Budapest drops 2024 Olympics bid

Los Angeles, Paris left as potential host cities

LONDON (CNNMoney) - And then there were two.

Budapest has abandoned its bid for the 2024 Summer Olympics, a move that leaves Los Angeles and Paris as the only potential host cities.

The decision was confirmed by a Budapest 2024 bid official, who said Hungary's capital city was pulling out because of a lack of political support for the project. Activists had collected hundreds of thousands of signatures from Hungarians who did not want to host the event.

There's one big reason support drained away: the high cost of hosting the Olympics.

"Many people are afraid that the cost would be immeasurable," Miklós Hajnal, one of the petition's organizers, told local media.

Budget concerns have led city after city to abandon their Olympic dreams in recent years. Rome and Hamburg, Germany, previously bailed on 2024. Stockholm and Krakow, Poland, pulled the plug on bids for the 2022 Winter Olympics, which were later awarded to Beijing.

An Olympic host city has to plan, pay for and construct massive sporting venues and infrastructure projects. Security costs can run into the billions of dollars. Thousands of hotel rooms must be built for athletes and tourists.

Most of it happens on the taxpayer dime -- with little discernible economic benefit. Researchers at Oxford's Saìˆd Business School estimate the cost overrun for the 2016 Summer Olympics in Rio de Janeiro was $1.6 billion.

Elected leaders have argued that ticket sales, construction jobs and increased tourism outweigh the costs. But economists say the real return on hosting the Olympics is not so rosy.

Montreal, host city of the 1976 Summer Games, provides perhaps the best example of the long-term cost.

Before the games, the mayor declared: "The Olympics can no more lose money than a man can have a baby." He was wrong. Gross cost overruns left the city with $1.5 billion of debt that wasn't paid off until 2006.

The Olympic stadium, known as the Big O, was turned into a ballpark and now sits largely idle. The citizens of Montreal took to calling it the Big Owe.

While Montreal is an extreme case, the Oxford researchers have found that spiraling costs are the norm.

"All Games, without exception, have cost overrun," they wrote in a 2016 paper. "The budget is more like a fictitious minimum that is consistently overspent."

The Montreal experience scared off potential host cities for 1984. Only one, Los Angeles, made a bid, and consequently was able to dictate terms to the International Olympic Committee.

It pursued a new model that relied heavily on private financing. Los Angeles also used existing stadiums as venues, erasing one of the largest costs associated with hosting the Olympics. The result? A profit.

Recent host cities have taken a different approach. Russia is said to have spent an incredible $50 billion on the 2014 Sochi Olympics. China spared no expense in hosting the 2008 Beijing Games.

In Rio, the most recent summer event host, venues built for the Games have already fallen into disrepair.

The International Olympic Committee knows it has a problem: The group is pursuing a set of reforms aimed at reducing the costs of bidding for and managing the Games.


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