An Olympic Delay: Will Rio Manage to Beat the Historic Precedent?

NEW YORK | Nov. 11, 2013 — Rio de Janeiro launched the countdown to the 2016 Olympic Games in a public event Saturday at the feet of Christ The Redeemer, the landmark statue looking down from Mount Corcovado. With less than 1,000 days to go before the games begin, the city may need all the redemption it can get.

As of today, construction of the facilities that will make South America’s first Olympics are running well behind schedule. Government organizers have been distracted by a spree of mega-events and the continuing public protests over the costs of the games — Among other concerns over infra-structure shortcomings, corruption scandals, poor public services and soaring taxes.

A report by Brazil’s Federal Court of Accounts estimated that, as of late September, only 5 percent of the $746 million construction budget had been utilized. Historically, these kinds of delays have led to additional make-up and unforeseen costs laid on the government’s back and in turn, on taxpayers’ pockets. In an interview with the Associated Press, Leo Gryner, the chief operating officer for the organizing committee, anticipated the allocation of $700 million in public money to balance out the predicted operating budget.This high estimate doesn’t even begin to account for the future maintenance costs after the games are over.

Up to date, the only success story of an Olympic Game with no trail of debt has been Los Angeles 1984, which managed to turn a $200 million profit thanks to existing facilities that were remodeled instead of being built from the ground up. At the time, LA’s success was also attributed to successful lobbying for corporate sponsorship by the American organizing committee. For Athens 2004, delays in venue construction drove Greece to spend 5 percent of the nation’s entire GDP in a rushed attempt to make ends meet. Much of the work was carried out in just 500 days prior to the event’s opening ceremony. The balance was an abandoned Olympic Park and an economic crisis.

But perhaps the most infamous deadline disaster and financial mismanagement happened in Montreal 1976, when the city had to go 796 percent over its budget, incurring a debt that took 30 years to be paid off. Needless to say, Brazil can’t afford to be in a similar situation, but its track record so far suggests a path that may not be so different.

In hosting the Pan-American Games of 2007, the country went over 10 times the original budget for a much smaller event. Moreover, a report by the Federal Court of Accounts found proof of overbilling and budget discrepancies that amounted to over $1 million under the guise of hiring services for the hotel sector. The investigation led executive members of the organizing committee to face legal charges for misappropriation of funds.

However, despite the controversy, the positive attention that the Pan 2007 games garnered ended up weighing in support of Brazil’s application to host the Olympics, after having been passed over in two earlier bids. What impressed the International Olympic Committee was that the Pan 2007 plan seemed to reflect an efficient use of time and resources in improving public transportation, among other key aspects for events of that magnitude. But what actually happened was the government carried out a string of fast, short-term solutions that circumvented larger planned projects, such as a major expansion in the subway system that would have been a pre-requisite for Rio 2016.

During a conference in Buenos Aires 2 months ago, IOC’s vice president John Coates, spoke to Reuters about his concerns revolving the city’s accessibility, saying that the location of the athletes’ villages may compromise competitors’ ability to easily get to the venues where they will be competing.

“In Rio, the issues are being behind in construction, not just venues, some of which are at real risk now of not being ready for test events which is generally a year before; the transport infrastructure, those sorts of issues,” Coates said.

Right now Rio seems to be as delayed as other hosting cities have been in the past — But those also happened to be the ones that ended up indebted and unable to sustain the facilities’ maintenance costs after the games. By all accounts of history, this proves to be a real warning sign.