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Olympic price tag set at $1.63 billion

Costs have gone up significantly, but so have revenues

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By Clare Ogilvie

Olympic organizers released their long awaited business plan this week, announcing that they will put on the 2010 Games for $1.63 billion.

That’s about $100 million less than the Vancouver Organizing Committee for the 2010 Games was projecting just a few months ago. The operating budget also includes a $100 million contingency.

The capital cost of the Games venues, paid for by the provincial and federal governments, remains at $580 million.

“Our objective has been to produce a balanced budget with a healthy contingency and we have delivered that plan today,” said John Furlong, VANOC’s chief executive officer at the release of the business plan Tuesday.

Details of the deal with Orca Bay for GM Place were also revealed. VANOC will pay $110,000 a day plus inflation for the daily rental of the facility and a lump sum of   $18.5 million.

VANOC expects to make $70 million though activities associated with GM Place.

“It’s a great deal,” said Furlong, adding that no taxpayer money will be used to fund the deal.

The deal with Whistler-Blackcomb is still as outlined in the 2002 bid book, with payment to the company being based on a revenue formula of use over several years before the Games.

Dave Cobb, executive vice president of marketing revenue and communications for VANOC wouldn’t reveal the number but said it was in the budget.

“The agreement we have with Whistler Blackcomb calls for VANOC to replace the revenue that Whistler Blackcomb will lose due to the disruption of regular services they will experience during the Games,” said Cobb.

“ In other words, we’ll make Whistler Blackcomb whole.  “There is a formula that we will use to determine the number but because it will be subject to some negotiations, it wouldn’t be appropriate to go into specifics. However we are comfortable we have allowed enough room in the operating budget to cover any costs.”

The 196-page business plan details all levels of spending.

It shows that domestic sponsorship is expected to be $760 million at the end of the day — that is significantly more than outlined in the bid book, which called for US$255 million to be raised.

About $610 million in domestic sponsorship has already been received or committed.

According to the bid book, IOC international sponsors (TOP) were expected to provide close to US$85 million. In the business plan TOP sponsors are expected to provide US$201 million. About three quarters of that is received or committed.

VANOC also expects to raise about $46 million from licensing and merchandising, and $40 million from the Paralympics.

Another $110 million is to be raised from other sources, such as Internet revenue, asset disposal, the Rate Card program, test events and food and beverage. None of this revenue is secured.

On the expenditure side some of the big-ticket items from the operating budget are the cost of technology systems at $398 million, service operations and ceremonies at $548 million and sport and venue management $186 million.

All of these items have risen significantly in cost since the bid book.

Despite these increases all VANOC’s government partners support the plan, with the federal and provincial governments giving their approval this month.

However, Colin Hansen, the provincial minister responsible for the Olympics, said VANOC spending would be watched.

“We do believe there has to be some very close monitoring,” he said. “But the bottom line is we have full confidence in VANOC.

“I think the (business plan) is a great document… it is very comprehensive.”

The province did suggest changes to the plan, said Hansen, but they were mostly for clarity.

VANOC has already collected or received commitments for $1.1 billion or 69 per cent of their operating budget.

This budget is raised solely from the private sector.

Furlong described the plan as flexible, saying there was no doubt that challenges ahead would change some of it. The plan will be updated at the end of 2008.

He would not predict whether there would be a surplus at the end of the Games or not but if there were, said Furlong, it would go back to sport in Canada.

“I think we all hope we will leave a positive financial legacy,” he said.

The budget is not that different from the last Winter Games in Torino, Italy, which came in at $1.87 billion. However, those Games declared a deficit of close to $40 million, the first Winter Games to do so.

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