There “may not be a Commonwealth Games in 2026” at all, after Victoria withdrew from hosting the event, citing billions in cost blowouts.

Premier Daniel Andrews announced the decision on Tuesday morning, and said it was because the 12-day event would cost more than $6 billion to host.

“Last year, when the Commonwealth Games authorities approached us and needed someone to step in and host the 2026 Commonwealth Games, as a state we were happy to help out. But, of course, not at any cost,” he said.

“What has become clear is the cost of hosting these Games in 2026 is not the $2.6 billion that was budgeted and allocated, the vast majority of which hasn’t been spent. It’s not $2.6 billion, it is at least $6 billion and could be as high as $7 billion.”

The Victorian government hasn’t released the cost estimates publicly or to Commonwealth Games Australia (CGA) yet, but it has announced a $2 billion package for regional areas to build sporting facilities, and $1 billion for social and affordable housing.

CGA CEO Craig Phillips said the multi-city regional model was proposed by the state government, who “did not step in last minute as indicated by the Premier today”.

“The stated costs overrun, in our opinion, are a gross exaggeration and not reflective of the operational costs presented to the Victoria 2026 organising committee board as recently as June,” he said.

“Beyond this, the Victorian government wilfully ignored recommendations to move events to the purpose-build stadia in Melbourne and in fact remained wedded to proceeding with expensive temporary venues in regional Victoria.”

Commonwealth Games Australia CEO Craig Phillips. Photo: AAP

He said the decision to withdraw, 18 months after announcing the state would host the event, has “jeopardised Melbourne and Victoria’s standing as a sporting capital of the world”.

Future of the Games

Dr Tom Heenan, lecturer in Sports and Australian Studies at the Monash Intercultural Lab, said Victoria withdrawing as host means we should “face the fact there may not be a Commonwealth Games in 2026”.

“I think there is a real problem given the timeline, and I know today a number of state premiers have said they weren’t prepared to step in,” he said.

“it’s not just the Olympics where fewer cities are prepared to put up with the cost and and aren’t prepared to put up with the inconvenience.”

Mr Andrews’ cited cost is a huge increase compared to the $1.5 billion spent by the Queensland government to host the 2018 Games on the Gold Coast.

The premiers of New South Wales, South Australia and Western Australia have already announced they will not step in to host the event.

Cost benefit

Mr Phillips said the budgetary implications announced have not been “sighted or discussed with the Commonwealth Games Federation or CGA ahead of being notified of the government’s decision”.

“CGA would welcome the opportunity to review the financial analysis prepared independently of those who have been involved at the coal face of planning and delivery,” he said.

The 2010 Delhi Commonwealth Games was the most expensive in history, costing more than $5.8 billion, and large sporting events rarely live up to the economic benefits touted by organisers.

Dr Heenan said part of the problem is the Commonwealth Games, like the Olympics, often caused losses for hosting countries and states.

“You start out with an initial estimate that’s usually quite low, but it’s usually around three times as much, which is the number the Andrews government stumbled upon this morning,” he said.

“It isn’t all these mega-events, but they do have a history of blowing out in cost.”

Four out of five Olympics and World Cups have run at cost deficits, according to a study, with hosting the events between 1964 and 2018 costing an average of $US2.8 billion, exceeding average revenues of $US1.7 billion.

Mr Phillips said the decision will have an impact on cities deciding to host the Commonwealth Games in the future.

“We already have Canada well and truly engaged around hosting in 2030, we know New Zealand are looking at 2034, but this announcement this morning and the cavalier way it was made really does make it challenging to continue conversations,” he said.

“We have to manage the messaging and make sure when we are engaging with governments, we know what the real costs of the Games are and not some inflated number.”

Sporting capital

Dr Heenan said the decision has damaged Melbourne’s claim to be the sporting capital of the world.

“It certainly damaged Melbourne’s reputation on the world stage. It is walking away from a major event,” he said.

“It also coincides with the Women’s World Cup, where the city isn’t hosting a semi-final or the final.”

During the Women’s World Cup, which starts this week, Sydney and Queensland will instead host the semi-final and final games.

Accor Stadium in Sydney will host the Women’s World Cup Final next month. Photo: AAP

Dr Heenan said losing the Commonwealth Games will be a major loss to regional areas, in particular community sporting clubs.

“The package is the government repairing its reputational damage in those regional centres, but I think the damage is really at the community level,” he said.

“We may have to face the fact Melbourne isn’t the sporting capital of the world, let alone Australia.”