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June 24, 2017

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US$2.9 billion operational budget unveiled for Rio Games

RIO DE JANEIRO -- Rio 2016 Olympic Games organizers on Thursday unveiled an operational budget of US$2.9 billion, comprising private money and around 27 percent higher than initial forecasts allowing for inflation.

The total is some two thirds above the original bid quote made in 2008 but inflation accounts for 31.89 percent.

The total does not include capital spending or infrastructural elements and will comprise wholly private money, organizing committee president Carlos Nuzman said.

The budget includes items such as ticketing, sponsorship and merchandising whereas infrastructure projects, including transport upgrades, falls in the spending remit of national and local governments, to be unveiled next week.

When Rio was selected as hosts for South America's first ever Olympiad in 2009 the spending blueprint came in at US$3.5 billion (based on U.S. dollar/Brazilian real exchange rate at the time), the lion's share funded through sponsorship and an International Olympic Committee grant.

The organizing committee has "undertaken a line-by-line critical analysis of the budget, to balance known spending commitments and be able to meet new obligations as they arise," chief executive Sidney Levy told reporters in Rio.

"We are striving to achieve a zero contribution of public funds to the committee," he added.

The issue of the private-public split is a hot topic in Brazil, which is also hosting this year's World Cup, set to cost around US$11 billion.

Last year, around a million Brazilians took to the streets to protest the cost of staging major sports events when the country is suffering from creaking infrastructure and lack of investment in health and education.

Multi-million dollar new football stadiums have been paid for in major part by government funds, fueling popular resentment and suspicion at how state finances are being spent.

Olympic organizers insist the overall budget for 2016 — estimated in the region of US$12 billion — is as transparent as it can be.

The budget revealed Thursday covers expected revenue and organizing committee-related expenses.

The Committee explained that part of the overshoot on the 2008 figure when the bid was submitted was down to the inclusion of four new sports — rugby sevens, golf and paracanoe and paratriathlon in the Paralympics.

A spokesman added that technological and communications advances since 2008, coupled with regulatory requirements and salary increases had also had to be taken into account, as had the costs of leading and fitting out the Olympic village.

Next Tuesday is due to see the capital section of the budget unveiled which is forecast to be some three times greater than the operational figure.

Chief Operating Officer Leo Gryner said he could not "categorically" state that the total cost would not rise by 2016, citing unknown factors such as exchange rates — a key element is sponsorship, whose deals are valued in dollars.

Since 2008, the dollar-real rate has oscillated by half from some 1.6 reais to the dollar to nearer 2.4 now.

In all, 16,000 athletes from 204 countries will descend on Rio for the August 5-21 Games along with some 25,000 media representatives.

Levy indicated that "the good results achieved with sponsorships and licensing allow us to forecast sufficient private revenue to cover the costs outlined in the budget we are presenting today."

Nuzman said that the operational spending level, deemed to be around 12 percent less that that of London 2012, was a "responsible" figure.

"Our obligation to Rio de Janeiro, to Brazil and to the worldwide sporting community is to deliver a memorable Games," said Nuzman.

"We are undertaking the mission of planning and organizing the Games in a responsible manner," Nuzman said.

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