Vancouver View -- VANOC Budget up Seven Percent

VANOC's new budget is $1.76 billion. (ATR)Organizers of the 2010 Winter Olympics are spending $127.3 million more to stage the Games than they projected in 2007.

VANOC released its revised, balanced budget Friday amid the biggest recession since 1982.

The new budget is $1.76 billioncompared to almost $1.63 billion from May 2007. It is to be financed mostly by sponsors, broadcasters and ticket and souvenir sales.

Revenue is down overall by almost $782,000, but costs have risen $35.4 million. There is a $27 million contingency for revenue shortfalls and $50.1 million left in the 2007-projected $100 million contingency.

Spending is up by $67.7 million in sport and service operations, but $6.6 million was cut from technology and $12.9 million from workforce and sustainability. Staff pay increases were reduced from 3 percent to 2 percent and new hires have been delayed. VANOC projects a net $13.6 million foreign exchange loss.

VANOC is projecting $10.3 million more from the International Olympic Committee via foreign exchange fluctuations. An $8.3 million dip in sponsorship is offset by an $11.8 million increase in goods and services from sponsors. Another $17.5 million in ticket sales are expected over the original $231.8 million projection, which includes service charges. A $7.8 million increase is projected in licensing and merchandising.

“We had to rethink everything,” said VANOC CEO John Furlong. “We felt it was our obligation to simply look ahead and make the kinds of judgments that were necessary to protect us from things that none of us can predict.”

Revenue is down overall by almost $782,000, but costs have risen $35.4 million. There is a $27 million contingency for revenue shortfalls. VANOC is using almost half its $100 million contingency to cover increased costs.

"Those contingencies we believe are necessary to protect us and the interests of the organization given the kind of climate we're in and for what might lie ahead,” Furlong said.

Spending is up by $67.7 million in sport and service operations, but $6.6 million was cut from technology and $12.9 million from workforce and sustainability by delaying new hires and reducing staff pay increases from 3% to 2%. VANOC projects a net $13.6 million foreign exchange loss.

“We are committed to staging spectacular games, but it must be staged within the financial resources of the organizing committee,” Furlong said.

Ticket sales revenue is expected to be $17.5 million more than the original $231.8 million projection. Licensing and merchandising is up $7.8 million. An $8.3 million dip in sponsorship is offset by an $11.8 million increase in goods and services from sponsors.

Furlong said VANOC will be an economic catalyst in the next year in the Olympic province. Its $1.3 billion expenditure will be matched by spending by government and private sponsors.

“We believe that’s a reason for a lot of optimism,” Furlong said.

Chief financial officer John McLaughlin was unable to immediately say how much of the budget was government-financed.

Precisely how much VANOC is spending throughout each department was not disclosed. Instead of a line-by-line update of the 196-page May 2007 budget and business plan, only a four-page backgrounder and two-page spreadsheet were released.

(Exchange rate: $1 Canadian=$0.81 U.S)

With reporting from

Bob Mackin in Vancouver.

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