Russia faces Olympic-size cost overruns

Russia's Olympic dream has turned into a nightmare.

Next year's Winter Olympics in the Russian Black Sea resort of Sochi is shaping up to be the most expensive games in history amid reports of massive corruption in the awarding of construction contracts.

According to The Los Angeles Times, the games may cost three times as much as the next most expensive Winter Olympics, the 1998 games in Nagano, Japan, which had a price tag of $17.5 billion. The Summer Olympics in London last year cost about $13 billion, according to the U.K.'s Guardian.

Russian President Vladimir Putin, reportedly furious because costs for the Olympics are expected to be 400% over their original projections, has ordered the firing of a senior member of the Russian Olympic Committee.   His anger is understandable, given how the games are supposed to showcase Russia's achievements, not highlight its corruption and other serious problems. Transparency International ranks Russia No. 133 out of 176 on its latest Corruption Perceptions Index. On this scale, a higher rank indicates more corruption.  

As the BBC recently noted, Russia's Olympic organizers had their work cut out for them even under the best of circumstances because there wasn't much infrastructure in Sochi suitable for a huge international sporting event.

The ski jump alone has become a symbol of how big a boondoggle the games have become. According to The Associated Press, its costs have soared to $265 million from $40 million. Time magazine recently reported that workers building the Olympic facilities are being mistreated. Unlike other countries, which used public funds on the games, Russia is counting on private and state-controlled companies to foot more than half the bill, the AP says.

Sochi isn't the only place where dream of the Olympic games didn't match reality. As CNN noted, it took taxpayers in Montreal three decades to pay off the debt from the 1976 games. Cost overruns are a problem that organizers of many games have faced. 

Follow Jonathan Berr on Twitter @jdberr.

More on moneyNOW

• When will gas prices stop rising?

• Newspapers battle over raising minimum wage
  

• Office Depot, OfficeMax talk merger