Those cheering and waving at the Heroes Parade in London today would be well advised to keep at least one hand on their back pocket. After all, these heroes do not come cheap. Elite Olympic sport was lavished with more than £235 million of public money in the four years to Beijing, which works out at more than £12 million per gold medal, approximately the cost of three new primary schools. As Steve Williams, the double Olympic champion and Leander Rowing Club captain, put it: “You can't buy gold medals but you do have to pay for them.”

Williams was talking at a rowers' victory parade at the weekend, where he urged the Government to dig into its pockets again. Gordon Brown has already promised an extra £158 million of public cash to Britain's top athletes and coaches in the build-up to 2012 (over and above that spent on Beijing) but he is being asked to chip in another £79 million now that the sporting community has failed to raise funds in commercial sponsorship. This in addition to the £9.3 billion cost of staging the Games, in which the contingency budget is being swallowed up at an alarming rate.

Given that sports funding has shot up faster than a javelin in recent years, you might have expected the Government to tell the sporting lobby to take a running hop, skip and jump. But the impressive tally in Beijing - 47 Olympic medals, 19 of them gold - has been a game-changer. Administrators have been widely lauded for their “ingenuity” in targeting funding at sports with medal-winning potential while denying cash to those less likely to strike gold. But has this expensive policy really been so very clever?

The logic has certainly been transparent. Having cottoned on that it is not easy to deliver medals in popular and globally competitive Olympic sports, the authorities have focused on events such as sailing, in which international competition is minimal. In the women's Yngling event, for example, only a handful of crews compete in the UK, with fewer than 100 competitive crews on the planet. A stash of cash here goes a long way, enabling our sailors to train like professionals and rip apart the competition.

The same story can be told in track cycling, in which many of the teams in Beijing were flabbergasted by the army of support staff for British competitors. But what many of them did not know is that, in addition to the millions spent on preparation, the Government also provided a separate budget to enhance the aerodynamic efficiency of British bikes. Most nations lack a single velodrome, let alone access to state-of-the-art wind tunnels.

“It is clear that the UK Government outspends every other nation in the world on elite sport with the exception of China and possibly Russia,” Mick Green, a senior lecturer at Loughborough University, said. The figure of £235 million for elite sport in the build-up to Beijing included spending on young talent and not just on champions. But such funding is directed at medals in future Olympics, which, given an upward trajectory in overall elite funding, implies a real cost per Olympic gold somewhat above £12 million (or £5 million per medal of any colour). It is also worth noting that this figure does not take into account the millions spent on elite sporting facilities.

Many will look upon this international funding mismatch with glee and salute the Government for having spent so generously on Olympic medals. But this is public cash. We all agree that the athletes are talented, hard-working and deserving of huge admiration, but is it right that teachers, doctors and other taxpayers, many with little or no interest in elite sport, should fund athletes' salaries (on top of facilities, coaching and science support) without getting a bean in return when they start racking up huge endorsement contracts?

The sporting lobby will argue that public investment is justified because success at the Olympics is good for the nation by inspiring grassroots participation, which in turn reduces the £3.3 billion annual cost of ill-health and lost output as a result of physical inactivity. But this is demonstrable nonsense. The Government's own statistics demonstrate that elite success does nothing for overall participation and merely enables successful sports to poach from the rest.

Perversely, the success in Beijing might actually reduce overall sporting involvement. After all, can you think of any sports less suited to mass participation than sailing, rowing and track cycling (which, between them, accounted for 68 per cent of British golds in Beijing)?

Problems with capacity are already being felt just weeks after Beijing. Mark Banks, head coach at Leander, said last week that the club could not cater for demand. British Cycling chipped in with the observation that the Manchester velodrome is fully booked and is having to turn youngsters away. Given that those being rejected were probably already active in other sports, the net effect could be a new gang of couch potatoes.

The right-hand, left-hand problem in British sport is not merely a consequence of the split in responsibilities for elite and grassroots sport between UK Sport and Sport England. Even more damaging is the very existence of these quangos, essentially job creation schemes for bureaucrats. At UK Sport, for example, about thirty officials are responsible for funnelling money from A (the public purse) to B (elite sport).

Even now it is not too late for a minister with a bit of bottle to abolish this sports subsidy racket. Those who fear to rock the boat should consider the situation in China, a nation that spent big on topping the medals table to the exclusion of all else, but whose political elite has already become impatient with the lack of tangible public benefits.

It is said that much of the elite sporting infrastructure in China is in danger of being dismantled just weeks after the closing ceremony. British sport is heading for the same reckoning after 2012 if the present incoherence is allowed to persist.