In light of recent announcements by the organisers for Rio 2016 that the budget for the games will be cut by 30% in order to keep Brazil’s government from being forced to pay for any budget, deficit incurred. Currently, the games are privately funded with a budget of around 3 billion US dollars. However, any budget shortfalls or overspending are the responsibility of the Brazilian government. This announcement comes in the light of concerns over water pollution for athletes and protests in 2013 and 2014 over overspending for the World Cup and Olympics as both Brazilians and those around the world see an Olympic games still far from ready for launch.
What will be affected?
The committee listed the following services as being most impacted:
Opening ceremony – approximately three and a half hours long – budget cut. Now estimated to be 10% of the cost of that of London 2012
All promotional videos must now be made in-house
Online lottery for tickets scrapped and all on open sale with the option to pay by instalments
More tents and fewer structures at Olympic events
Infrastructure at test events scaled back
Volunteer programme, which includes English lessons for participants, likely to be cut from 70,000 to 60,000
The particularly large cut was to the the opening ceremony, generally seen as a nation’s primary opportunity to showcase the work they have done to prepare the games and to impress on the world stage.
These budget cuts come after reports surfaced that one quarter of all projects had not yet been started and in many cases were without a building contract or even a plan. One reason for this is a major corruption scandal involving the state run oil company Petrobras has implicated multiple construction companies and led to a slowing in the building process for 2016.
As seen in the 04 games in Athens, late construction often leads to ballooning costs as speeds becomes a priority. Thus, these recent cutbacks are significant in that they will make a tough job for organisers for the Rio games even tougher. John Coates, a senior IOC official, was quoted as saying that Brazil’s preparations were “the worst I have ever seen,” and while the IOC has taken a softer stance since then their attitude has not changed much.
Flagging tickets sales
Currently only 30% of all tickets for the games have been sold with less than a year away from the games, and much of this can be attributed to the precipitous fall of the against that of the dollar.
When Brazil was given the bid for the games, a pre-negotiated exchange rate for tickets was set up when the real was much stronger. Now, with a ticket for the men’s 100 meter final being sold for $383 when in an open market they would only be sold for $303. However, Brazil not negotiating the exchange rate in light of the value of the real experiencing a drop has likely stymied ticket sales.
With ticket sales being the third highest form of revenue for the games, low ticket sales could also hurt Brazil as it attempts to keep the games on budget and not dip into tax payer funding in order to make up a shortfall.
The most publicized issue of the games thus far has been the issue of water pollution as concerns over the health of athletes competing in the Rodrigo de Freitas Lagoon rises.
The environmental agency in Brazil has certified the water as being safe for competition, even after they admitted that over half of the sewage from Rio into the lagoon goes untreated. While Brazil has improved its water treatment dramatically since 2009, the IOC has begun to test for viruses in the water at the urging of the WHO. IOC Medical Director Richard Budgett:
“The WHO is saying they are recommending viral testing,” We’ve always said we will follow the expert advice, so we will now be asking the appropriate authorities in Rio to follow the expert advice which is for viral testing. We have to follow the best expert advice.”
With independent testing from the IOC, WHO, and the International Sailing Federation approaching perhaps the bigger issue is that there are only 4 labs in all of Brazil capable of the microbiology necessary to test for viruses in the lagoon and other water venues.
Still time to adjust
The Olympic Games in Rio de Janeiro are still roughly 10 months away, and Brazil does have time to build the necessary venues while staying under budget. However, as protest by Brazilians continue to mount along with pressure from the IOC, many organisers and government officials will wonder if hosting such a large endeavor was as good an idea as they thought.