An elephant in the Olympics financing room
There has been all sorts of talk about the costs of a Boston Olympics, with elected officials left and right stamping their feet, drawing lines in the sand, and otherwise declaring with the utmost gravity and certainty that they will not allow the commitment of any public funds (other than those already planned for infrastructure projects) for a global sports extravaganza here.
The officials may be perfectly sincere, but in one sense their pledges ring hollow. That’s because, in order for the Boston bid to go forward, Mayor Marty Walsh will have to sign a guarantee that Boston taxpayers will cover any unanticipated cost overruns.
That is the dirty little secret behind the constant refrain from Boston 2024 boosters that this will be an entirely privately-funded affair. It’s been looming over the talk of a Boston Olympics from the start. Today it gets an airing on the front-page of the Globe, but it’s a pretty friendly one for Walsh, Olympics honcho John Fish, and others who are hoping this issue doesn’t blow-up and become the the bid’s undoing.
The public guaranteeing of cost overruns “seems to always be an issue in the US,” the Globe quotes the editor of an Atlanta-based publication that covers Olympics issues worldwide. That may be because there is a more vigorous public review of proposals here, but it’s also because it is state or local governments that end up on the hook in US proposals, while national governments tend to be the financial backstop for proposals in other countries.
Celtics co-owner Steve Pagliuca, a co-chairman of the Boston 2024 fundraising and finance committee, tells the Globe he thinks revenue projections of $4.8 billion to $5 billion are “very doable, and doable with a cushion.”
Of course, if there was no chance of ever blowing past any such “cushion,” there would be no need for a government backstop.
Chicago obtained a $1.5 billion insurance policy against overruns as part of its failed bid for the 2016 Games. A University of Chicago economist who was critical of projections for the proposal there thinks Boston may find it can’t put forward a competitive proposal on the budget it has projected.
The Globe story says, high up in the piece, that the need for government backing of any cost overruns has become a “rallying cry” for opponents of a Boston Games. Yet in what seems like a glaring omission, the story then includes no comments from those opponents.
While there is a bit of a nothing-to-see-here-folks quality to the story, this won’t be the last exploration of the question that will take place. Indeed, telegraphing a take on the matter that is anything but matter-of-fact,Globe columnist Scot Lehigh tweets out today’s story and calls the need for a city guarantee of any cost overruns a “key & perhaps fatal issue” for the Boston Olympic bid.
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