The money game surrounding how cities will pay to host Olympic Games is becoming even more complicated in the wake of the economy and money-hungry city officials.
On June 17 Chicago Mayor Richard M. Daley told the International Olympic Committee that the city will take full responsibility for the funding of the 2016 Games, should it win its bid to host.
And he did it without the input from the city council or the people.
After Daley suspected Chicago may be falling behind in the bid race due to Madrid, Tokyo and Rio de Janero already promising a full financial guarantee, he decided to jump right in and go all out.
What this means is should the Games produce severe cost-overruns or the city doesn’t get as much money from private sectors as it originally planned, taxpayers may be expected to help make up that cost. That, however, should only happen in an extreme case, said the bid committee.
So far, a $2.2 billion government insurance plan has been promised if things go south. Only if more money is needed will the city tap into $500 million guarantee promised by the city council, and another $500 million after that. But that’s only if needed after sponsorship and private businesses sectors don’t do their financial jobs. Daley has promised an insurance policy to mitigate the worry that taxpayers will foot any of the bill. Still, the possibility is there.
“When the mayor said he was prepared to sign the host-city agreement as is, he said it with the knowledge that by the time we are required to sign it, we will have solidified this private extra insurance,” Daley’s spokeswoman Jacquelyn Heard said to the Chicago Tribune. “The mayor would not even think about going back to the taxpayers to finance the Olympics.”
So, lets say for the heck of it that Daley is right and taxpayers never outright end up paying for the city to host the Games. But what they will be paying for, and what the bid committee has failed to tell them is that they will be paying for the tickets.
I found an interesting article in the Chicago Sun-Times that said tickets are expected to balloon as high as $1,645 for the Opening Ceremony, not counting an amusement tax, due to the large amount of money it will take to produce the games. So you’re telling me officials are shoving it down residents throats that the Olympics will be good for the city, and then these residents won’t even be able to afford to attend the events? I guess that is what Daley meant in the bid book when he said much of the revenue would be coming from “ticket taxes.”Other high-ticket events are expected to go for around $500 dollars and spectators can be expected to pay higher public transportation events as well.
As much as Daley wants to say taxpayers won’t be out money, we’ve got to get serious. History has shown residents and the city are often tapped out of their resources by the end of the games.
The Montreal games in 1976 took decades to pay off while the 2012 games in London that were supposed to cost around $4.9 billion has already inflated to an estimated cost of $13 billion – and that number is sure to rise. These numbers will show a project like this is just too big to know the actual cost until the transformation has taken place.
Well whatever it is spent on, it looks like Chicagoans will have to dish out tons of dough if Chicago hosts the 2016 games.
But that is where the wrench has been thrown into this whole money game.
On Aug. 28, the IOC has pledged to cover budget deficit of the 2010 Winter Games in Vancouver due to the economic downturn.
Vancouver’s Olympic Committee is short about $37 million of its $1.75 billion budget due to a decrease in sponsorship contracts and lower TV revenues. The IOC has played a part in that, securing only 9 of 11 promised international sponsors.
The IOC hasn’t said how much it will contribute yet, but will do so for the first time in Olympic history.
VANOC released a statement on the issue, stressing the help from the IOC is not intended as a complete bailout.
“The IOC is not guaranteeing to cover all outstanding costs or to ensure there is no deficit at the end of the games,” the statement said. “The IOC’s support to help mitigate a possible deficit has a limit. It does not and is not intended to replace the responsibility of the organizing committee and its partners and other entities in respect of their obligations to stage the games.”
But, questions still remain for me as to what this will mean for Chicago’s bid.
Does this mean the IOC will continue to “bail” out cities, or will this promise only be offered as long as the economy as in a deflated state? Will the IOC attempt to offer any money to Chicago, or even London for that matter, to help them with their deficits and make it easier on the city to put these Games on? Maybe contribute funds to take the pressure off taxpayers, should it come to that? And if so, where will it get that money in this economic nightmare we are living in?
For many residents of host cities, it all comes down to money. Those who don’t want the Games don’t want them because they don’t want to be shelling out thousands or seeing money spent that could go to help areas of concern in the city.
If money weren’t an issue, I know a whole lot of people who would support the bid 100 percent. While I’ve always loved the Olympics, I think money still stands in the way of my decision to fully support the Games. I would love to go to Olympic events and cheer for my home country right in my backyard. I would love all the publicity Chicago will get form the rest of the world. But I’m not sure about the lingering hole of financial debt that could remain over Chicago in the aftermath.
I guess we have to wait and see how the whole money game will play out should Chicago win the bid. It will be a money game to see if the city ends up in debt and how much, and who will play the game to get it out of debt. And it will be interesting to watch it all play out. I think the financial standpoint will be the ultimate deciding factor in who will be announced Oct. 2 as the winner to host the 2016 Games.
Where do you stand on whether or not Chicago should host the Games?
