It is simple math, the penalty for not hosting vs the cost of hosting. It seems thing was going to have a negative cost much more than the penalty so they decided to withdraw. People who are angry are thinking with their heart, not their head (or will just whinge about anything)

Whether you like Dan or not I think this is the correct call. I believe Dan was counting on some federal funding to make this happen and that Albo probably pulled it in favour of a surplus.

So instead of spending the extra couple of billion, we would also need to spend the couple of billion we should have gotten federally and we got screwed instead.

On that though, I think Dan needs to appoint a successor and plan to retire.

I posted this a while ago - it's about the olympics but I think a lot of the conclusions are relevant. Personally I back the logic of a known loss now, rather that doubling down and facing an uncertain and likely worse loss during an already difficult time.

https://www.cfr.org/backgrounder/economics-hosting-olympic-games

First time someone's ever pulled out in regional Victoria.

It sucks about the withdrawal fine but if it stopped greater expenditure… I think there’s a lot of core things that could more urgently use the money

but then I think sunk cost fallacy

It's important to remember precisely what the sunk cost fallacy means, because it's not necessarily completely intuitive.

The sunk cost fallacy requires you to ignore any time or money already spent. But you still evaluate any potential future costs compared to the benefit.

With any event like the Commonwealth Games there are obviously non-financial aspects, but for these purposes we can either ignore them or assume they have been somehow quantified and put into a dollar-equivalent figure.

So the calculation to decide whether or not to keep the Commonwealth Games going is:

• Take the cost of continuing to host them (building infrastructure, etc.). Ignore any already-spent money. Call this C₁.

• Take the cost of not hosting them (the $380 MM compensation, plus intangibles like reputational damage, etc.). Call it C₂.

• Take the benefit of hosting them (direct income from tourism, health benefits from increased sporting participation, plus any intangibles). Ignore any benefits already locked in, like infrastructure that has already been built or is going to be built regardless. Call it B.

Note that because it's politicians making this decision, they'll also be factoring in the political optics into this decision. If they think most Victorians don't want the Commonwealth Games, that would be an increase to C₁ (the cost of hosting the Games is increased as people think your Government is out of touch and count that against you). Some Victorians might also be in favour of hosting them, which would be an increase to B.

Then you just evaluate:

B > C₁ - C₂

If that's true, keep the games. If it's false, cancel them.

Note that at day-0 (before signing on to the games) C₂ would be 0, so you would be doing a simple "are the costs of hosting them bigger than the benefits we'd get?" But since some obligation has already been entered into, there is a higher hurdle to cross before it makes financial sense to cancel them. Note also that it means if the cost of pulling out was greater than the cost of continuing on, the right-hand-side of the inequality would be negative, and thus even if there were zero benefit, it would still be worth doing. Imagine, for example, if the charge for pulling out was some nonsensically high value like $100 billion.

While I enjoy the Commonwealth/Olympics Games, I think that pulling out is the best thing for us (heh) because just how much money government bodies sink into these games with us getting nothing out of it. Sure there might be more tourism, but so many buildings built for these games just become decrepit and unused. So while it does foster comraderee and tourism, in the end it'd be such a waste. And with our cost of living crisis and other crisis' post-Covid, it just feels like... a waste.