Victorian Government facing significant penalty costs for Commonwealth Games exit

Following yesterday’s announcement that it was relinquishing its hosting rights for the 2026 Commonwealth Games, the Victorian Government is reported to have entered “delicate” negotiations with the UK-based Commonwealth Games Federation (CGF) over the breaking of its contract.

With the Victorian Government claiming it abandoned its hosting of the 12-day event because of costs rising to $7 billion, reports suggest that the financial penalties for the breaking of its Games contract may cost as much as $2 billion.

Victorian Premier Daniel Andrews’ claims that the Commonwealth Games would not be held in the state because they were too expensive have been disputed by Commonwealth Games Australia Chief Executive (CGA) Craig Phillips, who says they are “grossly exaggerated”.

Speaking yesterday afternoon, Phillips (pictured below) stated “it’s a comprehensive let down for the athletes, the excited host communities, First Nations Australians who were at the heart of the Games, and the millions of fans that would have embraced a sixth home Games in Australia.”

With the Games program having grown since the original bid to include new venues such as a new hockey centre in Geelong and sports including golf and shooting, Phillips noted that the Victorian Government had “wilfully ignored” advice to scale back the Games, stating “the multi-city model for delivering Victoria 2026 was an approach proposed by the Victorian Government, in accordance with strategic roadmap of the Commonwealth Games Federation.

“It was pitched to the CGF after Commonwealth Games Australia (CGA) had sought interest to host the Games from several states. They did not step in as hosts at the last minute, as indicated by the Premier earlier today.”

“The detailed budgetary implications announced today have not been sighted or discussed with the CGF or CGA ahead of being notified of the Government’s decision.

“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.”

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

The Victorian Government announced on Tuesday it would push ahead with a $2 billion spending package on housing and infrastructure across regional Victoria which, when combined with possible compensation of up to $2 billion, means the costs without the Games could still top $4 billion.

Despite lobbying, the Victorian Government had not secured Federal funds for the Games, with Commonwealth monies being directed to the Brisbane Olympics.

Premier Andrews has advised that a team of Victorian Government lawyers had been sent to London to negotiate with the CGF.

In 2018, the then Queensland Labor Government released advice provided to the previous Liberal Government in 2012 that abandoning the Commonwealth Games on the Gold Coast would leave the state on the hook for about $1 billion.

Phillips went on to say the decision to abandon would affect Victoria’s international reputation as a host of major events, adding “the Victorian Government … has jeopardised Melbourne and Victoria’s standing as a sporting capital of the world.”

In a statement from London, the CGF said the Victorian Government repeatedly made decisions, such as including more sports, adding another regional hub and changing planned venues, that “added considerable expense”, against the advice of the organising bodies.