Games facing cash crunch

Not long ago, it seemed like organizers of the 2010 Winter Games had constructed a gold-medal model on how to put on an Olympics.

Not long ago, it seemed like organizers of the 2010 Winter Games had constructed a gold-medal model on how to put on an Olympics.

New sports facilities in Vancouver and Whistler, B.C., were completed on schedule and on budget.

The backdrop of the Games would be one of the most beautiful urban and Alpine settings to ever host an Olympics, in a country that defines its identity by snow, cold and everything winter.

Yet with less than six months until the Olympic flame is lit in Vancouver, key knots in the plans for the 2010 Winter Games are slowly coming undone because of a worldwide recession seen as the worst economic slump since the Second World War.

No one is saying the 2010 Games’ budget won’t be balanced. But at a time when the focus should be on the final few details, a multi-million dollar budget shortfall is fraying the close ties that bind Vancouver officials and the International Olympic Committee.

The IOC’s co-ordination commission makes its final trip to Vancouver this week and will review transportation, accommodation, venue arrangements and plans for the opening and closing ceremonies, among other things.

But plans in some of those areas can’t be finalized because of an issue that’s become a key point of contention between the IOC and Vancouver organizers — $30 million worth of sponsorship money.

Vancouver’s committee, known as VANOC, has repeatedly claimed it’s owed a further $30 million from the IOC’s take from major international sponsors.

Not so, says the IOC.

From the IOC’s perspective, its contractual obligation to VANOC has been met and even surpassed, says Gilbert Felli, the IOC’s executive director for the Olympic Games.

“We may have some more to come but it’s not an obligation of the IOC,” Felli told The Canadian Press.

Felli and Rene Fasel, the chairman of the co-ordination commission, say the IOC has given more to VANOC than any other organizing committee.

“We have also taken over the host broadcaster role, which used to be paid for by the (organizing committee) itself,” Fasel said in an email, adding the cost of doing so is worth about US$145 million.

“Since the beginning, we have also worked with VANOC to ensure that the core product was being delivered and have pointed out when we felt that perhaps some ’nice to have’ elements were unnecessary.”

VANOC’s claim comes from its 2009 budget, developed on the assumption IOC would be able to sign 11 international sponsors and give them $196 million towards their $1.75-billion bottom line.

That was despite the fact that during the bid phase for the Games, the IOC’s forecast for sponsorship was about CDN $127 million in 2002 dollars.

During the four-year period from 2005-08 that included the last Winter Olympics in Turin, Italy, and last year’s Summer Games in Beijing, the IOC had 12 worldwide sponsors that brought in nearly US$900 million.

Since then major backers Kodak, Johnson & Johnson and Manulife Financial have dropped out, leaving just nine worldwide sponsors, the lowest number since the worldwide program was started.

“We were making budget forecasts that were based on a buoyant economy, on ongoing discussions with the IOC, on the performance in Beijing as it related to sponsors,” said Renee Smith-Valade, vice-president of communications for VANOC, of the $196 million figure.

“We prepared our updated budget and then of course everything changed, the economy took a dive and everyone had to reanalyze.”

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