a budget revision under the close supervision of the State
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Paris (AFP) – Twenty months before the Olympic and Paralympic Games in Paris, the revision of the budget of the Organizing Committee (Cojo) was carried out under the strict supervision of the State, which returned little to help a committee affected by inflation and underestimated costs .
Monday afternoon, the Board of Directors must endorse what Cojo’s financial management has been doing for several weeks, in coordination with the International Olympic Committee (IOC) and the State. It should record a budget of up to 10% (+400 million euros) up to 4.380 billion euros, 96% of private sources (income from sponsors, ticketing and contributions from the IOC).
With the budget of Solideo (Olympic works delivery company) at 4.3 billion so far (including 1.870 billion of public money), the total bill for the Paris Olympics could reach 8.7 billion. euros, compared to 6.8 billion expected in 2019.
In any case, since the arrival of Amélie Oudéa-Castéra, Minister of Olympic Games, the State, guarantor in case of a deficit from Cojo, “tightens the bolts”, reported some sources to AFP. Cojo has already made a budget revision at the end of 2020, with 300 million euros of savings at stake.
But this time, rising inflation has made the exercise difficult.
“They were not too early and the situation worsened, if they had signed their contracts then, they would have escaped that”, a source close to the Olympic world explained to AFP. Inflation is almost half of the increase, with 120 million euros for this year and 75 million euros for 2023 and 2024, detailed Cojo.
Curse of the auction winner
But aren’t organizers also victims of the “auction winner’s curse”? As economist Wladimir Andreff explained, the country that won the IOC competition to organize the Olympic Games systematically underestimated the cost. Then he should keep checking the invoice again. “The budget is undervalued,” several sources told AFP for months.
Some lines continue to rise. This is the case for security, which went from 195 to 295 million in 2020, and became 320 million euros at the end of December.
For his part, the Minister of the Olympic Games also modestly mentioned “the complexity of relatively underestimated details”. Clearly, the contracts cost more than expected.
“When we organize events at the Grand Palais, for example, we have to hide the glass roof to take into account the requirements of broadcasting”, explained Amélie Oudéa-Castéra in the Senate on November 2, which was “unexpected” .
Similarly, the idea of outsourcing and entrusting the conduct of events to third parties – the core business of an organizing committee – did not work as expected. Several prospective providers have thrown in the towel under the weight of IOC constraints or liability-related fears. Meanwhile, time passed and prices rose.
Another problem: payroll, with “jobs in tension” at sports events, which can earn money for their arrival less than two years from the event.
“acceptance of weakness”
The committee also recruited “an executive director of operations” in the person of Edouard Donnelly, and not much publicity. Coming from the world of events, he worked with Etienne Thobois, currently general manager. “He comes a bit like a firefighter,” believes a source close to the Olympic world.
Faced with these rising costs, it is necessary to both save money and find income.
The boss of Cojo, Tony Estanguet, slipped last week that the State was “moving to find new partners”. “An admission of weakness”, according to one observer, who also sees it as a sign of state control. But Cojo says it is “on top” of its goals and will register an additional 127 million euros in the partnership line on Monday. However, several sources tell AFP that “contrary to what they say, they are really in the dark”.
Cojo will also sell more and more expensive tickets for certain events, as well as draw 115 million euros from its contingency reserve.
It also received aid from the State and local authorities (City of Paris, Metropolis of Greater Paris) in particular for the organization of the Paralympic Games but also for costs related to the fight against doping. So 111 million euros of public money will be added to only 100 million euros of public grants.
The book of accounts should be more widely open at the beginning of 2023 when a Court of Auditors report that has not yet been made public will be debated in Parliament.
© 2022 AFP
