Deficit not hurting 2010 Olympic finances, organizers say
Last Updated: Thursday, October 16, 2008 | 10:34 PM PT
The Canadian Press
The 2010 Winter Games remain in a strong financial position, despite a current deficit, rising venue budgets and global financial concerns, organizers said Thursday.
The budgets for individual venues being constructed or upgraded by organizers are up about $12 million total since last year, although the overall budget for venue construction hasn't increased, according to the Vancouver Olympic organizing committee's year-end financial statements.
'From our perspective we are going to complete them on target and on budget.'— John McLaughlin, Vancouver Organizing Committee
Rising expenses elsewhere pushed the Games organizing committee into a deficit of $48.1 million in the fiscal year ending July 31. At the same time last year, they had a surplus of $60.9 million.
"It's important to look at that in the context of the entire run of the Games, the six-year period," said John McLaughlin, the chief financial officer for the organizing committee, who added the deficit wasn't a surprise to the committee.
"Whether or not we have a deficit or a surplus in any given year is really strictly just a matter of timing of our cash flows and is not indicative of the financial performance of the organization."
McLaughlin said organizers still expect the Games to break even.
He said the deficit came from organizers ramping up spending on staff, technology and other planning elements for the Games.
Venue budget increases have been covered off by a contingency fund which now sits at around $13 million, down from over $66 million two years ago.
McLaughlin said the budgets were always projected to rise throughout the construction process, which is why there was a contingency plan in place.
It's possible the entire fund will be depleted by the time the Games are over, McLaughlin said, but the venues themselves won't go over the overall budget of $580 million.
"It really is no more money, we're not asking for any more money, we won't ask for any more money," he said. "From our perspective we are going to complete them on target and on budget."
Ticket sales to supplement finances
The venue budget for the Games is separate from the operating budget; the former is financed by the federal and provincial governments while the latter is covered mostly by the money the Games makes through sponsorship, broadcast rights, merchandising and ticket sales.
When organizers first released their business plan for $1.6 billion operating budget in 2007, they said they were making their revenue plans on the assumption of the "Canadian economy remaining relatively strong with no recession through Games time."
On Thursday, Canadian banks warned a recession was coming, as the global credit crunch worsened and the stock market fell yet again.
Still, McLaughlin said the Games are on solid financial footing — 79 per cent of revenue has already been committed or received and organizers have surpassed their target for sponsorship.
Money from ticket sales will start coming in next month when the first phase of sales ends and organizers said demand is high.
"We should be able to hit our revenue targets, not without our challenges but we're in good shape," McLaughlin he said.
