The Victorian government said in a statement on Tuesday that the price of hosting the event would be more than double the economic benefits it would generate. The state, which includes the city of Melbourne, was awarded a bid to host the four-year event just this April.
“What has become clear is that the cost of hosting those Games in 2026 is not the A$2.6 billion ($1.8 billion) that has been stated,” Premier Daniel Andrews told reporters in Melbourne. “It’s actually 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 he’s going to adequately fund these games.”
The Commonwealth Games, which began in 1930, were only canceled during World War II. Andrews said his government aims to reach a “reasonable” cost settlement for breaking the contract until an alternative host city can be found. The leader of Victoria’s main opposition Liberal Party described the shift as a “humiliation” in a tweet:
Victoria became deeply in debt after borrowing huge sums 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 expected to rise by about A$40 billion to about A$170 billion over the next four years.
The cancellation of the games comes as the cost of issuing new debt has skyrocketed. The yield on 3-year Victorian government debt rose to 4.22% from 2.66% when it was awarded the event. That could add about an additional A$150m in servicing costs for every A$1bn of debt issued, based on secondary market rates.
Andrews said the money for the Games would instead be spent on a regional package, which includes upgrading sports facilities, and he also announced more money to build social and affordable housing. 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 east of the state.
“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, but not at any cost and only if there was a lasting benefit,” Andrews said.
The London-based Commonwealth Games Federation did not immediately respond to a message seeking comment, which was sent outside normal business hours.
— With assistance from David Stringer, Matthew Burgess, and Garfield Reynolds