The Rio Olympics of 2016 had millions of Americans tuned in and cheering on swimmer Michael Phelps, who earned his twenty-eighth Olympic medal and his twenty-third gold. Those same fans were thrilled with the power and grace of Simone Biles, who secured a team gymnastics gold along with three more individual golds. In my home, attention was elsewhere.
My wife, who was born and raised in Brazil, had just one thing on her mind: redemption. Two years before, Mineiraço (“the trauma at Mineirão”) — the Brazilian men’s stunning 7–1 World Cup loss to Germany — had scarred the nation’s sporting psyche. Winning gold on their home soil, sealed by Neymar Jr.’s decisive penalty kick, was a powerful salve on the still-open national wound. Days later, the Brazilian men overpowered Italy in volleyball to secure the gold, capping an unforgettable Olympics for the host nation.
Brazilians saw victories on the pitches and courts but the political economy of Olympic hosting was another matter. Rio’s Olympics were a story of corruption, cost overruns, and economic waste the nation could ill afford.
Rio’s complicated Olympic legacy showcases crony capitalism, and the damage resulting from politically driven malinvestment. At the center of the former was a corruption investigation known as Operation Car Wash (Lava Jato). The joint effort between Brazilian and French investigators uncovered a vast web of massive bribery and kickbacks that would eventually lead to the imprisonment of high officials with connections to the national government. Members of the Brazilian Olympic Committee were sentenced for bribery, embezzlement, and more.
The rot reached back to the awarding of the games themselves: Rio’s governor, Sergio Cabral, later confessed to facilitating over $2 million in bribes to secure votes over rival bids from Chicago, Madrid, and Tokyo. Cabral wasn’t alone in the scheme. Carlos Arthur Nuzman, then-head of the Brazilian Olympic Committee, was convicted for the internal negotiations that secured the deal.
For their crimes, Cabral and Nuzman were sentenced to 10 and 30 years in prison, respectively. In March 2024, however, these sentences were annulled by a Brazilian federal court, claiming that the earlier convictions were outside the jurisdiction of the judge, Marcelo Bretas, who presided over the trial. While Nuzman walks free, Cabral remains in prison, facing sentences of more than 400 years for other crimes. The same appeals court that released Nuzman also overturned the conviction of Brazil’s current president, Luiz Inácio “Lula” da Silva, who was also found guilty of crimes in the Lava Jato operation.
One of the main beneficiaries of the winning bid was the Brazilian construction giant Odebrecht and its petrochemical arm, Braskem. Odebrecht oversaw over half of the building contracts, later found to have been facilitated by an in-house bribery operation, cravenly called the “Division of Structured Operations.” Its then-president, Marcelo Odebrecht, served just two and a half of a nearly 20-year sentence for corruption, and was released in 2017. This shortened sentence was part of a plea deal in which he admitted to paying nearly $800 million in bribes for construction contracts throughout Latin America, but in particular for Olympic-related construction deals. In December of 2016, lawyers for Odebrecht pleaded guilty, agreeing to a fine of $3.5 billion to satisfy prosecutors in the US, Brazil, and Switzerland for additional international bribery schemes. At the time, it was the largest international bribery settlement in history.
Such high-profile corruption may be the exception, but Olympic cost overruns are the rule. Rio paid $13.1 billion for the 2016 games, $3.5 billion over budget in nominal terms. A 2016 study at Oxford University found the Olympics have the highest average cost overrun of any type of megaproject: an average of 156 percent in real terms.
Rio ran the greatest budget deficit, but every hosting city since 1960 has overspent what it planned. The Sochi Winter Olympics of 2014 exceeded its budget by 289 percent, the 1994 Lillehammer Winter Games by 277 percent (each in 2022 dollars). Calgary, Canada spent three decades paying off its $1.6 billion Olympic bill, prompting Canadians to joke that the Olympic “Big O” had become the “Big Owe.” While other cities haven’t broken the bank to the same degree, not a single event has come in under budget. Excessive spending — or deliberately misleading the public — seems to be endemic to the games themselves. Without a true profit and loss calculation, taxpayers routinely bear the burden, while the politically well-connected line their pockets.
Despite these uneconomic and corrupt outcomes, defenders of the Games point to a different kind of redemption. Some of the facilities have been converted into schools or parks, and now serve the public good. In 2024, the mayor of Rio de Janeiro, Eduardo Paes, proclaimed, “Finally, we will deliver to the population of Rio the legacy of the Olympic Games.” The International Olympic Committee has also touted Rio’s repurposing of old, gutted venues. A community pool now stands where the Olympic Aquatics Stadium once stood, but large expanses remain empty and closed. A local federal prosecutor called them “white elephants,” erected with “absolutely no planning.”
While these land use conversions are highly visible and easy for politicians and IOC members to hail, a dark stain of property rights violations still mars the Rio Olympics, particularly among those who had their homes demolished in the area surrounding the Vila Autódromo. The eminent domain battle began the same day that Rio won (bought) the Olympic bid in 2009. A community of about 600 families watched helplessly as their homes were bulldozed to make way for parking and roads accessing Olympic venues. Offers of public housing were little consolation and their evictions sparked local protest and international concern. These scene of mass displacement are common around Olympic building projects and in anticipation of its international media and delegations.
Supporters of the overall Olympic vision rely on hypothetical, inflated cost-benefit analyses and quaint references to the “public good.” But the true legacy of the Rio games, like others, seems to be one of cronyism and crushed property rights. With extraordinary budget deficits, decrepit infrastructure that takes years to rehabilitate, and corruption scandals that reached across international borders, Brazil was a standout in degree, not in kind. Wherever governments, shadowy international organizations, and taxpayer money collide, a less-than-redemptive story is sure to follow.
The central lesson isn’t that officials and developers in Rio were uniquely corrupt. They weren’t, as officials in Salt Lake City, Atlanta, Paris, Tokyo, and elsewhere have faced similar corruption scandals. The fiscal disaster of so many Olympics teaches instead how projects insulated from market discipline routinely overinvest, overspend, and undervalue the rights of those who bear the costs.
