Melbourne, Australia's Olympic bid was born of great confidence and enthusiasm in a city with an addiction to sports.

The city had hosted the 1956 Games -- the only time the Olympics have been staged in the Southern Hemisphere -- and older Melburnians spoke of those Games as the time the city prospered and matured.

This time, Melbourne outbid Sydney and Brisbane to gain Australia's nomination. Those bids were strong -- particularly Brisbane's, which had hosted the 1982 Commonwealth Games -- but Melbourne won as much on emotion as on its presentation.

A team of successful businessmen and political leaders was quickly assembled to promote Melbourne's effort, under the slogan, "It's Time for Another Continent."

When the Melbourne delegation traveled to Puerto Rico last August and September to present its case to the International Olympic Committee and the world's media, it performed well and left satisfied. Still, there were rumblings that have since shaken the bid and perhaps destroyed it.

Melbourne's economy, which had been lubricated by a mixture of union deals and government subsidies, ground to a halt. Premier John Cain -- the equivalent to a state governor -- resigned in disgrace as the full extent of his government's financial mismanagement surfaced.

Things have become so bad that State Bank, whose lending was guaranteed by the government, had to be sold. International credit agencies downgraded the rating of Victoria (Melbourne is its capital) and, at the moment, the city is wallowing in a nasty recession of its own making.

One recent report said as many as 3,000 qualified architects in the city were driving taxis and working in other semi-skilled occupations because there was so little construction work.

Such turmoil can be fatal to an Olympic bid and it is noticeable that Melburnians who once all but demanded the right to hold the 1996 Olympics now pray for the Games to lift sagging spirits and restore a measure of confidence to the battered city.

The financial collapse, triggered by government financial practices that made investigating accountants squirm with embarrassment, has cast a cloud over a bid that seemed to have a great deal going for it.

Melbourne is on a river and along a bay. The Olympic facilities would be within walking distance of each other and of the city center. The venues are surrounded by parks and gardens which, on the cool, clear days of late spring, are a delight.

The centerpiece of the facilities is the Melbourne Cricket Ground, a large circular stadium that was the central arena in 1956. It holds close to 100,000 people and is home not just to international cricket, but to the Grand Final of the state's Australian Rules Football competition each September.

The stately old MCG would be revamped for the Games -- much of the work will be done regardless of the bid's success -- the opening and closing ceremonies and the track and field events.

Five minutes away, across a park, is the National Tennis Center, which, like the Toronto SkyDome, has a retractable roof. The site would be used for gymnastics, handball and tennis.

Boxing, swimming, basketball, volleyball, hockey, shooting, pentathlon, cycling, equestrian and yachting all would be held within about three miles of the city center, making Melbourne's bid even more compact than Toronto's or Atlanta's.

Despite a new $200 million complex just south of the city for swimming, basketball, volleyball, badminton and table tennis, the bid envisages a profit of about $35 million.

Two other problems jeopardize Melbourne's bid: transportation and trade unions. Melbourne's public transport system, which combines buses, trams and trains, is generally regarded with disdain by the people who use it. The system is dirty, inefficient and unreliable. Fewer riders use it each year, preferring to take their chances on the choked road system than to sweat it out in unairconditioned trains or waiting for trams that arrive late, if at all.

Where a city such as Atlanta, for example, can boast outstanding transportation outlets, Melbourne only can offer excuses. Melbourne Airport also would need major renovations to cope with the surge of traffic before and after the Games. At the moment, it has more in common with the terminal in, say, Greensboro, N.C., than Hartsfield International in Atlanta.

Then there are the labor unions. Melbourne is the home of the powerful Australian union movement and, while the unions have pledged support for the bid, the city has frequent strikes. The building and transportation unions are particularly militant, and even sporting events have been disrupted by attendants refusing on short notice to work unless they receive a pay raise.

Before the 1956 Games, work on the MCG was interrupted by a dispute involving builders' laborers. Since then, project managers have learned that setting a deadline is a self-defeating exercise. Millions of dollars were spent to bribe workers to complete the tennis center although that too was of considerable importance to the city.

In addition to the other drawbacks, Melbourne is truly remote from the rest of the world. While communications from Australia are excellent, flights are long, expensive and brutal. After 28 hours in coach class, you get off in Melbourne feeling shattered.

For Northern Hemisphere athletes, the journey will mean not just a leap across time zones -- Melbourne is 14 hours ahead of Washington -- but a change of seasons. Spring has just started in Melbourne and, when Washingtonians are sitting down to a chilly Christmas, Melburnians will be sitting outside drinking cold beer and having a barbecue.

Australia differs from the U.S. in another important regard: It is less populous, so air fares are much higher and the distance between major cities is great. Athletes and visitors planning to make a Melbourne Olympics a Down Under vacation would do well to check out prices well in advance.

The 1956 Games are remembered as the place where the modern closing ceremony was created. It was there, for the first time, that all athletes mingled on the final day, celebrating the spirit of friendliness, which the Games had been designed to foster. Whatever the shortcomings of the bid, when it comes to genuine displays of warmth and friendliness, Melbourne is of truly Olympian quality.

Peter Stephens is the Washington correspondent for The Melbourne Age.