VANCOUVER—An updated Olympics budget, adjusted in light of the financial crisis, was released Friday by the Vancouver Organizing Committee for the 2010 Olympics (VANOC).
The new balanced budget of $1.76 billion includes $127 million in revenues and expenses that has been added to the previous $1.63 billion budget.
A contingency of $77 million remains from the $100 million in the original budget to be used for potential revenue shortfalls and unexpected costs in transportation, accommodation and anti-doping.
“I think everybody at a time like this should be concerned about costs, and we are. We are doing everything we can to manage them,” said Vanoc CEO John Furlong at a news conference Friday.
The organizers “know better now” regarding operation and accommodation costs, as some venues have started to run already, said Dave Cobb, Vanoc’s executive vice-president of marketing.
The budget was approved earlier this month by Vanoc’s board of directors. This will be the last formal budget before the Games start on February 12, 2010.
Furlong said the committee spent "thousands of hours" revising the budget to safeguard it against further financial risks in the current economic climate.
“The spirit of the Games is extremely important to us. That’s why we get out of bed every morning to give the people the promise and the country the experience. The city will start to look and feel different. People will start to arrive,” said Furlong.
The largest expense increases, totaling about $60 million, occurred in areas related to transportation, accommodation, Games services and sport programs.
Initial costs escalated due to challenges finding enough affordable accommodation in the Sea to Sky corridor between Squamish and Whistler, more media and spectators than expected, and higher costs in meeting the accommodation requirements for suppliers and contractors.
There were also revenue gains, due in part to a dramatic increase in the number of sponsors, in ticket sales, and in merchandise sales, especially from the mascots.
“The cost of our budget has gone up by $127 [million], but the revenue has gone up by the same amount. And there’s no additional risk in our budget,” said Cobb.
Some uncertainties still remain, however, including $26 million that has yet to be delivered by the International Olympic Committee’s international sponsorship, $10 million from domestic sponsorship, and $16 million from advertising yet to be sold.
The contingency will be used to cover these costs if necessary.
“Those contingencies we believe are necessary to protect us and to look after the interests of the organization, given the kind of climate we are in for what may lie ahead,” said Furlong.
Vanoc cut about $25 million in expenses from areas including technology, workforce, marketing and communications programs. Planned pay raises for employees was reduced from 3 percent to 2 percent, saving $2 million. Furlong himself turned down the entire raise.
The budget will be modified on a continuous basis, and in the future there will be some “in-and-out” revenues and expenses associated with Vanoc acting as a middleman for some International Olympic Committee-related programs.
Furlong said that over the next 12 months, Vanoc will spend $1.3 billion locally on various services for the Games, with its partners spending the same amount, resulting in a positive impact on the economy.
Cobb said these investments will bring future benefits.
“To say ‘an arena costs a hundred million dollars’ without thinking about what values that delivers as an asset—it’s not money that has been flushed down the toilet. These are investments being made. I think the public will start to understand and realize the value they will get over these investments in the future,” he said.