The Australian State of Victoria has pulled out of hosting the 2026 Commonwealth Games after cost estimates 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 in 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.”
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” in a tweet:
Victoria has become mired in debt after borrowing massive amounts for infrastructure projects and then grappling 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$150 million in servicing costs for each A$1 billion of debt issued, based on secondary market pricing.
Andrews said the money marked for the Games would instead be spent on a regional package, which includes upgrading sports facilities, and also announced more money to build social and affordable housing. The hosting duties were to be shared across 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.
@Bloomberg