The Rio Olympics are $1.6 billion over budget

Is Rio ready?

The lead-up to the Rio Olympics has been rife with problems and now we can add overspending on top of the pile of problems that the city has run into in preparing for the event.

According to a report from the Saïd Business School at Oxford University, the city of Rio de Janeiro has gone $1.6 billion over budget in preparing for the Games.

The problem is not an unusual one as many Olympics, summer and winter, have gone way over budget. According to the report, "47 percent of Games have cost overruns above 100 percent." However, the problem may be more important than ever because of the situation Rio is in.

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Brazil is currently in a deep recession and the governor of Rio de Janeiro recently declared a state of financial emergency, asking for help from the federal government to avoid a "total collapse in public security, health, education, transport and environmental management."

The $1.6 billion cost overrun, or 51%, according to the study, that Rio has incurred is the same as median costs for Olympic Games since 1999. It is also far off the record for highest cost overrun, which was 720% incurred during the 1976 Olympics in Montreal.

That said, there is an inherent risk in hosting the Olympics, as the report's abstract concludes with:

"Given the above results, for a city and nation to decide to stage the Olympic Games is to decide to take on one of the most costly and financially most risky type of mega-project that exists, something that many cities and nations have learned to their peril."

While it may have been impossible to predict the nation's economic fallout when the Games were originally awarded in 2009, this is just the latest example showing that the Olympic games have become a luxury that few nations can afford.

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