Thu, Oct 08, 2015 page19

• Rio Olympics cuts costs, as Brazil is deep in recession

  ‘VERY STRICT BUDGET’: The organizing committee is to cut its budget by about 10%, as the real has lost 70% of its value, tickets remain unsold and venues are under fire

  • AP, RIO DE JANEIRO
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  Olympic organizers, faced with the reality of a country deep in recession, are trimming costs to keep their budget balanced.

  To keep spending in line, officials said they would cut back on volunteers, reduce staffing at dozens of test events and trim costs for the opening and closing ceremonies of the Olympics and Paralympics in Rio de Janeiro.

  “This is a very strict budget,” organizing committee chief executive officer Sidney Levy said. “There’ll be no excess, but we are not going to compromise the essentials.”

  

  Journalists get a first-hand look at the construction site of the Olympic Park for the Rio 2016 Olympic Games during the third media briefing for the Games in Rio de Janeiro, Brazil, on Tuesday.

  Photo: Reuters

  Levy has said often over the past few months that he would trim costs and cut non-essential purchases.

  News of the budget austerity comes as hundreds of journalists from around the world are in Rio this week visiting Olympic venues and talking with organizers about how the Games will run when they open on Aug. 5 next year.

  Organizing committee spokesman Mario Andrada on Tuesday said the cuts came during a periodic budget review.

  He estimated without trimming, expenditures would exceed income by “around 10 percent.”

  “A lot of areas have built fat in their planning,” Andrada said. “What we’re trying to do is to identify if there is any fat.”

  The organizing committee’s budget remains at 7.4 billion reals (US$2 billion), which is for putting on the Games themselves. It does not include building venues, subway lines and highways to help stage the Games.

  Operating income is from ticket sales, local sponsorships, merchandising and licensing, with the largest contribution from the International Olympic Committee.

  “We need to make sure we get into the final stretch with enough budget revenue to go all the way,” Andrada said.

  Andrada said cuts could include reductions in printed materials, changes in “backstage costs” unseen by fans, and using as many as 10,000 fewer unpaid volunteers.

  Plans call for 45,000 volunteers for the Olympics and 25,000 for the Paralympics.

  “We’re trying to see if volunteers who work in the Olympics can do the same work in the Paralympics,” Andrada said. “If we can achieve that we can save some money.”

  The volunteers are unpaid and must pay their own lodging. However, they are given uniforms, transportation to venues and meals the days they work.

  Andrada said that only 2 million of about 5 million tickets allocated to Brazilians had been sold. Another 2.25 million are earmarked for sales outside Brazil. He said ticket revenue represented about 20 percent of the income for the operating budget.

  Brazil hosted the World Cup last year with year-long protests leading up to the event.

  Now the Olympics are causing another strain.

  Brazil’s currency has lost 70 percent of its value against the US dollar in the past year and inflation is running at 10 percent. The economy is expected to remain in a steep recession through the Games, and there are calls to impeach Brazilian President Dilma Rousseff, partly driven by a US$2 billion bribery scandal involving state-run oil company Petrobras.

  When Rio won the Olympic bid in 2009, a US$700 million contingency fund was available from the federal government to cover any cost overruns. Since then, organizers have promised not to use that money with politicians unwilling to be seen supporting such spending with the country in recession.

  Olympic organizers also face other problems.

  The venues for sailing, rowing, canoeing, triathlon and open water swimming are heavily polluted with viruses and bacteria, with only stop-gap measures possible to contain the problem.

  Organizers have said athletes are not at risk, though some athletes have openly questioned competing in the dirty water.

  An Associated Press study published on July 30 showed high levels of viruses in all of Rio’s water.

  Organizers say they are looking at viral testing, but do not plan to move any venues.
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