The financial situation of the Vancouver Olympics has deteriorated so badly that it appears that the organizing committee, known as 'VANOC' is destined to lose more money hosting the games than the city Montreal did in 1976.I'm sure nobody in Quebec thought that something like that would ever be allowed to happen again in Canada.
It took Montreal over thirty years to erase the 1.5 billion dollar loss generated by the 1976 summer Olympic Games, a loss which heralded in the modern era of Olympic cost excesses.
Adjusting for inflation, the Montreal loss is equivalent (in today's dollars) to about 4.5 billion dollars and sadly, it's a number that Vancouver is well on it's way to replicate or surpass.
Sadly, a combination of cost overruns, added security requirements and the world financial recession has led to a catastrophic change in fortune for the Vancouver organizing committee.
Originally budgeted at $1.7 billion, the games may end up costing upwards of $6 billion, when the costs of all the ancillary projects and infrastructure improvements are added in. These include the expansion of the 'Sea to Sky' highway to Whistler, the expansion of the convention center and building of the Olympic village, as well as hundreds of other small and medium projects.
As for revenues, corporate sponsorships, which were expected to generate up to a billion dollars in revenue are now predicted to be less than a third of that number, as companies, hit hard by the recession, re-evaluate their commitments.
TV revenue and ticket sales are expect to ring in only about $800 million, so the shortfall is dramatic.
The problems of escalating costs is not restricted to any one particular element.
Security costs have skyrocketed from an estimate of $170 million to over a billion dollars.
The Olympic village, a condo project of 800 hundred units, required a city bailout when the developer pulled out, as costs rose to an estimated 800 million dollars. Other projects, such as the expansion of the convention center have also gone way over budget.
The idea that the games would be self-financing, as promised by VANOC are now completely discredited. In fact no recent Olympic game hosts managed to break even, with Calgary showing a $910 million loss, $1.4 billion for Barcelona, and a $2.3 billion loss for Sydney.
It is estimated that China spent over $40 billion on the 2008 Summer Olympics!
Research by University of Alberta sports economics professor Brad Humphreys suggests that the Athens games in 2004 which were budgeted for $1.6 billion, ended up costing $16 billion.
The London games, which are to take place in 2012 were originally budgeted at $8 billion, but $19 billion has been already spent, with the games still three years away.
It seems that the bloom is definitely off the Olympic rose and it may be harder to find willing hosts.
"Even the government is going off the Olympics," states a recent headline in a London newspaper. "Is it too late to give them to the French?"Vancouver's only saving grace is that the mammoth loss will be shouldered in part by the federal government, something Montreal was never able to achieve.
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