Another Big Dig:

Establishing a range for the cost of a Boston Summer Olympics

No Boston Olympics
February 26, 2014
www.nobostonolympics.org
Table 1:
City Games
Bid Value
($B USD)
Istanbul 2020 $19.0
Rio De Janeiro* 2016 $14.4
Tokyo* 2020 $8.5
Madrid 2016 $5.6
Madrid 2020 $5.0
Chicago 2016 $4.8
Tokyo 2016 $4.4
*IOC-selected city
Estimating the Cost of a 2024 Boston Summer Olympics
Pinpointing the cost of a Boston Olympics is a difficult task, but developing a minimum cost and an
expected actual range is a rather straightforward exercise. The following analysis takes both a top-
down and bottom-up approach, using the last eight Olympic Games as a benchmark. We
conclude that a Boston Games would have a minimum cost of $5 billion, and is likely to total
between $10-$20 billion, accounting for all costs. While this analysis provides a wide range, it is a
reasonable starting point for any discussion of the potential costs of a Boston Olympic Games.
I. Establishing a minimum cost:
About seven years before each Summer Games are held, the International Olympic Committee
(IOC) chooses a handful of finalist cities. For the 2020 Games, those finalists were: Istanbul,
Madrid, and Tokyo.
1
For the 2016 Games, those finalists were: Rio De Janeiro, Madrid, Tokyo, and
Chicago.
2
Each bid city is required to estimate the full cost of the Games in its bid book, a
document prepared by each local bid committee. Table 1 presents the projects costs from the 2016
and 2020 bid books.
In the most-recent 2020 round, Madrids bid was
commonly described as an austerity bid meaning
it had only the minimum amount of investment
required to successfully host a Games.
3
Indeed, the
bid committee noted that 28 of 35 needed venues
were already built.
4
Given this benchmark, and
remembering that inflation will only have increased
costs, even an austerity bid by Boston would be a
minimum of $5 billion.
The 2000 Sydney Summer Olympics, considered by some to be a well-managed Games, provide
another useful data point. In 2002 the Auditor-General of New South Wales reported the cost of
the 2000 Sydney Games at $AUS 6.6 billion.
5
With exchange rates and inflation, this equates to $4.7
billion in 2014 US dollars.
6
However, it is important to remember that the Sydney Games took
place before the terrorist attacks of September 11
th
. All post-Sydney Games have had to plan for far
higher security costs than the Sydney Games.
It is reasonable to conclude that the minimum cost of hosting the Summer Olympics is $5B.

1
http://www.olympic.org/news/ioc-selects-tokyo-as-host-of-2020-summer-olympic-games/208784
2
http://www.olympic.org/content/the-ioc/bidding-for-the-games/past-bid-processes/election-of-the-2016-host-
city/
3
http://www.reuters.com/article/2013/08/31/us-olympics-2020games-madrid-idUSBRE97U01B20130831
4
http://en.mercopress.com/2013/09/06/debt-struck-madrid-believes-its-modest-budget-will-end-hosting-the-2020-
olympics
5
http://www.forbes.com/sites/sportsmoney/2011/08/05/how-does-londons-olympics-bill-compare-to-previous-
games/2/
6
In 2000, the USD/AUD exchange rate fluctuated between 1.50 and 1.96 Australian Dollars to 1 US Dollar. Using a
midpoint of 1.73, the Games cost $3.8B in Year 2000 USD. Then converting Year 2000 dollars to Year 2014 dollars, we
estimate the Sydney Games cost $4.7B.
Table 2:
Year Host Type
Nominal Cost
($B, USD)
2014 Sochi Winter 51.0 $
2012 London Summer 13.9 $
2010 Vancouver Winter 8.9 $
2008 Beijing Summer 43.0 $
2006 Turin Winter 4.7 $
2004 Athens Summer 16.0 $
2002 Salt Lake City Winter 2.0 $
2000 Sydney Summer 3.8 $
19.2 $
16.7 $
15.0 $
6.8 $
3.8 $
2.0 $ Minimum of Winter Games
Average of Summer Games
Average of Winter Games
Median of Summer Games
Median of Winter Games
Minimum of Summer Games
II. Establishing a true cost:
Top-Down Analysis:
The work of economists at Oxford University, in the UK, has led to the development of a costing
technique called reference class forecasting (RCF), which advocates developing budgets through a
comparison with similar completed projects.
7
The RCF approach has been endorsed by the
American Planning Association, which says: APA encourages planners to use reference class
forecasting in addition to traditional methods as a way to improve accuracy. The reference class
forecasting method is beneficial for non-routine projects such as stadiums, museums, exhibit
centers, and other local one-off projects. Planners should never rely solely on civil engineering
technology as a way to generate project forecasts.
8
The full RCF methodology requires an initial
cost estimate by the planners of a mega-
project, and will be completed upon the
release of a cost estimate by the Boston bid
committee. In the absence of a forecast by a
bid committee, a benchmarking of the full
costs of previous Olympics is the most
practical and straightforward way of
estimating the costs of future Olympics. In
that effort, we have compiled actual
reported costs of the last eight Olympic
Games four Summer Games and four
winter Games in Table 2.
Please note these estimates include
conversions to USD, but do not account for
inflation.
Table 2 shows that since 2000, the average
Summer Games has cost $19.2 billion, and
the least expensive Summer Games was
Sydney at $3.8 billion in Y2000 USD, or $4.7
billion in Y2014 USD.

7
http://www.sbs.ox.ac.uk/ideas-impact/bt/research-teaching/publications/book-
chapters/eliminating-bias-early-project-development-through-reference-class-forecasting-and-good-
governance
8
http://www.planning.org/newsreleases/2005/apr07.htm?print=true
Table 3:
Item London Cost in $M (USD)
Cost of Developing Bid 80 $
Security 850 $
Olympic Stadium 800 $
Olympic Stadium Conversion Post-Olympics 250 $
Aquatics Center 450 $
Velodrome 175 $
Olympic Village 1,750 $
Opening Ceremonies 45 $
Closing Ceremonies 30 $
Purchase of Olympic Park Land 1,200 $
Legacy Projects and Games-Related Activities 1,300 $
Total in 2012 Dollars $ 6,930
Total in 2014 Dollars $ 7,060
Bottom-Up Analysis:
A bottoms-up analysis using costs for the 2012 London Games leads to a similar range, presented in
Table 3.
The list of items in
Table 3 amounts to
more than $7 billion
present-day dollars.
Note that it does not
include investments for
transportation
infrastructure needed to
support the games,
which would need to be
included in a full
accounting of costs.
The total cost of
Londons Olympics is
estimated at over $14
billion in present-day
dollars, equivalent to
the cost of Bostons Big
Dig project.
Conclusion
While it is challenging to pinpoint the exact cost of a Boston Olympics, the data above provides an
accurate starting point for the economic discussion. Given the necessary infrastructure
improvements, the facilities that would need to be constructed, and the relatively tight timeframe,
there is virtually no way Boston could host the Olympics for less than $5 billion, with a total cost in
the range of $10-$20 billion far more likely. We believe there are much better ways for the city and
the state to use public and private funds (as illustrated below), and call on our elected leaders to
oppose efforts to bring the Olympics to Boston.
Things Massachusetts Could Buy With
$5 billion, the minimum cost of a Boston Olympics:
Fully fund state assistance for local roads and bridge for next 15 years.
or
15,621 homes at the January, 2014, median MA housing price, enough to house every
homeless family in the Commonwealth.
$10 billion, our low estimate for the actual cost of a Boston Olympics:
Waive all tuition and fees at UMass system for next ten years.
or
Eliminate all of the MBTAs outstanding debt and have enough left over to build South
Coast Rail, the Green Line Extension to Somerville/Medford, and buy new rail cars for
the Orange Line.
$20 billion, our high estimate for the actual cost of a Boston Olympics:
Repair all structurally deficient bridges on Massachusetts roads.
or
Eliminate all income and sales taxes for one year.
or
Provide a $15,000 college-savings bond to every child born in Massachusetts over the
next decade.