London Olympics billions over budget, study shows

(CBS News) LONDON - The London Olympics begin in less than a month.

They're on-track to be the most over-budget Olympic games since Atlanta's in 1996.

An Oxford University study finds the event is likely to cost more than twice the original estimate and end up billions of dollars over-budget.

It seems there's a trick to putting together a winning Olympic bid: You have to have a flexible relationship with reality.

The London bid that beat out New York and Paris won, at least in part, because it promised value for money.

And after the extravagance of the Beijing Games, London promised, in 2005, to deliver a more measured approach, games that would cost under $4 billion - a bargain.

Too good a bargain, it turned out.

Within two years, the London organizers had already admitted the games would cost about four times as much - about $15 billion, once taxes and security costs were included.

Complete Coverage: 2012 London Olympics

Lately, they've claimed they're actually under-budget, by about three-quarters of a billion dollars.

"It's on-time, it's on budget, all the building's being done," says British Prime Minister David Cameron. "But most important of all... "

Not so fast.

"I'm thinking they are spinning the information about the Olympics, and that's understandable - that's what politicians do. They want to look good," says Oxford Prof. Bent Flyvbjerg.

He's one of the authors of a study that concludes the London Games are currently, with adjustments for inflation, etc., 101 percent over their original budget. In other words, twice as much as promised.

"It doesn't look good to have 101 percent overrun," Flyvbjerg points out.

And London isn't unique: Just about all Olympic Games run way over-budget.

To pick just a few: Atlanta in 1996 was 147 percent over original estimates. Sydney in 2000 was 90 percent over. Montreal in 1976 was a spectacular 796 percent over-budget.

In the past 50 years, the Olympics have run an average of 170 percent over their original projected costs.

Four times the cost. Twice the cost. Hidden costs. Arguing over the cost of the games has become an Olympic sport of its own - a sport in which the poor, put-upon taxpayer of the host city never seems to win.

"There' s something about the Olympics," says Flyvbjerg. "We think it's the fact that you're basically writing a blank check at the outset."

One exception to the rule was Los Angeles in 1984, which largely used existing facilities and financed the games out of corporate sponsorships and sky-high TV rights.

But the more common example is Athens in 2004, whose facilities are now decaying and whose cost overrun of 60 percent was a major contributor to Greece's current financial woes.

The people behind the losing New York bid are feeling pretty smug.

"The Olympics are a great sporting event, but they don't work in cities that are already on the world's map," observes New York University Prof. of Urban Policy, Mitchell Moss.

And they don't work for the advertised price, either.