Work on London’s main Olympic site is progressing well. The 600-acre former industrial zone in east London that will become the focal point of the 2012 event has been transformed into Europe’s biggest construction site. Steel for shoring up the massive new stadium’s seating terraces is being installed. And work on the structure that will eventually support its roof is underway. But the progress masks concerns that the economic crisis will hit the world’s biggest sporting event. As one member of the International Olympic Committee remarked on a recent visit to London, Britain’s capital faces “the toughest time — short of wartime — to get the project to 2012.”
Even in the best of times, staging an Olympic Games is an extraordinary feat. Hosting thousands of athletes and millions of spectators takes billions of dollars in investment to pull off. But with public and private funding under heavy strain in the global downturn, it’s hardly the ideal time to be putting on a show. China lavished some $40 billion on last year’s Beijing Games. These days “we are in a mode for lean games,” IOC president Jacques Rogge said in December.
So how do you budget for the Olympics during lean times Some $13.8 billion in public funds has been allocated to the London Games, a huge jump from the $5 billion that was budgeted in 2005. Having fluffed the original math, though, the government insists that the event won’t cost a penny more. The $290 million increase in the cost of building venues announced on Feb. 5, for instance, will come out of a $3 billion contingency fund included in the inflated budget. So too will the $682 million in extra public money needed for the media center and Olympic village — home to some 17,000 athletes during the Games, before turning into 3,000 apartments following them — after private investors spooked by the downturn backed away from the projects.
London is not the only one suffering. Caution among private investors, particularly when it comes to the enormous athletes’ village, has hit other upcoming Games. The local government in Vancouver will now likely fund much of the $820-million village intended for its 2010 Winter Olympics after private backing fell through.
The cities still in the running for the 2016 Summer Games — Chicago, Rio de Janeiro, Madrid and Tokyo will hand their final submissions to the IOC this week — are also wary of the downturn. Chicago’s plan for the Games rests almost entirely on contributions from businesses, foundations and individuals. “The private funding initiatives on behalf of the general public [are] a well-established precedent in Chicago,” says Patrick Ryan, chairman and CEO of Chicago 2016. Ryan remains optimistic that Chicago can raise enough money should it win the Games, not least because Chicago’s proposed athletes’ village would be located on a prime waterfront site that would be “extremely attractive for private development.”
Tokyo has taken a different approach. The city started a fund back in 2006 for the construction of its proposed Olympic venues and infrastructure. Tokyo’s metropolitan government will have banked some $4 billion by the end of 2009. The city authority “knows that during good moments, you save money,” Hidetoshi Maki, deputy director-general of the Tokyo bid, told reporters in London on Feb. 5. And with the national government pledging to cover up to 50% of the venues’ construction costs, “we don’t think our bid plan is hugely damaged” by the slowdown, said Maki. Limiting the number of new venues helps; good maintenance of several sites used during the 1964 Tokyo Games means that 23 of the 34 venues earmarked for 2016 already exist. That’s a similar proportion to London’s plan, though slightly higher than that of Chicago or Rio de Janeiro.
And while short-term costs might seem painful during an economic slump, cities will be keen to press longer-term benefits. “The London 2012 Games will provide economic gold at a time of economic need,” Tessa Jowell, Britain’s Olympics Minister, wrote in the latest annual report on progress toward 2012. That will mean 100,000 contract jobs to stage the Games — of those currently working on the Olympic site, one-tenth were previously unemployed — with half as many long-term positions created in the park and surrounding area. “The Games remind us,” Rogge said on a recent visit to London, “that the transient difficulties of life can be overcome through hard work and determination.” And a lot of the green stuff.
See pictures of Olympic tattoos.
Read a TIME story about the lessons of the Beijing Games.
