ATR First: Sports Ministry Must Find Olympic Park Operator By 2019

(ATR) Minister Picciani says Brazil Social Development Bank will help solicit private operator before funding lapses.

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(ATR) The Brazilian Sports Ministry is working with the Brazilian Social Development Bank (BNDES) in an effort to find an operator for the Barra Olympic Park, Around the Rings has learned.

Sports Minister Leonardo Picciani told ATR in an exclusive interview that the ministry has 18 months to secure a private operator. To help facilitate that, a deal with BNDES is being finalized in an effort to lure an operator.

The ministry took over administration of a number of venues in the Olympic Park after the Eduardo Paes administration failed to find a private operator. Then, the city of Rio de Janeiro’s tender failed to materialize after bidders balked at the 25-year lease requirement on the venues.

Without an operator, the venues risk falling into disrepair. Currently parts of the Deodoro Olympic Park are without an operator, although Rio City Hall says that could change by the end of June. Two venues in the Olympic Park, the aquatics center and the future arena, remain standing, but empty, awaiting funds for dismantling.

Picciani said that operating the Park was a "short term resolution," and the ministry does not have the budget to operate the Park after 2018. A BNDES spokesperson confirmed meeting with the Ministry of Sport to ATR.

"We wanted that at the end of last year a private operator [could heed] the city of Rio's call to assume the operation, but it was not possible," Picciani said. "After this the ministry of sport assumed this responsibility and we are making this formulation with BNDES to solve this problem within the next two years maximum."

A Rio City Hall spokesperson said the city was not involved in any negotiations with BNDES over operating the Olympic Park. City Hall currently only operates Carioca Arena 3 within the Olympic Park. The spokesperson said since any future concession would not include that arena, "the negotiations do not go through here".

The BNDES spokesperson confirmed to ATRthat it would not be providing "financing," to ensure the parks operations, but was working to continue with a Public Private Partnership.

"The BNDES had an initial meeting with the Ministry of Sports to discuss modeling studies of a PPP for the operation of the Olympic Park," the spokesperson said.

Ernani Torres, a Brazilian economist who also worked at BNDES for 35 years, told ATR it would make sense for the bank to be involved in securing a private operator. Torres says the bank, which is subsidized by the Brazilian government, can offer lending rates that are much lower than private banks.

To receive the funds from BNDES at a lower rate than private banks, an operator would have to show that it has the capability to provide 130 percent of the capital that BNDES puts up, Torres said. That would mean only larger firms could qualify.

BNDES would then create an auction for which private companies could bid on the concessionaire and assume operations of the park.

"The bank would help structure the operations," Torres said, adding that the loans would be released after that.

For the ministry, there is no worry about taking up to 18 months to find a company to run the park. Previous editions of the Olympics have seen similar delays, and Picciani says that as BNDES works to find an operator, events in the Barra Park will continue.

"London spent more than two years on its Park," Picciani said. "The private operation of the Olympic Stadium [started just now]. We are doing our responsibility and have a strong agenda and schedule of sport events for the next year, even without a private operator."

Written by Aaron Bauer

25 Years at #1: Your best source of news about the Olympics is AroundTheRings.com, for subscribers only.

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