The cost of the Olympic Games

Costs and benefits of the Games
The Vancouver Organizing Committee for the 2010 Olympic and Paralympic Games, known as VANOC, insists its $1.76 billion operating budget is on target. So far, no one has produced the numbers to prove it wrong.   But ever since 2003, when Vancouver won the right to host the Games, the cost of putting on the events has kept rising.
One of the costlier increases was in construction of the venues, which is not in the operating budget. The price tag for building the arenas, rinks and other facilities started out at $470 million, but jumped by $110 million to a final tally of $580 million.

The opening ceremony on Feb. 12 and closing ceremony on Feb. 28 alone will cost $40 million.
The final costs of the Games won't be known for a long time afterwards – and maybe never.
"Over time it may be answerable," said Robert VanWynsberghe, the lead researcher on the Games at the University of British Columbia. "For now we only have some of the data. It seems like the pre-Games economic forecasts are pretty ambitious and they tend not to be borne out in the overall impact of the Games."
The research was commissioned by VANOC to study the social, economic and environmental impacts of the Vancouver Games. So far, the group has released two of four volumes in a 10-year study aimed at showing the impact of the Games. "We know this is the most heavily funded Games since Lillehammer (in 1994)," said VanWynsberghe. "But we don't know for certain until the final tally is in."

VANOC will open its books to the researchers after the Games and another report is to be published by October. What is certain, said VanWynsberghe, is that the Olympics loosen purse strings at all levels of government. Ottawa has invested at least $1.23 billion in the Games while the province of British Columbia, which committed $600 million, has spent $765 million.

That doesn't include costs of the newly constructed convention centre ($885 million) and the multibillion-dollar infrastructure work funded by the feds and the province for improving the Sea-to-Sky highway between Vancouver and Whistler and a new rapid transit line from Vancouver's airport to downtown.

B.C.'s minister of state for the Olympics, Mary McNeil, said it's not fair to include infrastructure costs in the Olympic price tag.

While the Games may have speeded up the projects, the positive impact of the convention centre, safer highways and the transit line will continue long after the athletes have gone home, she said.

The province has been accused of underestimating the true costs of the Games, but McNeil said it's impossible to say just how much the Olympics will benefit the economy.
"The proof will be later in hindsight. The estimates now are we will generate $4 billion in economic activity through the province," she said. "It's hard to judge, but what I've heard from other jurisdictions is we are lucky we have the Olympic Games coming when the economy all over the world is challenged."
The benefits could range from immediate ones to an increase in tourism a decade from now because visitors first saw Vancouver through a TV broadcast, McNeil said.
The Conference Board of Canada this week forecasted that Olympic spending will make B.C. the fastest-growing province this year.
About $770 million in Games-related spending is expected, through tourists staying in hotels, eating in restaurants and touring the province. That will add 0.6 per cent to the province's economy, which is forecast to grow by 3.7 per cent.
Without the Olympics, the province would grow by 3.1 per cent. That would put it behind Ontario, at 3.5 per cent, and ahead of Alberta, projected to grow by 2.5 per cent.
"If not for the Olympics, B.C. would not be No. 1 in the country," said the Conference Board's Marie-Christine Bernard.

Others are more skeptical.
A study released this week by the University of British Columbia's Sauder School of Business found little evidence of big economic benefits or severe busts in cities that hosted an Olympics.
Jake Wetzel, a PhD student at the school and a 2008 Olympic gold medallist on Canada's rowing team in Beijing, said that when politicians tout the Games' huge economic benefits, they're making people consider what else the money could be spent on, such as relieving homelessness.
"The problem with how the Games have been sold is people make promises that can't be kept and that detracts from what the Olympics are about," he said. "People are left with a bad taste in their mouth when they think about the economic impact, because much of that can't be proven."
Wetzel and UBC professor Tsur Somerville looked at post-Olympics housing prices in other host cities and found no proof that visitors ended up buying second homes, driving up real estate prices.
It could take years to figure out whether the other costs were worth it.  The city of Vancouver, which helped fund the athletes' village in one of the few waterfront locations left near downtown, calculated it could make money by selling off the units after the Games. That decision, made during the heady days of a real estate boom, turned messy when costs escalated and the market slowed.  The city had to step in and agree to bankroll the $1 billion price tag after Wall Street hedge fund Fortress Investment Group backed out.
Organizers are focused on last-minute arrangements. VANOC has not said whether all Olympic tickets have been sold and organizers are spending the next 12 days outfitting the venues and ensuring there is enough snow on Cypress Mountain, where warm temperatures have forced workers to stockpile and move in snow.

VANOC's vice-president of sports, Tim Gayda, said money for the last-minute effort will be found in other parts of the operating budget.   International Olympic Committee (IOC) President Jacques Rogge said this week that VANOC will not lose money, but no one will know for sure until six weeks after the Games.
"The prediction is to have a break-even," Rogge said at a media briefing in Lausanne, Switzerland. "It is the latest position of VANOC and it is our position."
Early last year, as the global economy imploded, the IOC offered up to $22 million to VANOC to ensure the Games break even. But Rogge suggested the IOC will not need to step in.
"They are heading for a balanced budget, but of course, as always, you have to wait for the final outcome."

PETTI FONG, January 30, 2010