The finish line of the third budget revision has just been crossed by the Organizing Committee for the Olympic and Paralympic Games (Cojop). Not without difficulties and some obstacles to overcome. Since the spring, the organization responsible for planning and financing the Olympic Games has been working on an impossible equation to solve… How to absorb a galloping increase in costs with a slight increase in revenue prospects? The answer was approved on Monday December 12 by the Board of Directors.
With expenditure forecasts which have increased by 10% (i.e. 400 million euros), and which bring this budget – 96% financed by private funds – to nearly 4.4 billion euros, the search for savings will not have been enough. The Cojop will be forced to start drawing on its “contingency reserve” sooner than desired. And the State, the Greater Paris Metropolis, the City of Paris and the Ile-de-France Region will have to take out the checkbook to increase the total amount of their subsidy by 111 million euros. “It comes to support the additional cost for the Paralympic Games, and certain items that can be considered as public policies”, explains Fabrice Lacroix, the administrative and financial director of the Committee. By adding the budget of Solideo (Olympic works delivery company), the total bill for the Olympics now climbs to 8.7 billion euros.
Inflation and the winner’s curse
An extension granted by the public authorities far from being pharaonic… But which is starting to wake up the Cassandres promising the 2024 Olympics the same fate as the previous editions: budgetary slippages which end up costing taxpayers dearly. For the moment, the addition is minimal, but its decomposition may raise fears that it will increase further in the coming months. Like all businesses and all households in France, the Cojop has faced inflation which has caused certain expenses to skyrocket.
“The rise in prices affects many items: accommodation, catering, transport or temporary infrastructure”, explains Fabrice Lacroix. The square meter of tent has gone from 90 to 190 euros! In total, inflation inflated the rating by nearly 200 million euros. However, forecasting price trends is one of the most complicated exercises for forecasters, especially in these uncertain times. If a lull is certainly expected, it continues to be postponed… The other large part of the increase in the budget comes from an “underestimation of the specifications”, as recognized by the Minister of Sports, Amélie Oudéa-Castéra at the end of November. A fault which is not specific to Paris 2024. The economist Wladimir Andreff even theorized it, under the name of “curse of the winner of the auction”. “The auctioning off of the organization of the Olympics by the IOC leads the candidate cities to one-upmanship by underestimating their organizational and infrastructure costs. For the city which obtains the Games, this underestimation translates into an increase in the real cost up to a multiple of the cost initially announced”, he writes in summary of an article published in 2012.
Faced with this deluge of rising expenses, the Cojop has certainly benefited from slightly more dynamic revenue forecasts… But not enough to fill the hole. Marked in the panties by an executive who assured that the Games would finance the Games and that there would be no Olympic Games tax, the Committee did not avoid the austerity cure. He had to give up some promises that were part of his candidacy, such as free transport for spectators. And negotiate fiercely with the International Olympic Committee (IOC) to revise certain parts of the specifications downwards. Requirements of OBS, the broadcaster of the Olympic Games, pooling of means of transport, later opening of the Olympic Village… The list has been combed through, and the showdown has not been easy. Because if the IOC is well aware of the need to set up more sober Games, it is not easy to abandon its old habits.
“For them, it’s a real paradigm shift,” says a connoisseur of the Olympic world. Another race against time underway for the COJOP: that of the list of partners. On this point, the executive is trying to give them a boost to convince some reluctant CAC40 to add their logo next to those of Danone, Carrefour and EDF. Tough negotiations… but which would remove a thorn from Cojop’s side if they came to fruition quickly.