Spi­ralling costs threaten Paris 2024 Olympics

New Straits Times - - Sport -

PARIS: With Paris set to be awarded the 2024 Olympics, one of the or­gan­is­ers’ biggest chal­lenges will be to keep the Games within bud­get — a chal­lenge that has de­feated so many of their pre­de­ces­sors.

The French cap­i­tal has set a rel­a­tively mod­est bud­get of €6.6 bil­lion (RM bil­lion), but Lon­don in 2012, Athens in 2004 and Syd­ney in 2000 all saw their bud­gets for host­ing the Sum­mer Olympics at least dou­ble from the time of their bids to the fi­nal bill.

The bud­get-bust­ing reached its peak with the 2008 Bei­jing Games for which costs bal­looned to a ver­tig­i­nous €32 bil­lion, more than ten times the orig­i­nal bud­get.

Vladimir An­dr­eff, a sports econ­o­mist at Paris’ Sor­bonne univer­sity, de­scribed Olympic bud­get in­fla­tion as “the curse of win­ning an auc­tion.”

“In the­ory, the win­ner of an auc­tion is the most op­ti­mistic par­tic­i­pant and the one pre­pared to out­bid ev­ery­one else,” said An­dr­eff, one of three ex­perts who con­trib­uted to a fi­nan­cial im­pact study com­mis­sioned by the Paris bid team.

“And when there are a lot of com­pet­ing cities, the win­ner is trapped.”

In an at­tempt to im­press the In­ter­na­tional Olympic Com­mit­tee in the bid­ding process, can­di­date cities have a habit of un­der­es­ti­mat­ing cer­tain costs — as Lon­don did for the 2012 se­cu­rity bill — and over­es­ti­mat­ing po­ten­tial eco­nomic ben­e­fits.

Af­ter eval­u­at­ing the Paris bid in July, the IOC said in its re­port that while costs for se­cu­rity, pre­par­ing venues and in­stalling tem­po­rary in­fra­struc­ture “may be un­der­stated”, they “could be off­set by po­ten­tial ex­pen­di­ture re­duc­tions in other ar­eas.”

How­ever, Jean-Pas­cal Gayant, eco­nom­ics pro­fes­sor at Le Mans Univer­sity, is scep­ti­cal.

“I find it very hard to imag­ine that the bill for 2024 will be be­low that for Athens and Lon­don,” he said.

The of­fi­cial cost of the Lon­don Games rose to £8.77 bil­lion, or €9.8 bil­lion /US$11.6 bil­lion at to­day’s ex­change rates, from an ini­tial bid es­ti­mate of around half that fig­ure.

An­dr­eff, the Sor­bonne econ­o­mist, es­ti­mates the ac­tual bill for Lon­don was al­most €10.9 bil­lion.

The spi­ralling cost of or­gan­is­ing an Olympics was the main ar­gu­ment put for­ward by op­po­nents of the French cap­i­tal host­ing the Games for the first time since 1924.

But the Paris bid team has re­peat­edly in­sisted that its €6.6 bil­lion es­ti­mate is fea­si­ble.

Bernard La­pas­set, the co-head of the or­gan­is­ing com­mit­tee, said the bid was “shel­tered” from changes to fi­nan­cial con­di­tions in the fu­ture be­cause 95 per cent of the venues al­ready ex­ist.

The or­gan­is­ing com­mit­tee bud­get is ba­si­cally fi­nanced by the Olympics them­selves — the es­ti­mated €3.37 bil­lion cost will be paid for with the IOC’s con­tri­bu­tion of €1.45 bil­lion and in­come from spon­sor­ship and ticket sales.

Paris is plan­ning to use the Stade de France, built for the 1998 World Cup, as the main Olympic Sta­dium, whereas Lon­don and Athens both had to build sta­di­ums.

Paris only has to con­struct three sites — the ath­letes’ vil­lage, which at €1.3 bil­lion is by far its most ex­pen­sive item, a me­dia cen­tre and an aquat­ics cen­tre.

The to­tal bill for per­ma­nent venues is es­ti­mated at €3 bil­lion, of which the French state and lo­cal au­thor­i­ties will pay half, while the other half will come from pri­vate in­vest­ment — the ath­letes’ vil­lage will be partly pri­vately fi­nanced.

One con­cern for Paris is that its bid was based on the sports in the 2016 Rio Olympics. Since then, surf­ing, climb­ing, soft­ball/baseball, karate and skate­board­ing have been added to the Olympic pro­gramme, mean­ing they might re­quire the con­struc­tion of venues not cur­rently in the bid es­ti­mate.

But the biggest headache for host cities re­mains the cost of transport in­fra­struc­ture to bring hun­dreds of thou­sands of spec­ta­tors to events. AFP

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