basketball Arena</td><td>Multipurpose Hall</td></tr><tr><td>Volleyball Arena</td><td></td></tr><tr><td>Handball Arena</td><td></td></tr><tr><td>Gymnastics Arena</td><td></td></tr><tr><td>Velodrome</td><td>Velodrome</td></tr><tr><td>Velopark (including BMX track)<sup>10</sup></td><td></td></tr><tr><td>Ski Jumping Hill</td><td>Ski Jumping Hill</td></tr><tr><td>Bobsleigh, Skeleton & Luge</td><td>Sliding Centre</td></tr><tr><td>Figure Skating & Short Track</td><td>Ice Stadium</td></tr><tr><td>Curling</td><td></td></tr><tr><td>Ice Hockey</td><td></td></tr><tr><td>Speed Skating</td><td></td></tr></tbody></table>

<footnote n="9">9 Mixed categories were established when separation of “summarised categories” was not possible.</footnote>

<footnote n="10">10 In one case, the Velopark was not subdivided into velodrome and BMX track. Therefore, the BMX track was included in the evaluation. However, these costs were consistently included from the bidding stage to the final budget, thus the basket remained the same and the potential cost overrun included the Velopark.</footnote>
<table><thead><tr><td>Categories of the budget listing</td><td>Summarised categories</td></tr></thead><tbody><tr><td>Olympic Village</td><td rowspan="5">Olympic Village</td></tr><tr><td>Olympic and Paralympic Village</td></tr><tr><td>Main Olympic Village</td></tr><tr><td>Mountain Olympic Village</td></tr><tr><td>Metropolitan Area Village</td></tr><tr><td>IBC &amp; MPC</td><td rowspan="2">IBC &amp; MPC</td></tr><tr><td>Media Village</td></tr></tbody></table>

The table above contains the baskets we used for the non-OCOG costs. The label was taken from the above table (summarised categories). In our basket we have taken one of the venues shown on the left, depending on which data were available in the bidding documents. Mostly, the biggest venues were taken. For example, when we write “Ice Stadium”, it could be the speed skating venue for one Winter Games and the Ice Hockey Arena for another Winter Games. Since we did not display overall costs, but only the changes, it does not matter if different “Ice Stadium” venues were considered in our basket, as long as we took the costly ones.

The table above displays only the venues we have considered in our baskets. As explained for Sydney 2000 and London 2012, we took only the public money share of the overall investments into account. That leads most probably to an overestimation of cost overruns, because the spending of public money is often not profit driven and less well controlled than that of private investors.

For example, for Sydney 2000, we took only the governmental contribution to the stadium into account and the construction of the stadium itself. In doing so, we missed out the private contribution. Additionally, we did not consider the remediation works and transport and railway connection to the stadium as they are not the direct costs of the “Olympic Stadium” venue.

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<figure><img src="image_16.png" /></figure>
The results section is twofold. First, we will look at all Games levels, providing information for each of the 10 investigated Olympic Games. In a second results section, we will look across the various Games, which enables us to suggest interpretations by cost (revenue) groupings or categories. Finally, we present our overall findings.

It should be noted that OCOGs sometimes changed categories in their accounting systems from one year to another. This explains the sudden ups and downs between categories we defined.

## 4.1 Sydney 2000

In September 1993, the IOC awarded Sydney the right to host the Olympic Games in the year 2000. The Olympic Games were held between 15 September and 1 October 2000, and the Paralympic Games between 18 and 29 October. In order to secure the Olympic Games for Sydney, the New South Wales (NSW) Government was required to give an unqualified guarantee that the State would underwrite the Olympic budget. The Government had a responsibility, therefore, to maintain close oversight of the planning for the Olympic Games and implementation of those plans to ensure that essential Olympic facilities were provided on time and within reasonable costs and that the Sydney 2000 Olympic Games were successful.
All capital investments were made by the NSW Government. Three support and coordination authorities with power to oversee key aspects were established. One was the Olympic Road and Transport Authority (ORTA), the other the Olympic Coordination Authority (OCA), which was in charge of all construction, and lastly another one was the Olympic Security Demand Centre (OSCC). The OCA had the responsibility of coordinating the operational planning and management for those areas in Sydney which fell outside specific Olympic venues, areas collectively known as the Urban Domain.

At the time the Sydney Organising Committee for the Olympic Games (SOCOG) was established, four government ministers and five separate agencies were taking on the NSW Government's Olympic responsibilities. In 1995, action was taken to simplify the management structures. At the end of June 1994, the OCA was formed. The main tasks of the OCA were to deliver venues for the Olympic and Paralympic Games and to coordinate all government involvement regarding Olympic services and programmes needed (OCA 2002, 29). The complexity of this project can be seen in the territories to be coordinated. The OCA was responsible for implementing the planning, redevelopment and management strategies of the 760-hectare Homebush Bay area. It was also responsible for the delivery of new sporting and recreation facilities and venues at Homebush Bay, Penrith Lakes, Blacktown, Bankstown, Horsley Park, Ryde and Cecil Park, which were used during the staging of the Olympic and Paralympic Games (NSW 2000, 8). Following the successful implementation by the OCA, in 2001 a new agency was developed, the Sydney Olympic Park Authority, which is dedicated to running the Olympic Park to this day (NSW, n. d.).

This new coordination model worked out well and was highly appreciated by the IOC. It had the following key elements: A Games "financially underwritten by the Government of New South Wales, a formal and explicit relationship between the Organising Committee, the NSW Government and the Commonwealth of Australia [...], strong state and Commonwealth government coordination mechanisms, backed as far as possible by legislation" (Girginov & Parry 2005, 237). Both, Athens 2004 and Beijing 2008 involved their governments in the financing and organising of the Games. However, the involvement of the government means using public money and a different ability to control cost overruns.

The starting point of cost estimates is difficult to define for Sydney 2000. The first plans (Tab. 16) found date back to September 1990, three years before the bid. A report to the Premier of NSW shows sometimes higher figures than the official report. This may be due to different planning in the pre-bid phase or it may be a strategically lower announcement of costs in the bid files. This point illustrates the difficulty in determining the best figures for this study.

While the OCA took responsibility for the construction of facilities for the Games, the funding of these facilities was a public and private sector undertaking
<figure><img src="image_17.png" /><figcaption>**Fig. 10** Organisations involved in the Sydney 2000 Olympic Games</figcaption></figure>

Source: State Chamber of Commerce (2001, 11)

<table><caption>**Table 16** Comparison of cost estimates for Sydney 2000 pre-bidding</caption><thead><tr><th></th><th>Sept. 1990 Review Committee</th><th>1993 Bid Limited</th></tr><tr><th></th><th colspan="2" style="text-align: center;">million AUD</th></tr></thead><tbody><tr><td>Velodrome</td><td>32</td><td>17.5</td></tr><tr><td>Olympic Stadium</td><td>113 - 182</td><td>190.4</td></tr><tr><td></td><td colspan="2" style="text-align: center;">Warm-up &amp; scoreboard + 22</td></tr><tr><td>Super Dome</td><td>63</td><td>94</td></tr></tbody></table>

Sources: Sydney Olympic Games Review Committee (1990); Sydney Olympics 2000 Bid Limited (1993)

(PPP). The 110,000-seat Olympic Stadium was finished in February 1999, three months ahead of schedule. The stadium was constructed and funded mainly by the private sector. The project cost was AUD 690m, with a government contribution of AUD 124m to the overall investments (figures are without price index adjustments) (NSW, 2000). As explained above, we consider only the public money share (the
NSW contribution) regarding cost overruns. For example, the Olympic Stadium (ANZ) had a construction price of USD 583m and a capacity of 83,500 spectators. After the Games were staged, the running track was removed from the stadium in Sydney and its capacity to meet local sporting needs and to be able to host as many events as possible was reduced (Alm 2012, 19).

The OCA and NSW Treasury first published estimates two years prior to the Games because then the cost estimates were quite reliable. Both state agencies published the estimated net impact of the Games on the State's budget in June 1998. AUD 1,650.5m according to the OCA (OCA, 1998) and AUD 1,287.5m according to the Treasury in NSW (both 1998 AUD). Both the OCA and Treasury updated their estimates each year, but unfortunately these updates were not available for the present study. The important fact here is that the estimate by the Treasury in NSW was AUD 363m less than that presented by the OCA, being the net cost of constructing the Sydney Showground at Homebush Bay. The NSW Treasury did not treat this expenditure as a cost of the Games. Although the OCA's 1998 estimate included this cost, its current report excludes it. The exclusion is consistent with the Audit Office's treatment of these costs in the report entitled Sydney Olympics 2000: Review of Estimates (tabled in Parliament in November 1994). What we learn here is the inconsistency and definition of what must be considered as Olympic-related or not.

Another interesting fact to be mentioned here is that the government did not release the true costs expected, even though it knew at least that costs were higher than announced, which is a typical index of the winner's curse during the bidding process, as the backing of the population is important. While according to the neo-institutionalist *PRINCIPAL-AGENT* theory, this situation is called "adverse selection". The bidders (the government and the OCA), which are the *AGENTS*, have an incentive not to provide full information (playing with information asymmetry) to the *PRINCIPAL* (taxpayers) in order to increase their probability of winning the bid (opportunistic behaviour of the *AGENT*). For further information, see the neo-institutionalism theory in the theoretical explanations part.

### 4.1.1 SOCOG Revenue

SOCOG was constituted under the Sydney Organising Committee for the Olympic Games Act 1993 in November 1993 and was to be wound up on or before 31 March 2002. In this time, it had the responsibility for the 2000 Olympic Games of:

1. organising accommodation and transport for competitors, team officials and personnel, and media personnel;
2. organising the sports programme, including preparing and operating all venues and facilities for the Games;

3. organising the cultural programme;

4. establishing a marketing programme, in consultation with the International Olympic Committee and the Australian Olympic Committee;

5. arranging and making available a host broadcaster and television and radio facilities and other information services.

SOCOG earned revenues mainly from sponsorship, ticketing, television rights and government funding, over its period of operation.

<table><caption>**Table 17** SOCOG revenue evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File (t-7) (000 AUD)</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 AUD)</th></tr></thead><tbody><tr><td>IOC Contribution</td><td>0% (802,570)</td><td>-8%</td><td></td><td></td><td>24%</td><td>32%</td><td>32%</td><td>41% (1,132,000)</td></tr><tr><td>Sponsorship</td><td>0% (488,450)</td><td>-8%</td><td></td><td></td><td>77%</td><td>84%</td><td>76%</td><td>40% (685,600)</td></tr><tr><td>Ticket Sales</td><td>0% (228,601)</td><td>-8%</td><td></td><td></td><td>122%</td><td>170%</td><td>173%</td><td>166% (607,100)</td></tr><tr><td>Licensing</td><td>0% (83,875)</td><td>-8%</td><td></td><td></td><td>-24%</td><td>-20%</td><td>-23%</td><td>-14% (72,100)</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></td><td></td><td></td><td></td><td></td><td>0%<sup>11</sup></td><td></td><td>137% (7,300)</td></tr><tr><td>Subsidies</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>0% (30,800)</td></tr><tr><td>Other</td><td></td><td></td><td></td><td></td><td></td><td>0%</td><td>-80%</td><td>744% (217,100)</td></tr><tr><td>Total</td><td>0% (1,603,496)</td><td>-8%</td><td></td><td></td><td>52%</td><td>67%</td><td>63%</td><td>72% (2,752,000)</td></tr></tbody></table>

Sources: OCA (2002); Sydney Olympics 2000 Bid Limited (1993); SOCOG (1994, 2001, 2002)

<footnote n="11">11 Explanation: The disposal of assets was mentioned for the first time explicitly only in t-1. So that is why it is 0%, as that is the starting value for this category and we measure the revenue overrun from this point onwards. This method is used in many other Olympic Games categories.</footnote>
The SOGOC revenues show a 72% rate of revenue overrun. There was no funding through a lottery and no donations were registered in favour of the OCOG. In almost all revenue categories more money was generated than originally stated in the Candidature File. The only exception is the licensing and merchandise category. In the ticket sales, disposal of assets and other categories, revenues reach up to more than twice the amount that was actually planned. High revenues from ticket sales is due to the fact that only a small proportion of tickets on free sale were available through a ticket lottery. Many tickets were held for various corporate customers, who paid high ticket prices (Nichols 1999). The drop in some categories from t-1 to final can be explained by the fact that the categories of disposal of assets, subsidies and others rose sharply at the final time or were calculated for the first time only one year before the Games. Where appropriate, these categories were not separated for the first time until the t-2 projection, or these sources of revenue were generated only at a later date, as it became clear that less revenue was expected in some categories (e.g. sponsorship).

<figure><img src="image_18.png" /><figcaption>Fig. 11 SOCOG revenue evolution of estimates and final</figcaption></figure>
## 4.1.2 SOCOG Expenditure

SOCOG already calculated a surplus in its Candidature File, so the budget was never balanced. Nevertheless, the revenues were always higher than the expenditures, even though the percentage information of the revenues seem to be lower than the expenditures at time t-3.

<table><caption>**Table 18** SOCOG expenditure evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File (t-7) (000 AUD)</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 AUD)</th></tr></thead><tbody><tr><td>Venues</td><td>0% (208,866)</td><td>-8%</td><td></td><td></td><td></td><td>89%</td><td>181%</td><td>163%</td><td>203% (632,200)</td></tr><tr><td>Workforce</td><td>0% (78,941)</td><td>-8%</td><td></td><td></td><td></td><td>-10%</td><td>-37%</td><td>-3%</td><td>-9% (71,500)</td></tr><tr><td>Technology</td><td></td><td></td><td></td><td></td><td></td><td>0%</td><td>25%</td><td>27%</td><td>28% (406,300)</td></tr><tr><td>Services</td><td>0% (151,304)</td><td>-8%</td><td></td><td></td><td></td><td>240%</td><td>301%</td><td>305%</td><td>103% (307,700)</td></tr><tr><td>Marketing & Events</td><td>0% (848,620)</td><td>-8%</td><td></td><td></td><td></td><td>-48%</td><td>-55%</td><td>-59%</td><td>-46% (455,400)</td></tr><tr><td>Administration & Coordination</td><td>0% (23,025)</td><td>-8%</td><td></td><td></td><td></td><td>343%</td><td>294%</td><td>253%</td><td>481% (133,800)</td></tr><tr><td>Other</td><td>0% (268,072)</td><td>-8%</td><td></td><td></td><td></td><td>107%</td><td>92%</td><td>87%</td><td>38% (371,200)</td></tr><tr><td>Total</td><td>0% (1,578,827)</td><td>-8%</td><td></td><td></td><td></td><td>53%</td><td>66%</td><td>63%</td><td>51% (2,378,100)</td></tr></tbody></table>

Sources: OCA (2002); Sydney Olympics 2000 Bid Limited (1993); SOCOG (1994, 2001, 2002)

In the venues, technology, services, administration & coordination and other categories, a cost overrun in the SOCOG budget was recorded, while less was spent than originally planned for workforce and marketing & events. The changes between the categories may well result from using different subcategories and belonging to different categories. In summary, there was a 51% total cost overrun of the OCOG expenditures.
<figure><img src="image_19.png" /><figcaption>**Fig. 12** SOCOG expenditure evolution of estimates and final</figcaption></figure>

### 4.1.3 Sydney 2000 Non-OCOG Costs

SOCOG planned in its Candidature File renovations and new construction of the Olympic Stadium, the multipurpose hall, the velodrome and the Olympic Village. The table above shows only the government's public expenditure. The total cost overruns are calculated on the basis of absolute figures. This means that the velodrome, which has high cost overruns, counts less when looking at all costs of venues in our sample. After all, weighted by the costs of each venue, the government had total cost overruns of 56% relatively to the promises in the Candidature File.

The costs of the swimming pool were estimated quite well as, in the end, they were 6% below the estimates. However, as explained above, the costs for the swimming pool were not declared until two years before the Games were staged. To remind the reader of our method: the table above shows for the swimming pool 0% at t-2, because it was first mentioned then. For the calculation of the overall 56% cost overrun in Sydney between t-7 and final, the nominal costs of the swimming pool were considered (final) and AUD 0 were put into t-7. Thus the overall percentage reflects the cost overruns in the full amount of the swimming pool.
<table><caption>**Table 19** Sydney 2000 non-OCOG costs evolution of estimates and final from public resources</caption><thead><tr><th>Categories</th><th>Candidature File (t-7) (000 AUD)</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 AUD)</th></tr></thead><tbody><tr><td>Olympic Stadium</td><td>0% (340,826)</td><td></td><td></td><td></td><td></td><td>-60%</td><td>-62%</td><td>-61% (131,600)</td></tr><tr><td>Swimming Pool</td><td></td><td></td><td></td><td></td><td></td><td>0%</td><td></td><td>-6% (218,800)</td></tr><tr><td>Multipurpose Hall</td><td>0% (81,275)</td><td></td><td></td><td></td><td></td><td>106%</td><td>81%</td><td>75% (142,400)</td></tr><tr><td>Velodrome</td><td>0% (6,631)</td><td></td><td></td><td></td><td></td><td>563%</td><td>539%</td><td>535% (42,100)</td></tr><tr><td>Olympic Village</td><td>0% (81,275)</td><td></td><td></td><td></td><td></td><td>127%</td><td></td><td>157% (209,200)</td></tr><tr><td>IBC/MPC</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Total</td><td>0% (510,008)</td><td></td><td></td><td></td><td></td><td>43%</td><td>-26%</td><td>56% (797,785)</td></tr></tbody></table>

Sources: NSW (2002); OCA (1999, 2002); Sydney Olympics 2000 Bid Limited (1993); The Audit Office of NSW (1999, 2002)

<figure><img src="image_20.png" /><figcaption>**Fig. 13** Sydney 2000 non-OCOG cost evolution of estimates and final from public resources</figcaption></figure>
The reasons for the increase in costs from the Australian government were (The Audit Office of NSW 1998, 12):

1. the bid was primarily concerned with a successful bid outcome rather than with detailed planning for the delivery of the Games. In this sense, the assumptions within the bid estimates, when measured against current understanding and knowledge, were superficial,

2. improved understanding of the task. Agencies concerned with planning for the Games acquired a greater appreciation of the complexity and extent of the task,

3. estimates took on several changes in their assumptions. The substantial increase in the transport estimate, starting from that included in the bid estimates for example, came about as a result of changed circumstances and assumptions which expanded the role and costs to the government,

4. the number of contests and venues increased,

5. the requirements and configuration of venues changed,

6. the experience of the Atlanta Games resulted in the establishment of new organisations, such as the Olympic Roads and Traffic Authority to coordinate and plan the delivery of transport.

## 4.2 Salt Lake City 2002

All of the Olympic Games in the United States of America have not heavily relied on the support of public money. The highest public support reported was for Lake Placid in 1980, with a share of 50% of the direct costs. Salt Lake City 2002 was estimated to be 30% of the total direct costs. Finances were shared by Utah state agencies (8%) and the Salt Lake City local government (4%) and 18% from the federal government (Government Accountability Office (GAO) 2001, 11). However, this money was not all spent on capital investments, but also on transport and security. Only 8% of the governmental money was spent on infrastructure, namely USD 27m on constructing roads to the venues.

Salt Lake City created an “Olympic Opportunities Planning” office. Even though the US Olympic Games should not be financed by public money, the US federal government played a critical role in the staging of the Games. The Congress approved more than USD 240m between 1998 and 2001 for direct Olympic and Paralympic activities. In 2002, President Bush added an additional USD 116m (SLOC 2002b, 9). Fig. 14 shows how the money (projected 2001) was spent. The chart clearly shows that venue building and construction was mostly not paid by
public money. However, according to Department of Transportation officials, the "construction of the Snowbasin and Winter Sports Park access roads, which are to provide access to the downhill skiing, ski jump, bobsled, and luge venues for the 2002 Olympic Winter Games, would not have been possible, nor would they have been built, without the approximately USD 15m specifically designated by Congress" (GAO 2000, 49).

<figure><img src="image_21.png" /><figcaption>**Fig. 14** Total direct cost for projects and activities related to planning and staging the 2002 Olympic and Paralympic Winter Games in Salt Lake City</figcaption></figure>

Source: GAO (2001, 13); Hopkins (2002, 54)

As of two years before the Games, the federal government planned to provide about USD 1bn in federal funding and support to prepare Salt Lake City for the 2002 Olympic Winter Games. Most of this was provided primarily to develop, build and complete major highway and transit improvement projects (GAO 2000, 40). It is debatable whether these projects were really needed for the Olympic Games or if free riding or opportunism helped to get additional funding for the city and state (see our reflections at the end of this study).
## 4.2.1 SLOC Revenue

According to the IOC's Host City Contract for the 2002 Olympic Winter Games, Salt Lake City and the United States Olympic Committee (USOC), not the federal government, were responsible for organising the Games. The contract states, in part, that Salt Lake City, the Salt Lake Organising Committee (SLOC) and USOC would be jointly responsible for all commitments concerning the organisation and staging of the Games, with the exception of financing the Games. Financing the Games was the responsibility of both Salt Lake City and the Salt Lake Organising Committee (SLOC). In addition, organisers stated that they were dedicated to hosting the Games with revenue from private sources (GAO 2000, 44).

SLOC's revenue statement shows that it was able to achieve revenue overruns in almost all categories. The exception here is the licensing and merchandise category. In addition, no revenue was generated by an Olympic lottery as one was never created. Overall, Salt Lake City was able to achieve its revenue in all areas. In ticket sales, proceeds from donations, the disposal of assets, subsidies from the government, and the category "other" revenues more than doubled. The percentage for donations and subsidies was so high because only a very small amount was set out in the Candidature File for conservative reasons. The high changes in the estimates in t-4 and t-3 are due to a different categorisation. Overall, the organisation's commission increased its total revenue by 119%.

<table><caption>**Table 20** SLOC revenue evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File (t-8)<br>(000 USD)</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<br>(000 USD)</th></tr></thead><tbody><tr><td>IOC<br>Contribution</td><td>0%<br>(360,970)</td><td>34%</td><td></td><td>36%</td><td>28%</td><td></td><td></td><td>23%<br>(443,340)</td></tr><tr><td>Sponsorship</td><td>0%<br>(358,031)</td><td>95%</td><td></td><td>94%</td><td>57%</td><td></td><td></td><td>89%<br>(614,771)</td></tr><tr><td>Ticket Sales</td><td>0%<br>(95,659)</td><td>44%</td><td></td><td>18%</td><td>100%</td><td></td><td></td><td>112%<br>(202,568)</td></tr><tr><td>Licensing</td><td>0%<br>(46,095)</td><td>8%</td><td></td><td>15%</td><td>-41%</td><td></td><td></td><td>-28%<br>(33,200)</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>0%<br>(2,305)</td><td></td><td></td><td>3643%</td><td></td><td></td><td></td><td>2072%<br>(50,070)</td></tr><tr><td>Disposal of<br>Assets</td><td>0%<br>(5,788)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>315%<br>(24,004)</td></tr></tbody></table>
<table><thead><tr><th>Categories</th><th>Candidature File (t-8)<br>(000 USD)</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<br>(000 USD)</th></tr></thead><tbody><tr><td>Subsidies</td><td>0%<br>(34,576)</td><td></td><td></td><td>0%</td><td></td><td></td><td></td><td>1540%<br>(567,000)</td></tr><tr><td>Other</td><td>0%<br>(16,110)</td><td>45%</td><td></td><td>2776%</td><td>3380%</td><td></td><td></td><td>382%<br>(77,603)</td></tr><tr><td>Total</td><td>0%<br>(919,534)</td><td>51%</td><td></td><td>110%</td><td>96%</td><td></td><td></td><td>119%<br>(2,012,556)</td></tr></tbody></table>

Sources: Salt Lake City Bid Committee (1994); SLOC (n. d., 2002a)

<figure><img src="image_22.png" /><figcaption>Fig. 15 SLOC revenue evolution of estimates and final</figcaption></figure>

## 4.2.2 SLOC Expenditure

The costs for venues, workforce and technology were decentralised in the Salt Lake City Candidature File in the other categories. These categories were first recorded in its second budget in 1998. Also, four years before the Olympic Winter Games, a small amount of workforce cost was stated, which was probably part of the administration category, which led to such a high cost overrun in the workforce category. SLOC had to pay an early rent for the sports facilities, which becomes apparent in the total costs. In general, many categories had a cost underrun, which is nevertheless overshadowed by the cost overrun of the workforce and services
categories, which is why the SLOC ultimately had a cost overrun of 114%. The services category had such a high cost overrun because “sustainability” was accounted for the first time and was only placed in this category for the final budget. Security costs, also accounted in the services category, dramatically increased due to higher safety standards after 9/11.

<table><caption>**Table 21** SLOC expenditure evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File<br>(t-8)<br>(000 USD)</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<br>(000 USD)</th></tr></thead><tbody><tr><td>Venues</td><td></td><td></td><td></td><td>0%</td><td></td><td></td><td></td><td>-41%<br>(211,796)</td></tr><tr><td>Workforce</td><td></td><td></td><td></td><td>0%</td><td></td><td></td><td></td><td>702%<br>(259,060)</td></tr><tr><td>Technology</td><td></td><td></td><td></td><td>0%</td><td></td><td></td><td></td><td>-22%<br>(247,379)</td></tr><tr><td>Services</td><td>0%<br>(107,000)</td><td></td><td></td><td>-17%</td><td></td><td></td><td></td><td>712%<br>(869,124)</td></tr><tr><td>Marketing<br>&amp; Events</td><td>0%<br>(213,202)</td><td></td><td></td><td>19%</td><td></td><td></td><td></td><td>-23%<br>(163,982)</td></tr><tr><td>Administration<br>&amp; Coordination</td><td>0%<br>(187,979)</td><td></td><td></td><td>-9%</td><td></td><td></td><td></td><td>-51%<br>(92,039)</td></tr><tr><td>Other</td><td>0%<br>(411,353)</td><td></td><td></td><td>-16%</td><td></td><td></td><td></td><td>-69%<br>(126,532)</td></tr><tr><td>Total</td><td>0%<br>(919,534)</td><td></td><td></td><td>70%</td><td></td><td></td><td></td><td>114%<br>(1,969,912)</td></tr></tbody></table>

Sources: Salt Lake City Bid Committee (1994); SLOC (1998, 2002a)

A potential reason for cost overruns according to Mitt Romney (CEO of SLOC) was IT, which increased a lot for the Olympic Games. Not only in terms of measuring 1000/s, but providing results instantaneously around the world. In order to reduce the costs, the SLOC downsized many associated programmes around the Games and thus managed to stay within the projected budget (GAO 2001, 54).
<figure><img src="image_23.png" /><figcaption>**Fig. 16** SLOC expenditure evolution of estimates and final</figcaption></figure>

### 4.2.3 Salt Lake City 2002 Non-OCOG Costs

The analysis of costs is difficult in this case, because Salt Lake City applied for the Olympic Winter Games 1998. Thus, many capital investments were started during the bidding process for the first bid (1989-1991), and venues were completed in 1995, which is the year when Salt Lake City was awarded the 2002 Games. Therefore, the bid book we took as our base does not mention venues such as the Main Media Centre or the Delta Centre (Ice Arena) because they were already completed. Almost 50% of the capital investments for venues needed to stage the 2002 Winter Games were therefore spent for the first bid to get the Games in 1998 (Salt Lake City Bid Committee 1994).

Another difficulty was the collection of the overall costs of the Games for all involved agencies. There were representatives from about 27 federal agencies involved in preparing Salt Lake City to stage the Games (GAO 2000, 45).

In Salt Lake City, cost overruns are also based on changes of the master plan during the preparations. For example, the SLOC anticipated 9,000 media for the Games. Salt Lake County had an existing venue, but began an expansion of the Main Media Centre (MMC) in 1999 (SLOC 1999, 36).

Our attempt to breakdown each venue that is in our “basket” was highly supported by Fay (2018) (Professor SUNY Cortland, USA) and COO of SLOC Fraser
Bullock). We found that all venues are still being used in 2018 and virtually all were in place well before the Games in 2002. Some were repurposed for the 2002 Olympic and Paralympic Winter Games and then put back in original use (e.g. Rice Eccles Stadium at the University of Utah used for Opening and Closing Ceremonies and the Salt Palace Convention Centre used for the IBC/MPC for the Games in downtown Salt Lake City). The Rice Eccles Stadium (Olympic Stadium) was expanded in 1998 to 56,000 seats, and it has been reduced back to 46,178 seats today. The costs for that stadium were only USD 67m (Alm 2012, 105).

Other venues that were built for the Games all remain in use still today and are managed by the Utah Olympic Legacy Foundation (e.g. the ski jumps and bob sled/ luge/skeleton run at Utah Olympic Park; the Olympic Oval (speed skating); and Soldier Hollow Cross Country & Biathlon Centre). The Olympic and Paralympic Village at historic Ft. Douglas is now used as residence halls for the University of Utah. What is unique to Salt Lake is its vision in 1989 to fund these venues regardless of whether or not the city was ultimately awarded an Olympic bid (Fay 2018). And this is what happened, as Salt Lake did not get the Games for 1998. This means that the venue costs and their displayed cost overruns cannot be counted as Olympic costs, or at least it is difficult to calculate cost overruns for the 2002 Games when venues already existed during the bid.

Due to few public investments, little data were available on the Salt Lake City venues in our “basket” for this study. Therefore, we also used some less trustworthy sources, such as newspapers, to triangulate the figures we obtained. Fay (2018) conducted comprehensive research from public sources such as newspapers (Salt Lake City Tribune and the Deseret News) and some other articles. These sources were double-checked whenever possible by using several newspapers and then compared to the data we gathered from the Organising Committee.

SLOC used a public-private partnership model that involved a combination of state (public), non-profit (University of Utah) and private funding in order to build out the Games and then to manage many of these venues afterwards. For example, the Utah Olympic Park is currently undergoing a major upgrade and expansion.

The table 22 considers the Ice Sheet Ogden (curling) as an “Ice Stadium” because it incurred higher construction costs than the Olympic Oval and it was considered in the bid book, thus we had a starting point. COO Fraser Bullock stressed that the Delta Centre (Ice Stadium for figure skating) was built for an NBA basketball team, the Utah Jazz. It was not built for the Olympic Games, and only USD 2 million was paid by SLOC for rent. Overall, this research found that much of the construction in Utah would have happened without the Games and should not be counted as Olympic costs.
<table><caption>**Table 22** Salt Lake City 2002 non-OCOG cost evolution of estimates and final from public resources</caption><thead><tr><th>Categories</th><th>Candidature File (t-8)<br>(000 USD)</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<br>(000 USD)</th></tr></thead><tbody><tr><td>Olympic<br>Stadium</td><td>0%<br>(9,141)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>250%<br>(32,000)</td></tr><tr><td>Sliding<br>Centre</td><td>0%<br>(26,771)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>-20%<br>(21,493)</td></tr><tr><td>Ice Stadium</td><td>0%<br>(3,918)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>53%<br>(6,000)</td></tr><tr><td>Olympic<br>Village</td><td>0%<br>(54,848)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>86%<br>(102,000)</td></tr><tr><td>IBC/MPC</td><td>0%<br>(104,473)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>-11%<br>(93,000)</td></tr><tr><td>Total</td><td>0%<br>(199,151)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>28%<br>(254,493)</td></tr></tbody></table>

Sources: Fay (2018); Roche (1994); Salt Lake City Bid Committee (1994); SLOC (2001)

<figure><img src="image_24.png" /><figcaption>**Fig. 17** Salt Lake City 2002 non-OCOG cost evolution of estimates and final from public resources</figcaption></figure>
## 4.3 Athens 2004

Athens was selected by the IOC to host the Olympic Games on 5 September 1997 in Lausanne, where the Host City Contract between the IOC and the City of Athens was signed. Regarding planning and cost estimates, it is important to note that Athens had unsuccessfully bid for the Olympic Games of 1996, which coincided with the 100th anniversary of the modern Olympic Games. Thus, the bidding and planning started nine years beforehand. However, the true preparation effort intensified from 2000 onwards with great time pressure.

Apart from Athens, another four Olympic cities – Thessaloniki, Volos, Patras and Heraklion – hosted football matches. In Athens, two large complexes of athletic venues hosted most of the events of the Olympic Games 2004: the Olympic Athletic Centre of Athens and the Hellinikon Olympic Complex. The Games events were held in 32 venues, of which 18 were newly constructed, 12 were renovated and only 2 were temporary facilities. This put a high investment burden on Athens (Foundation for Economic & Industrial Research (IOBE) 2015, 28).

While the government took the responsibility for the construction of the sports venues for the Games, their funding was a public and private sector undertaking (Kasimati 2015, 169). The financing of the projects for the Athens Olympic Games was finally mainly covered by the State Budget (Public Investment Programme and Ordinary Budget) and by the revenues of the Athens 2004 Organising Committee for the Olympic Games (ATHOC). The construction of the Olympic Village was financed by the Worker's Housing Organisation (OEK). A fourth source of financing, which is, however, very small compared with the other sources, is the private sector, as some Olympic projects were self-financed (IOBE 2015, 43).

The Olympic venues for the Olympic Games in Athens 2004 were financed by several authorities:

1. Ministry of Environment, Physical Planning and Public Works (YPEHODE),

2. General Secretariat for the Olympic Utilisation (Ministry of Culture),

3. General Secretariat of Sports,

4. Special Service for Public Works.

The next figure shows how many ministries were involved.
<figure><img src="image_25.png" /><figcaption>**Fig. 18** Expenditure for the preparation of the 2004 Olympic Games by Ministry
Source: Ministry of Finance quoted by IOBE (2015, 48)</figcaption></figure>

Regarding to the allocation of expenditure by Ministry, the cumulative share of the Ministry of Culture and of the former YPEHODE reached almost 80% of the total expenditure. However, Panagiotopoulou (2014, 177) speaks of three ministries involved in the financing of the Olympic works: the YPEHODE, the Ministry of Culture and the Ministry of Transport.

There is controversy about the usefulness of infrastructural development. On the one hand, great infrastructure projects which had developed only slowly for years like the new subway, bypasses and the future major airport received great impetus from the pressing date of the Olympic Games. On the other hand, however, there is the threat of irreversible planning errors due to time pressure or infringements of social principles by special regulations (Lenskyj 2000).

It is important to note that according to the OECD (n. d.):

"Athens is benefiting from investments for the 2004 Olympic Games but it needs clear strategic planning to take advantage of the opportunities that globalisation and eastward expansion of the European Union will bring. Organising the Olympic Games has proved to be a unique challenge not only for Greece's capital city but for the entire national administration. [...] Preparations for the Olympic Games in August
2004 and financing from EU Community Support Funds have boosted investment in the hotel sector, year-round sports facilities and a modern region-wide transport network. This includes a brand new international airport, urban highways and ring roads to decrease congestion, upgraded rail links, a new metro, a non-polluting bus fleet, and tramway lines which connect the city centre and the suburbs. A programme to enhance architectural heritage and environmental assets has transformed central Athens and the area around the Acropolis. Like Barcelona, Athens now boasts easy access to a landscaped coastal zone at Faliron which offers a wide range of leisure and sports activities."

### 4.3.1 ATHOC Revenue

The Athens 2004 Organising Committee for the Olympic Games (ATHOC) – with the distinctive name “Athens 2004 S.A.” – was a private legal entity with the legal form of an anonymous society. The entity was established in March 1998 with Law 2598/98, with the Greek government as the sole shareholder, and was dissolved in May 2005. Thus the Greek government was responsible for supervising Athens 2004 S.A., through an inter-ministerial committee. ATHOC, according to the Host City Contract, was responsible for planning and coordinating the preparation and the management of the Olympic and Paralympic Games. Among its main responsibilities was to ensure that the construction of the facilities associated with the Games complied with the applicable specifications and time schedules, in accordance with the regulations set out by the IOC (IOBE 2015, 31).

Looking at the ATHOC revenue, it is noticeable that almost all categories of revenue were included in the Candidature File. Only subsidies from the government were added the first time in the final budget, thus it shows a 0% change. In almost all categories, ATHOC achieved a revenue overrun. The TOP Sponsorship and other categories more than doubled their revenue. Furthermore, the number of national sponsors was low, but these sponsors contributed with higher contributions. The generation of lottery revenues was problematic. Originally a lottery was to be offset up for the Olympic Games. But this lottery was never set up, yet the Greek state was obliged to pay a share to ATHOC under the contractual arrangements. Similarly, the Greek state had to provide funding for missing revenue at the end of the Games in order to pay all the costs incurred. However, this contribution by the state was paid back by the profit at the end of the Games by ATHOC. In summary, ATHOC generated 51% more revenue than it had forecast. The major element for increasing revenue was the foreign exchange gains as the foreign exchange rate (USD to euro) turned favourably to the OCOG.
<table><caption>**Table 23** ATHOC revenue evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 EUR)</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 EUR)</th></tr></thead><tbody><tr><td>IOC Contribution</td><td>0% (560,360)</td><td></td><td></td><td>49%</td><td>45%</td><td>37%</td><td>33%</td><td>3% (578,700)</td></tr><tr><td>Top Sponsorship</td><td>0% (104,188)</td><td></td><td></td><td>156%</td><td>162%</td><td>154%</td><td>145%</td><td>117% (225,800)</td></tr><tr><td>National Sponsorship</td><td>0% (267,509)</td><td></td><td></td><td>-15%</td><td>-1%</td><td>0%</td><td>-4%</td><td>16% (310,900)</td></tr><tr><td>Ticket Sales</td><td>0% (187,725)</td><td></td><td></td><td>15%</td><td>7%</td><td>4%</td><td>0%</td><td>3% (194,000)</td></tr><tr><td>Licensing</td><td>0% (72,274)</td><td></td><td></td><td>-10%</td><td>11%</td><td>15%</td><td>11%</td><td>15% (82,900)</td></tr><tr><td>Lotteries</td><td>0% (220,577)</td><td></td><td></td><td>21%</td><td>17%</td><td>14%</td><td>10%</td><td>28% (282,500)</td></tr><tr><td>Donations</td><td>0% (18,773)</td><td></td><td></td><td>21%</td><td>17%</td><td>-43%</td><td>-45%</td><td>-99% (200)</td></tr><tr><td>Disposal of Assets</td><td>0% (18,773)</td><td></td><td></td><td></td><td>-6%</td><td>175%</td><td></td><td>7% (20,000)</td></tr><tr><td>Subsidies</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>0% (191,400)</td></tr><tr><td>Other</td><td>0% (58,195)</td><td></td><td></td><td>-2%</td><td>127%</td><td>117%</td><td>320%</td><td>574% (392,400)</td></tr><tr><td>Total</td><td>0% (1,508,374)</td><td></td><td></td><td>30%</td><td>43%</td><td>39%</td><td>34%</td><td>51% (2,278,800)</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b)
<figure><img src="image_26.png" /><figcaption>**Fig. 19** ATHOC revenue evolution of estimates and final</figcaption></figure>

### 4.3.2 ATHOC Expenditure

The total expenditure overruns were quite stable from 2000 onwards at 30%. However, a year before the Games, we can observe large changes. Marketing & Events fourfold, but other expenditures were cut down tremendously. The reason might be that the categorisation was not consistent at t-1 in comparison to the other cost estimates.

ATHOC had an overall cost overrun of 30%. The categories workforce and technology weren't included in the candidature file respectively they added them into other categories and decentralised them. Actually the paid staff costs were all the time decentralised. The differences in the budget projection one year prior to the Games occur due to the inconsistency in illustrating the costs. These changes can also be explained by the inconsistent presentation of the budget. One of the reasons the expenditure for marketing and events increased was that ATHOC planned at a late stage to organise a torch relay all around the world in all former Olympic cities, returning back to its origins in Athens.
<table><caption>**Table 24** ATHOC expenditure evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 EUR)</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 EUR)</th></tr></thead><tbody><tr><td>Venues</td><td>0% (532,108)</td><td></td><td></td><td>-53%</td><td>-54%</td><td>-64%</td><td>-65%</td><td>-46% (287,200)</td></tr><tr><td>Workforce</td><td></td><td></td><td></td><td>0%</td><td>200%</td><td>82%</td><td></td><td>179% (55,400)</td></tr><tr><td>Technology</td><td></td><td></td><td></td><td>0%</td><td>4%</td><td>-9%</td><td>-12%</td><td>-21% (309,900)</td></tr><tr><td>Services</td><td>0% (206,498)</td><td></td><td></td><td>-50%</td><td>-8%</td><td>-18%</td><td></td><td>23% (253,900)</td></tr><tr><td>Marketing & Events</td><td>0% (300,361)</td><td></td><td></td><td>57%</td><td>64%</td><td>63%</td><td>238%</td><td>52% (457,400)</td></tr><tr><td>Administration & Coordination</td><td>0% (170,830)</td><td></td><td></td><td>28%</td><td>80%</td><td>92%</td><td>106%</td><td>42% (243,000)</td></tr><tr><td>Other</td><td>0% (298,577)</td><td></td><td></td><td>70%</td><td>55%</td><td>74%</td><td>-57%</td><td>21% (361,000)</td></tr><tr><td>Total</td><td>0% (1,508,374)</td><td></td><td></td><td>30%</td><td>43%</td><td>39%</td><td>34%</td><td>30% (1,967,800)</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996); ATHOC (2003, 2004, 2005a, b)

<figure><img src="image_27.png" /><figcaption>**Fig. 20** ATHOC expenditure evolution of estimates and final</figcaption></figure>
ATHOC took over the services and supply of goods for and on behalf of the Greek State for EUR 303.8m and received subsidies of EUR 180.2m. The deficit of EUR 123.6m was covered by ATHOC's profit, which then closed its accounts with a final surplus of EUR 7m (all in 2005 euros, ATHOC 2005a).

### 4.3.3 Athens 2004 Non-OCOG Costs

The implementation of construction projects was the responsibility of the Greek government. From 2000 onwards, ATHOC signed memoranda of understanding with each ministry separately, aiming to accelerate the execution of projects that had fallen behind schedule (IOBE 2015, 32).

According to the state budget reports, the state financing for the projects classified as Olympic came exclusively from the domestic resources of the Public Investment Programme (PIP), without financing from EU funds. The list of projects financed by the PIP includes the construction of new (and the upgrade of existing) sports facilities for staging sports events, along with auxiliary equipment and infrastructure. The expenditure for the procurement of equipment for the police and other government agencies to ensure security during the Games is also included here. The state financing also includes the construction cost of the transport network (technical studies, land expropriation, road infrastructure) necessary for connecting the sports and other facilities with the main road network of Athens. Public funds were also used to improve access to historical and cultural sites. This study concentrates solely on the sports venues as defined in the "basket". This means that cost overruns in the many other projects are not covered in the figures presented below.

In addition, the PIP includes the contribution of EUR 282.5m from the Greek State to the ATHOC budget for the preparation and staging of the Olympic and Paralympic Games, as per a decision by the inter-ministerial committee, DESOP. The subsidy aimed to cover the gap in the ATHOC budget from the cancellation of plans for an "Olympic lottery", which had stirred acute political controversy (IOBE 2015, 44). These funds are displayed above (ATHOC revenues) in the "Lottery" category and not in "Subsidies".

Additionally, on the occasion of the 2004 Olympic Games, the Greek State financed a substantial number of relatively low-scale projects, compared with the other categories, aiming to upgrade existing infrastructure (e.g. hospitals in Athens, public transport) and perform repair and reconstruction work in many areas of Athens (e.g. creating pedestrian zones, repairing roads and avenues, performing work on public parks, planting trees and restoring buildings). The Greece 2004 programme is also included here, with regional projects (e.g. upgrade of sports
facilities, cultural initiatives). The EU indirectly funded general infrastructure that was useful for the Games, but nothing directly related. A large programme of infrastructure works and industry development projects (a new airport, metro, tram, suburban railway, motorway system and upgraded road network) was implemented in the greater Athens area, and part of this was funded through the Community Support Framework (CSF) of the European Union for the general improvement of the city's infrastructure (Kasimati 2015, 172).

The following table and figure shows the changes of costs from the candidature to the final costs.

<table><caption>**Table 25** Athens 2004 non-OCOG cost evolution of estimates and final from public resources<fnref n="12" /></caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 EUR)</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 EUR)</th></tr></thead><tbody><tr><td>Olympic Stadium</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>(398,900)</td></tr><tr><td>Swimming Pool</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>(24,243)</td></tr><tr><td>Multipurpose Hall</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>(35,836)</td></tr><tr><td>Velodrome</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>IBC/MPC</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>(200,732)</td></tr><tr><td>Olympic Village</td><td>0% (395,646)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>-27% (287,900)</td></tr><tr><td>Shooting Centre</td><td>0% (13,188)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>328% (56,389)</td></tr><tr><td>Equestrian Centre</td><td>0% (21,581)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>439% (116,246)</td></tr><tr><td>Tennis Court</td><td>0% (10,790)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>418% (55,911)</td></tr><tr><td>Football Stadium</td><td>0% (28,774)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>97% (56,724)</td></tr><tr><td>Weightlifting Hall</td><td>0% (11,390)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>332% (49,240)</td></tr><tr><td>Total</td><td>0% (481,370)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>29% (622,410)</td></tr></tbody></table>

Sources: Athens 2004 Olympic Bid Committee (1996), ATHOC (n. d.); Kasimati (2015), Panagiotopoulou (2014)

<footnote n="12">12 Additional venues were considered.</footnote>
The table includes absolute figures for those venues that had a lack of cost estimates in the candidature file. These absolute figures are intended simply to give an overview of the final costs according to the “basket” that we usually investigate. What is interesting is that the bidding committee did not plan to spend public resources on core Olympic venues. Due to the lack of data for our “basket”, we changed the components of the basket on one occasion, but kept the Olympic Village in it. Although the final costs of the other venues are available, these cannot be included in our calculations, because we have no bid book data about these venues. To present here a percentage for cost overruns, we changed our basket solely for Athens 2004. The basket contains the Olympic Village, the Shooting Centre, the Equestrian Centre, the Tennis Court, one Football Stadium and the Weightlifting Hall. Overall, it was only 29% more costly than planned. Unfortunately, no data could be found showing intermediate cost estimates.

According to other sources addressing cost overruns, both PricewaterhouseCoopers (2004, 22) and Panagiotopoulou (2014, 178) found similar cost overruns as we did, at around 25%. The table above shows different overruns by project. Almost all venues we considered had a cost overrun, with noticeably high cost overruns. Only the cost for the construction of the Olympic Village fell below the original plans. This explains the relatively low 29% overall cost overrun because the Village was so expensive that its weight on the total sum led to a moderate percentage.

<figure><img src="image_28.png" /><figcaption>**Fig. 21** Athens 2004 non-OCOG cost evolution of estimates and final from public resources</figcaption></figure>
From Athens 2004 we can learn two facts. Firstly, many venues were not considered, or at least the bidding committee thought to use existing facilities or 100% private resources to construct them. Secondly, there are differences and problems in differentiating the costs of the individual sports facilities. For example, the cost of the Olympic Stadium was estimated at EUR 23m, with the additional costs of aesthetic enhancement and functional change of around EUR 361m (Panagiotopoulou, 2014, 178; Pollalis 2006, 9).

When discussing cost overruns in Greece, an important factor is mentioned by Cartalis (2015). He argues that the land ownership pattern is important when areas are picked to serve as Olympic infrastructure. The existence of publicly owned land within the urban area facilitates the integration of Olympic projects (and related capital investments) into the city; on the contrary, the case of Athens 2004 showed a lack of such areas. That limited the potential for extensive urban regeneration projects and increased the financial burden of the public authorities, because the necessary expropriations usually incurred high costs, due to the elevated market demand for available areas. Finally, this caused time constraints because, for a long time, construction could not start.

This explains the second cost driving factor, which is time pressure. The need to accelerate the construction of the projects may have led to higher costs, compared to a hypothetical scenario, in which the allocation of the projects in the preparation period had been more even. In general, we can say that unpredictable and uncertain factors may generate delays in the project achievement – which is often the case in the building and construction industry. Then the project lags behind schedule and must be finished in a rush, which always means with extra costs.

Another reason is the change of plans, mostly for legal reasons. Many of them were related to public-private partnership agreements or to capacity changes to reduce the capacities (ATHOC, 2005b, 147). However, ATHOC President Gianna Angelopoulos-Daskalaki swiftly understood the importance that successful Olympic Games would have on the psyche of the Greek people. Her vision was that the success of the Olympic Games, the most high-profile and costly undertaking in Greece's recent history, would give the country a boost of confidence. This effect had not only a political aspect, but also a psychological parameter that had to reach the hearts and minds of people, both in a mental and a visual way. From the position of President of ATHOC, she understood that this could be achieved by building illustrious and impressive sports venues that would capture the spectator's eye in the short-term and still be there after the Olympic Games to remind the Greek people of the triumphant Athens 2004 Olympic Games. To this end, Angelopoulos-Daskalaki was instrumental in the decision of the Greek state to incorporate design excellence and signature architecture for the renovation of the main stadium (Pollalis 2006,
4). Thus, star architect Calatrava signed the contract in October 2001 for a direct commission for the design of works at the OAKA, so that the Games would have a highly aesthetic dimension and the “signature” of an international architect (Pollalis 2006, 5). All the costs for such undertaking could certainly not have been included in the initial budget. In a press conference, Minister Venizelos revealed that the total cost of the aesthetic unification and functional improvements of the OAKA complex would be EUR 235m, with the aesthetic unification alone being EUR 126m (Pollalis 2006, 9). Alm (2012, 105) puts the costs at USD 373m, which is all around the same dimension.

This is a good example of late planning. The Olympic Stadium roof was planned only in 2001 (t-3), the contract was signed at the end of 2002, and construction carried out from May 2003 to June 2004.

The last, but not least, important factor that caused cost overruns was the change in security in the aftermath of 9/11. It increased from roughly EUR 400m to EUR 1,100m after 9/11 (Cartalis 2015; Panagiotopoulou 2014, 177).

## 4.4 Turin 2006

According to law, two specific authorities were established with the aim of controlling the programme: the Torino Organising Committee (TOROC), a private foundation that was responsible for organising the Games, and Agenzia Torino 2006, a public body that was in charge of the implementation of the Olympic Programme (Bottero, Sacerdotti & Mauro 2012, 204).

The permanent infrastructure that had to be delivered for the 2006 Olympic Games was managed by Agenzia Torino 2006, which was a public body with the dual function of acting as general contractor for all the planned works and which bore responsibility for their timely completion. The works activities were subdivided into different categories, according to their role in the event and to their financial support. The major aim of these “connected works” was a general redevelopment of the “Olympic territories” that made it possible to use the Games as a unique opportunity for developing and promoting tourism, even long after the mega event. According to this aim, several lines of intervention were identified. They encompassed the development of the winter tourist areas, road infrastructure, sewer systems, aqueducts, sanitary systems, and so forth. The cost of the “connected” public works totalled USD 429m, of which USD 273m was financed by the government under Law 285/00 (Bondonio & Campaniello 2006, 3).
Moreover, the Piedmont Region, in an attempt to extend a positive spin-off from the Games to those greater regional areas not directly involved, adopted the “Regional Programme of Tourist and Sport Infrastructures – Piedmont 2006” (Art. 21 of the Regional Law 166/02). This initiative was called “Accompanying Public Works”, to which USD 388m was allocated. Of that figure, USD 202m was financed by the central government and the remaining USD 186m by the Piedmont Region from its own budget (Bondonio & Campaniello 2006, 3).

Accompanying works were funded by Law No.166/2002 and had the aim of extending the beneficial effects of the Olympic investments to the whole region, to gain advantages for the entire Piedmont system.

Turin understood the opportunity that hosting the Olympic Games could offer the city and region, and the Organising Committee explicitly adopted a model to attract investments by maximising private funding and minimising public money funding (Bondonio & Guala n. d.). The final total costs of investment amounted to USD 2,207m (at 2000 year prices), and according to Bondonio & Guala (n. d., 6):

1. 65% of the total funding was financed by the “Olympic Law” No. 285/00,

2. whilst the remaining 35% was financed by:

a. Turin City Council 3.5%,

b. the Region of Piedmont 2%,

c. the Inter-departmental Committee for Economic Planning (CIPE) 3.5%,

d. the National Public Corporation of Roads (ANAS) 5%,

e. the Turin-Aosta Valley Highway Corporation (ATIVA) 5%,

f. the Italian Corporation for the Frejus Tunnel (SITAF) 7%,

g. the Public Regional Agency in charge of Environmental Prevention and Protection (ARPA) 1%,

h. private investors 6%, and by

i. Agenzia Torino 2006 2%.

Here we see again that the wide spread of financing and involvement of different authorities make a full calculation of cost contributions difficult and, additionally, the various authorities may have had different aims regarding legacy.

According to Bondonio & Guala (n. d., 6) an large amount of construction work, equally distributed between Turin and the Alpine locations, 36% in the city, 64% in the valleys, and the related infrastructure was carried out on time. It should be noted that the sporting facility costs did not exceed more than 30% of the total cost.
### 4.4.1 TOROC Revenue

The revenues of the Organising Committee were not all provided in the details we needed. However, overall we can state a revenue overrun of 50% was reached one year before the Games.

<table><caption>**Table 26** TOROC revenue evolution of estimates</caption><thead><tr><th>Categories</th><th>Candidature File (t-8)<br>(000 EUR)</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</td><td>0%</td><td></td><td></td><td></td><td></td><td></td><td></td><td>43%</td></tr><tr><td>Contribution</td><td>(337,906)</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Sponsorship</td><td>0%<br>(197,112)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>103%</td></tr><tr><td>Ticket Sales</td><td>0%<br>(42,238)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>Licensing</td><td>0%<br>(32,852)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>192%</td></tr><tr><td>Lotteries</td><td>0%<br>(65,704)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>Donations</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>Disposal of<br>Assets</td><td>0%<br>(9,386)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>920%</td></tr><tr><td>Subsidies</td><td>0%<br>(56,318)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>N/A</td></tr><tr><td>Other</td><td>0%<br>(23,466)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>204%</td></tr><tr><td>Total</td><td>0%<br>(764,981)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>50%</td></tr></tbody></table>

Sources: Turin Bid Committee (1998); TOROC (2005)

The total of 50% contains all categories, as well as those not displayed here. The N/A data are included in “other” revenues. Based on the presentation TOROC gave to the IOC Executive Board, revenues were reduced to a few categories that were not congruent with those used in the Candidature File. The high amount in the disposal of assets category is due to a low and conservative assessment at the time of the application. As shown, we obtained data only from t-1 and therefore cannot display the final real revenue overrun. In particular, the ticket sales and merchandise profits became visible only after the Games. Similar to Athens 2004, TOROC also benefited from the foreign exchange rate from USD to euro.
<figure><img src="image_29.png" /><figcaption>Fig. 22 TOROC revenue evolution of estimates</figcaption></figure>

4.4.2 TOROC Expenditure

As the budget of TOROC was almost balanced at the end, it is no surprise that the expenditures were also higher than planned.

TOROC ended with total cost overrun of 58%. The highest cost overrun of more than 270% was achieved by the technology and other categories. But there were also categories for which savings were made. For example, 81% in the venues area and 21% in the sector of administration & coordination. For the period t-1, the others category was particularly high, as other categories such as services and administration & coordination were assigned there.
<table><caption>**Table 27** TOROC expenditure evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File (t-8) (000 EUR)</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 EUR)</th></tr></thead><tbody><tr><td>Venues</td><td>0% (281,588)</td><td></td><td></td><td></td><td></td><td></td><td>-49%</td><td>-81% (53,611)</td></tr><tr><td>Workforce</td><td></td><td></td><td></td><td></td><td></td><td></td><td>0%</td><td>10% (223,907)</td></tr><tr><td>Technology</td><td>0% (103,249)</td><td></td><td></td><td></td><td></td><td></td><td>145%</td><td>277% (389,055)</td></tr><tr><td>Services</td><td>0% (70,397)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>53% (107,735)</td></tr><tr><td>Marketing & Events</td><td>0% (89,170)</td><td></td><td></td><td></td><td></td><td></td><td>55%</td><td>79% (159,786)</td></tr><tr><td>Administration & Coordination</td><td>0% (187,725)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>-21% (148,747)</td></tr><tr><td>Other</td><td>0% (32,852)</td><td></td><td></td><td></td><td></td><td></td><td>1141%</td><td>279% (124,640)</td></tr><tr><td>Total</td><td>0% (764,981)</td><td></td><td></td><td></td><td></td><td></td><td>50%</td><td>58% (1,207,481)</td></tr></tbody></table>

Sources: Turin Bid Committee (1998); TOROC (n. d., 2005)

<figure><img src="image_30.png" /><figcaption>**Fig. 23** TOROC expenditure evolution of estimates and final</figcaption></figure>
### 4.4.3 Turin 2006 Non-OCOG Costs

The cost overruns for our selected venues show a moderate 20%.

<table><caption>**Table 28** Turin 2006 non-OCOG cost evolution of estimates and final from public resources</caption><thead><tr><th>Categories</th><th>Candidature<br>File (t-8)<br>(000 EUR)</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<br>(000 EUR)</th></tr></thead><tbody><tr><td><strong>Olympic<br>Stadium</strong></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Ski Jumping<br>Hill</td><td>0%<br>(37,156)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>-3%<br>(36,043)</td></tr><tr><td>Sliding<br>Centre</td><td>0%<br>(51,539)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>50%<br>(77,290)</td></tr><tr><td>Ice Stadium</td><td>0%<br>(94,688)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>-26%<br>(70,450)</td></tr><tr><td>Olympic<br>Village</td><td>0%<br>(91,092)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>147%<br>(224,732)</td></tr><tr><td>IBC/MPC</td><td>0%<br>(176,191)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>-25%<br>(131,810)</td></tr><tr><td>Total</td><td>0%<br>(450,665)</td><td></td><td></td><td></td><td></td><td></td><td></td><td>20%<br>(540,325)</td></tr></tbody></table>

Sources: Bottero et al. (2012); Turin Bid Committee (1998)

Turin used an existing stadium to stage the Ceremonies, so there were no extra construction costs. The sliding centre and Olympic Village had cost overruns of 50% and 147% respectively. The remaining venues were built at a lower cost than planned, so the ski jumping hill cost 3% less and the Ice Stadium and IBC/MPC both about 25% less.
<figure><img src="image_31.png" /><figcaption>**Fig. 24** Turin 2006 non-OCOG cost evolution of estimates and final from public resources</figcaption></figure>

**4.5 Beijing 2008**

On 13 July 2001 Beijing was chosen to host the 2008 Olympic Games. The Govern-
ment of the People's Republic of China promoted the Games and invested heavily
in new facilities and transport systems. Thirty-seven venues were used to host the
events, including 12 constructed specifically for use at the Games.

Overall the financial information for the Beijing Olympic Games is very limited.

**4.5.1 BOCOG Revenue**

From September 2005 to March 2009, the Audit Office of the Central Government
carried out a follow-up audit of the financial revenues and expenditures of the Bei-
jing Organising Committee for the Games of the XXIX Olympiad (BOCOG). The
National Audit Report (2009, 1) states that “based on the sum of actual receipts and
expenditures as of 15 March 2009, expected subsequent revenues, and expenditure
accounts remaining to be settled, the revenues of BOCOG will reach 20.5bn yuan,
an increase of 800m yuan over the budgeted amount, and its expenditures will reach 19.343bn yuan, slightly over budget. The surplus will thus exceed 1bn yuan”.

<table><caption>**Table 29** BOCOG revenue evolution of estimates and final</caption><thead><tr><th>Categories</th><th>Candidature File (t-8)<br>(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<br>(000 CNY)</th></tr></thead><tbody><tr><td>IOC<br>Contribution</td><td>0%<br>(8,300,350)</td><td></td><td></td><td></td><td></td><td></td><td>-15%</td><td>-25%<br>(6,196,782)</td></tr><tr><td>Top<br>Sponsorship</td><td>0%<br>(1,521,926)</td><td></td><td></td><td></td><td></td><td></td><td>85%</td><td>64%<br>(2,500,724)</td></tr><tr><td>National<br>Sponsorship</td><td>0%<br>(1,756,068)</td><td></td><td></td><td></td><td></td><td></td><td>507%</td><td>382%<sup>13</sup><br>(8,461,962)</td></tr><tr><td>Ticket Sales</td><td>0%<br>(1,638,997)</td><td></td><td></td><td></td><td></td><td></td><td>-24%</td><td>-22%<br>(1,282,556)</td></tr><tr><td>Licensing</td><td>0%<br>(819,499)</td><td></td><td></td><td></td><td></td><td></td><td>26%</td><td>66%<br>(1,359,217)</td></tr><tr><td>Lotteries</td><td>0%<br>(2,107,282)</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Donations</td><td>0%<br>(234,142)</td><td></td><td></td><td></td><td></td><td></td><td>-85%</td><td>-60%<br>(94,269)</td></tr><tr><td>Disposal of<br>Assets</td><td>0%<br>(936,570)</td><td></td><td></td><td></td><td></td><td></td><td>-88%</td><td>-73%<br>(254,252)</td></tr><tr><td>Subsidies</td><td>0%<br>(1,170,712)</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Other</td><td>0%<br>(538,528)</td><td></td><td></td><td></td><td></td><td></td><td>54%</td><td>-33%<br>(360,556)</td></tr><tr><td>Total</td><td>0%<br>(19,024,073)</td><td></td><td></td><td></td><td></td><td></td><td>25%</td><td>8%<br>(20,510,317)</td></tr></tbody></table>

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

The Olympic Games were very successful in selling merchandise. That can be seen in the immense increase of revenues to BOCOG, with 66% greater revenues than expected during the bidding. The Organising Committee also achieved 382% more income through national sponsorship. The lower income from the IOC contribution

<footnote n="13">13 The final figure of national sponsorships revenues was reduced by the royalties paid to IOC. Therefore, the royalties also do not appear in the OCOG expenditures, which changed the final figure “other”.</footnote>
can be explained by the fact that, until Beijing 2008, this IOC contribution was a percentage of the total TV revenue made. Many other categories received less than originally planned: ticket sales, donations, disposal of assets and other. In summary, BOCOG experienced 8% revenue overrun.

<figure><img src="image_32.png" /><figcaption>Fig. 25 BOCOG revenue evolution of estimates and final</figcaption></figure>

4.5.2 BOCOG Expenditure

As we have seen before, it seems to be a pattern that, one year before the Games, the expenditures explode and then come back at Games year due to intensive saving.

Overall, the expenditures for BOCOG were managed very well. On the one hand, BOCOG saved between 15% and 54% in many categories, such as venues, workforce, technology and others. But other categories had cost overruns of between 9% and 45%: services, marketing & events, administration & coordination. The high change in the “other” category is due to the royalties that were deducted directly from sponsorship revenues and therefore did no longer needed to be accounted in the final budget (see footnote 13). After all, all expenses resulted in a 4% cost overrun in the BOCOG budget.