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Olympic bailouts

2008 November 16
by Skip Sauer

The developers who are Vancouver’s partners in the 2010 Winter Games reportedly have … financial issues. UBC’s Professor Somerville sums up the implications nicely, I think: “We’re looking at a very real potential here for some levels of government to pony up more money. The alternative would be the Olympic tent city.” The bailout business continues to boom.

Meanwhile, the cost of the 2012 games in London has escalated from £3.4 billion when they were awarded the bid to £10.3 billion at present. Private financing has gone the other direction however, and half of the government’s £1 billion contingency fund has already been tapped.

Financial headaches are doubtless behind this statement from Olympic Minister Tessa Jowell last week: “Had we known what we know now, would we have bid for the Olympics? Almost certainly not.” Jowell has since “clarified” her statement, going Keynesian and all that. I’m sure the British people are as happy as a hog in a wallow over the obligation to spend lavishly on Olympic infrastructure.

One thing that both the Vancouver and London plans have in common is “legacy development.” More specifically, the idea seems to be to avoid building the proverbial white elephants, and instead leave behind assets that have value to private developers. This is an intriguing possibility, but it could be very, very expensive in the end.

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