THE CANADIAN PRESS
VANCOUVER — Vancouver’s Olympics are making more money but also costing more money, forcing organizers to significantly boost their rainy day fund as they eye the storm clouds gathering on the economic horizon.
In its new $1.75-billion budget released Friday, organizers cut millions of dollars out of the back-end of the Games and boosted spending on the operation of the Olympics itself.
That was possible in part because sales of tickets and merchandise have been much higher than original projections.
But organizers say they’re concerned that other revenue taps are running dry.
"We know corporate budgets have been cut back and people are looking very carefully at that money," said Dave Cobb, executive vice-president of revenue for the committee known as VANOC.
Selling expensive VIP packages or all available ad space may no longer be realistic, Cobb said, though the committee remains unconcerned that existing sponsors will pull out.
So, for the first time, the committee has put in place a $27-million revenue contingency fund that will hopefully be enough to cover off any shortfall.
"What we’ve tried to do is say if something came, do we have the wherewithal, the durability, the flexibility, the finances to manage it and we think we do," said John Furlong, VANOC’s chief executive officer.
That fund is on top of a $50 million contingency fund for expenses, which once stood at $100 million but it has already been tapped to cover the rising cost of staging the Games.
Until the worldwide economic collapse, the committee had believed the remaining $50 million in the fund was enough to get it through the Games.
"We had to stop and start again," said Furlong, after the new budget figures were released. "We had to rethink everything."
The federal and provincial governments contribute some of VANOC’s operating budget, however much of the funding came from the private sector through sponsorship, broadcast rights, ticket sales and merchandising.
Among other things, the committee now expects to hire about 100 fewer people, has cut its annual three per cent salary increase for employees and will spend less on ads for tickets and Games-related publications.
Organizers maintain none of the cuts will affect the face Vancouver and Whistler show to the world.
Whistler residents may not be as convinced.
One of the budget cuts includes chopping a nightly medal awards ceremony in Whistler, saving about $5 million.
.The village had razed a grove of trees and is building a $13-million plaza for that purpose but medals will instead be handed out at the venues and a party will take place afterwards.
Even before the economic downturn, organizers had been stymied by the cost of holding an Olympics partially in Whistler, B.C., where accommodation and transportation logistics are now budgeted to cost millions more than intended.
.VANOC’s last budget, released in 2007, put the cost of the Games at $1.63 billion.
The additional $127 million in Friday’s budget reflects in part that organizers now know the true price of elements such as buses and power bills, and accounting rules required those be disclosed.
.The Games operating budget doesn’t include the cost of the sport venues, which cost $580 million plus $11.8 million in value-in-kind.
The speedskating oval has an overall budget $178 million, while the Olympic athletes village in Vancouver is about $1 billion.
On top of VANOC’s budget, the province is paying at least $600 million for the Olympics, though the province’s auditor general has argued that an additional $170 million should be added to that tally. The federal government’s contribution is over $650 million.
Neither of those budgets include the final cost for Games security, which has yet to be released.
