Following is an open letter to residents of Calgary, and those citizens in other cities who are contemplating Olympic bids.
Dear Calgary,
I heard that you’re preparing to vote in a plebiscite over a possible bid for the 2026 Olympic and Paralympic Games. You certainly have a lot to think about.
I know because I’ve been closely watching Olympic bids, and several of these plebiscites and referendums for over 20 years – and the results could have a significant impact on your city for years and decades to come. But, I’m happy to share what I know with you.
You’ll hear and read a lot of information over the next few weeks, and like any political campaign some will be true, much will be false – and very little of it alone will be comprehensive enough to help you make an informed choice.
And maybe, just maybe – there is some middle ground to explore. Keep reading.
Many of you have already made up your minds, but a lot of you haven’t and you could be the key to tilting this vote in one direction or the other. So, here are some tips on how to filter the information, ask the right questions, and make your own qualified decision.
Today, I’ll focus on the budget. I know, you don’t have the detailed numbers yet, but while you’ll absolutely need this information before the vote, I think there is value in Calgary 2026 spending the time to fully vet the budget in order to provide a reasonable accounting that considers risk, inflation and other important factors. Constituents have been critical of bids in the past that have published budgets that were rushed and unrealistic – and have later led to cost overruns.
What you must understand, however, is that there are really two budgets. The first is the operational budget, often referred to as the OCOG (Organizing Committee for the Olympic Games) budget. This is the budget that would be maintained and controlled by Calgary 2026 should it be chosen to host the Games.
The expenses accounted for in this budget include costs related to marketing, staffing, temporary venues and overlays; services surrounding things such as food, lodging, operations, transportation and the production of ceremonies and cultural events. These are offset by revenues from ticket sales, sponsorships, sales of licensed products and hospitality services, and the USD $925 million IOC cash and in-kind contribution.
To make this more clear, this is the budget to operate the Olympic and Paralympic Games in the run-up to, and during the event.
This is the budget that International Olympic Committee (IOC) Executive Christophe Dubi said, while he visited Calgary last month, has typically been balanced, or been in surplus (IOC jargon for profit), when the Games were completed. And he’s right.
Vancouver’s 2010 Games operational budget of CAD $1.9 billion was balanced, according to accounting after the conclusion of the event. Salt Lake City 2002 generated more than USD $50 million as a legacy surplus for winter sports in Utah. Korean officials have claimed that their PyeongChang 2018 budget will show a “multi-million dollar” surplus when figures are released.
And to further mitigate operational budget risks for the host city, for 2026 the IOC has slashed the requirements listed in the host city contract that could reduce costs by hundreds of millions of dollars – and they’ll continue to provide in-kind support such as broadcasting services, bearing any cost risks for those items.
The IOC will work with the city to keep this budget in check, as they have with PyeongChang, and continue to do so with organizers in Tokyo and Beijing.
One line to keep an eye on is the security cost, something that is extremely difficult to project eight years into the future. This cost is typically borne by the federal government.
Running major and international sports events and festivals is something that Calgary does often, and well. The annual Stampede is one example, along with world championships in Winter Sports and the Grey Cup – the Canadian Football Championship Game last hosted by the city in 2009 and will be again in 2019.
If you are concerned about major risk, I don’t think you will find it here, or by partnering with the IOC.
But of course, there’s more.
While Vancouver’s operational budget was $1.9 billion, the total cost to host the Games was pegged at over CAD $7 billion, with a budget overrun of about 17 percent. Why?
My advice: don’t do it! Don’t link these initiatives – the proposed projects that have already caused angst among stakeholders – don’t link them with the organization of the Olympic Games.
That brings us to budget two, that includes both direct and indirect capital costs. A direct capital cost is the price of a venue that is needed to host a required event – typically a sport venue such as the Olympic Oval for speed skating in Richmond, near Vancouver. An indirect capital cost is the price of additional infrastructure that has been proposed and promised to be delivered to improve the Games experience – such as the British Columbia Sea to Sky Highway expansion that linked ice venues in Vancouver to snow and sliding venues in Whistler. In both cases, the infrastructure should create a valuable legacy that lives years beyond the Olympic events.
Some Games critics have called for the IOC to truly partner with the city and help cover any cost over runs in this budget. But it simply doesn’t make sense that the organization should subsidize a venue it didn’t ask for, and one that is intended to create lasting value in the city – and not for the IOC.
You can dream, but the IOC will not pay for your shiny new arena.
For Vancouver, the Games were seen as a catalyst to jump-start critical transportation projects such as the much-needed highway plus a new transit line, and it’s unrealistic to attribute these costs and associated overruns to the Olympic Games.
It’s always risky to attach infrastructure projects to the Games since the work is time-boxed with a drop-dead delivery date – meaning any complications such as labor strikes and other unexpected delays could force additional spending to get the work done in time. Additionally, project estimates at bid-time are generally at a high-level, and price variances should be expected along with minimal wiggle-room to price and course correct.
Sochi’s 2014 Winter Games infamously carried a final USD $51 billion price tag. But more than 90 percent of that bill was for the massive infrastructure spend equivalent to the construction of a small city. Included in the price were a stadium and arenas to host all of the events; complete transportation infrastructure to connect the new venues to each other, and a rail line to the new mountain venue; airport upgrades, hotels, power stations and even the construction of a complete Disney-like theme park that boasts Russia’s highest roller coaster.
The IOC has learned from Sochi, and the massive delays and overruns associated with Rio 2016, and it no longer tolerates unnecessary infrastructure projects connected to the bid. In fact, it’s usually the city itself that insists upon the additional spend.
In 2014 the IOC told PyeongChang not to build a USD $115 billion sliding centre, unsuccessfully urging the Koreans to host the 2018 event using existing facilities in Japan instead. More recently, the IOC has encouraged organizers of the Tokyo 2020 Olympics to cut capital costs by using more temporary structures.
Last year, after the Calgary 2026 exploration committee released an initial budget for the Games of CAD $4.6 billion, the IOC immediately published a statement saying that number was too high – clearly an effort to push back against unnecessary infrastructure build.
So here’s the conundrum, and a topic you can bring to your debates that will certainly be scheduled ahead of the November vote. Do you want to minimize risk, or maximize legacy for Calgary? Or neither.
I don’t live in Calgary, and other than the Olympic debate – I don’t follow your city’s politics.
But I do know that there have been contentious negotiations around the construction of a new arena for the NHL’s Calgary Flames. There has also been a 10-year effort to fund a field house sport complex. And there are transportation upgrades in the works.
Negotiations around the construction of these facilities won’t get easier if they are tied to a Games, and the costs will likely go up.
Maybe the plebiscite question shouldn’t ask whether you want to host the Games – maybe it should ask how.
My advice: don’t do it! Don’t link these initiatives – the proposed projects that have already caused angst among stakeholders – don’t link them with the organization of the Olympic Games.
Calgary Herald columnist Rob Breakenridge nailed it, kind of, when he wrote this week “If we wish to build infrastructure or upgrade existing infrastructure, then we can certainly do so. For a fraction of the cost of hosting the Olympics, we could address several of Calgary’s priorities, while also enjoying any associated employment or GDP gains.”
These projects can and should be planned and developed separate from any Olympic context in order to minimize their costs and maximize their benefits. The days of permanent venue construction tailored for the Olympics are over.
But that doesn’t exclude, if interest is there, the option of ALSO hosting an Olympics without the risky infrastructure build – and with little, if any, additional cost. How? Host some hockey matches in Edmonton, the Ski Jumping in Whistler – in short, find existing venues or others that can be temporarily (or permanently) upgraded.
That’s how Italy hopes to deliver a low cost, low risk 2026 Games – by sharing events among three cities that already have facilities. Sion in Switzerland, before citizens dealt the bid a fatal blow by voting against needed funding, also proposed the use of existing venues.
In 2028, the City of Los Angeles will host what could be the biggest Summer Olympic Games ever – and they’ll do it without tying the construction of a single permanent venue to the project.
But for Calgary, there is still one massive and challenging venue to deliver should the city host in 2026 – the Olympic Village. Housing will be required for athletes, coaches, trainers, officials and members of the media.
Calgary’s published long-term affordable housing strategy, something that already relies on provincial and federal funding, could be leveraged to provide Olympic accommodations and a legacy for families in the community. This could be the only permanent Games-linked construction project for Calgary 2026.
And I’m not saying that if the city comes to terms with the Flames and builds a new arena, or a field house, or builds any other new facilities that aren’t named in the bid – that they can’t be used to host events at a 2026 Games. Olympic master plans are often changed during the seven-year run-up to the event.
But if a complete stable and low-risk plan is offered – and the development of possible additional venues are managed separately (if, at all) – the chances of success increase.
So that makes the plebiscite question a little ambiguous. By answering ‘yes’ to the question “Are you for or are you against Calgary hosting the 2026 Olympic and Paralympic Winter Games?”, you could also be unintentionally agreeing to risky time-boxed construction of new permanent venues for the city.
But even more importantly, by answering ‘no’, you could be against the costly capital projects, but actually in favor of bringing the Games back to the city on a slimmer budget.
Many whom support the bid on Calgary City Council justify the project due to the physical legacies that will be left behind. But that’s the risky path. That’s the old way that typically left massive bills for taxpayers in the past.
There are many intangible and economic benefits to hosting the Games by leveraging existing investment. So maybe the plebiscite question shouldn’t ask whether you want to host the Games – maybe it should ask how.
It’s probably too late to change the question. But when bid book details are released later this year, you’ll know whether Calgary 2026 plans to take a safe path, or a risky one – and you can cast your vote accordingly.
Now, when pro bid forces claim plans will be without risk, and the city will get a shiny new arena out of it, you’ll know that’s not what the IOC meant by low risk.
And when bid opponents reference the cost over runs in previous Games including in Rio, Sochi and London – you’ll know it doesn’t have to be that way if Calgary makes sensible plans.
Indeed, you do have a lot to think about. Good luck! I’ll write again soon.
Sincerely,
Robert Livingstone
GamesBids.com
