Credit Crunch Impacts Funding for London's Olympic Village

A LOCOG rendering shows the view for the 17,000 athletes and officials to be housed in the village.(ATR) Turmoil in global financial markets is making it more difficult to secure the $2.4 billion required to fund the building of London’s Olympic Village, 2012 chiefs admit publicly for the first time.

According to Olympic Delivery Authority chair John Armitt, the credit crunch is making it "just about impossible" to secure private funding, and additional public funding is now being sought.

“There was a certain amount of finance available six months ago, less two months ago and the reality is there is even less now,” Armitt told a fringe meeting of the governing Labour party’s annual conference in Manchester. Olympics minister Tessa Jowell and LOCOG chairman Sebastian Coe also attended.

London's Olympic budget for the village - to house 17,000 athletes and officials - was based on property prices continuing to rise at around 6 per cent per year, with the 3,500 apartments on the site to be sold off after 2012 to recoup capital costs, repay interest and provide profits for the private sector partners.

But UK property values have plummeted more than 10 per cent in the past year. The village is part of an overall regeneration scheme in the East End.

"Given the challenging economic environment, we are in ongoing discussions about the level of public investment in the Olympic Village," said Armitt.

"It is possible, given the economic situation, that more public investment may be needed," an ODA spokesman confirmed. The spokesman said the extra money would be within the existing $18.6 billion pound budget for the London Games and would be offset by the ODA claiming a greater share of profits from future house sales.

Construction work began on the Olympic Village in May, initially funded by the ODA while the terms of its contract with Australian developers Lend Lease are finalized. Lend Lease has struggled to raise its $900m share of funding for the project due to the banking crisis.

Armitt said that the ODA was still forecasting a deal “around the end of the year”, adding: “It's very difficult in the current market.”

He said that the organization believed it has “more than half” of the necessary funding secured for the project, the largest of the Olympics construction program. “We are in discussions with Lend Lease and its banks, and we are in discussions with government,” Armitt said.

Meanwhile, British media reports suggest the government and Olympic authorities will re-open talks next month with West Ham United, the Premier League soccer club, about becoming the anchor tenant for London’s Olympic Stadium after 2012. An August photo of the Olympic Park site, where the stadium under construction requires a tenant. (Getty Images)

West Ham – who play at the 36,000 capacity Boleyn Ground stadium in Upton Park, 1.5 miles to the east of the Stratford Olympic site - had previously refused to discuss moving. With the Olympic Stadium due to offer extensive legacy use for track and field, the football club considered the planned 25,000 post-Games capacity inadequate and disliked the idea of playing inside an athletics track.

Other attempts to find sports clubs to use the Olympic Stadium once it is converted from its 80,000-seater Games mode, including offering it to lower league soccer clubs and Saracens rugby club to ground-share, have so far come to nothing.

Work on building the stadium has already begun, giving added urgency to develop a viable legacy solution for the venue after the Games.

Written by Steven Downes

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