The Australian state of Victoria has agreed to pay AU$380 million ($242 million) to the Commonwealth Games Federation (CGF) after withdrawing as host of the 2026 Commonwealth Games due to an increase in the projected cost of staging the event.

Victoria Premier Daniel Andrew announced the state’s decision to walk away from hosting duties last month after new estimates suggested the cost had ballooned to AU$7 billion rather than the AU$2.7 billion originally projected.

At the time, Andrews said: “Frankly, six to seven billion for a 12-day sporting event. We are not doing that. That does not represent value for money. That is all cost and no benefit.

“I will not take money out of hospitals and schools to fund an event that is three times the cost [which] is estimated and budgeted for last year.”

Following the announcement, mediation was launched between the state, the CGF, the Commonwealth Games Federation Partnerships (CGFP), and Commonwealth Games Australia (CGA), which were presided over by former New Zealand judge Kit Toogood and the former chief justice of the Western Australia supreme court Wayne Martin.

The parties have confirmed all issues have now been resolved, with Victoria agreeing to pay AU$380 million, although a breakdown of how the money will be distributed between the CGF, CGFP, and CGA has not been disclosed.

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By GlobalData

A joint statement announcing the compensation acknowledged Victoria’s decision to try and stage the games across multiple regional cities as the main reason for costs increasing so dramatically.

At the time of Victoria’s withdrawal, CGF said the state’s wish to include more sports, an additional regional hub, as well as changing plans for venues were “often against the advice of CGF and CGA.”

Victoria was announced as host of the 2026 edition last March after organizers had struggled to find an appropriate location due to a lack of interest and Covid-19 disruptions. It was due to be held between March 17 and 26 in the regional centers of Geelong, Bendigo, Ballarat, Gippsland, and Shepparton.

The Victoria state previously hosted the 2006 Commonwealth Games in Melbourne and the last edition of the games staged in Australia was on the Gold Coast, Queensland in 2018.

A newly released costing document estimated excess costs of around AU$2 billion, due to compressed timelines, supply constraints, accommodation shortfalls, and major sports code displacement costs.

Requirements by CGF for athletes’ villages alone saw the accommodation increase from an estimated AU$200 million to over AU$1 billion. Transport costs swelled from AU$110 million to over AU$300 million, while security estimates surged from $200 million to $500 million.

The multi-sport event involves thousands of athletes representing 72 Commonwealth countries and territories and is held every four years. The last edition in 2022 was hosted by the English city Birmingham, which stepped in to replace Durban, South Africa, which faced financial issues.

The CGF is now searching for a new host. CGF chief executive Katie Sadleir said she would provide a “much more concrete plan” on how the CGF plans to solve its hosting issues at its next general assembly in Singapore from November 11 to 14.

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