POSTED: April 10th 2009

London threat to Chicago 2016

Chicago: a different financial model / Image: Chicago 2016
Chicago: a different financial model / Image: Chicago 2016

KEIR RADNEDGE / Sports Features Communications

LONDON: Chicago Olympic bid leaders have cause to fear an old cliché being turned on its head in this unpredictable economic era.

After the Wall Street crash of 1929 a London newspaper coined the phrase: “When America sneezes, Europe catches a cold.” In Olympic terms, the danger is reversed: every time London sneezes it is Chicago which may catch the cold.

The issue is still all about money. All four cities bidding to host the Games in 2016 made presentations to a mix of sport business and media recently in Denver, at Sportaccord.

Madrid, Rio de Janeiro and Tokyo all referred powerfully and at length to the secure financial support they had been guaranteed by national and local government. Chicago sidestepped that one because its financial model has to be different: United States law prevents state institutions offering the sort of financial safety nets assured by the rival governments of Spain, Brazil and Japan.

Now, the 2012 host city London had planned to finance its Games with a mixture of state and private finance. The credit crunch has wiped away much of the likely private finance so the state is having to come to the rescue.

The latest emergency assistance concerns the £1bn athletes village project. London had hoped that private sector finance would raise the bulk of the money for the 3,000 athletes’ apartments. But such funding has vanished in the wake of the credit crunch and subsequent collapse in property values.

Looking ahead

Thus the UK government must find up to £400m and seek a £225m loan from the European Investment Bank.

Now, translate this scenario into a 2016 context. When the IOC members come to vote on October 2 in Copenhagen, the economic climate will probably still be chilly. In studying the four candidates they must consider (and guess at) financial security in an insecure world.

Chicago lacks the sort of state support which is keeping the London Games effort afloat. Bid chair and ceo Patrick Ryan says the city has other, equally valid, guarantees. He and his team explained them to the IOC evalution commission this past week.

Every time the UK government rescues the London Games from a new funding crisis,  however, it underlines the value of the state purse – and the dangers of being without.

Ryan and his team should keep a wary eye on the headlines coming out of London, less they bear tales of financial infection . . .

Keywords · London · Chicago · 2016 Olympic Games

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