Organizers of the 2026 Commonwealth Games are scrambling to find a new host, after the Australian state of Victoria pulled out, blaming escalating cost estimates which blew out by billions of dollars in just a few months.
(Bloomberg) — Organizers of the 2026 Commonwealth Games are scrambling to find a new host, after the Australian state of Victoria pulled out, blaming escalating cost estimates which blew out by billions of dollars in just a few months.
The price of hosting the event would be more than twice the economic benefit that it would generate, the Victoria government said in a statement Tuesday. The state, which is home to the city of Melbourne, only secured the bid to host the four-yearly event last April.
“What’s become clear is the cost of hosting those games in 2026 is not the A$2.6 billion ($1.8 billion) that was indicated,” Premier Daniel Andrews told reporters in Melbourne. “It is in fact at least A$6 billion and could be as high as A$7 billion, and I can’t stand here and say I have any confidence that would adequately fund these games.”
Commonwealth Games Australia Chief Executive Officer Craig Phillips said the government had “willfully ignored” recommendations to move events to purpose-built sports facilities in Melbourne, instead proceeding with “expensive temporary venues” in regional areas.
“The stated costs overruns, in our opinion, are a gross exaggeration and not reflective of the operational costs presented to the Victorian 2026 organizing committee board as recently as June this year,” he told reporters.
The Commonwealth Games, which started in 1930, have only been canceled previously during World War II. Andrews said his government aimed to reach a “reasonable” cost settlement for breaking the contract so that an alternative host city could be found. The leader of Victoria’s main opposition Liberal party called the u-turn a “humiliation” on Twitter.
Debt woes
Victoria has become mired in debt after borrowing massive amounts for infrastructure projects, then dealing with the fallout from the pandemic, when Melbourne became one of the world’s most locked-down cities. The state’s net debt is forecast to surge by almost A$40 billion to about A$170 billion over the next four years.
The scrapping of the Games comes as the cost of issuing new debt skyrockets. The yield on Victorian government 3-year debt has climbed to 4.22% from 2.66% when it was awarded the event. That could add about an extra A$15 million per year in servicing costs for each A$1 billion of new debt issued, based on secondary market pricing.
The money marked for the Games would instead be spent on a regional package, which included upgrading sports facilities, Andrews said, with additional funds to build social and affordable housing. The event was to be hosted in the regional cities of Geelong, Bendigo, Ballarat and Shepparton, as well as in the Gippsland region in the state’s east.
“Last year when the Commonwealth Games authorities approached us and needed someone to step in and host the 2026 games, we were happy to help out, but not at any price and only if there was lasting benefit,” Andrews said.
The London-based Commonwealth Games Federation did not immediately respond to a message seeking comment sent outside usual office hours.
Alternate hosts
Phillips said he would work with the Federation to see if another host could be found in Australia. “Certainly interested in talking to any state that may have an appetite for hosting the games,” Phillips said. “We’ll be doing all we can to make sure that the numbers produced today by the Victorian government are not taken on face value.” The states of New South Wales, South Australia and Western Australia have already ruled out hosting the event, local media reported.
The cost blowouts should have been foreseen earlier “before businesses and community groups had committed their resources and time to their own plans for the Games,” said Tim Piper from the Australian Industry Group, which represents employers.
“They must be considered in the aftermath of this decision,” Piper said in a statement. “It’s the long term damage that concerns us, including the cost to break the contract.”
–With assistance from David Stringer, Matthew Burgess and Garfield Reynolds.
(Updates with fresh comments throughout. Earlier versions of this story corrected calculation and date bid secured to April 2022 in 2nd, 6th paragraphs)
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