By Stephen Eisenhammer
RIO DE JANEIRO (Reuters) – Rio de Janeiro’s City Hall will help cover the deficit of the local Olympic organizing committee if necessary, Mayor Eduardo Paes said in an interview on Tuesday, going back on assurances that the committee would be entirely privately funded.
The local organizer, known as Rio 2016, is a private company responsible for running the Olympics and Paralympics using funds from ticket sales, sponsorship, merchandise and broadcast proceeds passed on by the International Olympic Committee (IOC).
That it was fully private, unlike for London’s Games for example, was a key part of Rio’s claim to hosting a sustainable games which used public money mainly for legacy projects instead of for the sporting event.
But with just 20 percent of tickets sold for the Paralympics, which start on Sept. 7, and Rio 2016 spending heavily to fix last-minute problems such as plumbing and electricity in the Athletes’ Village, the committee’s finances are stretched.
“If it’s necessary we’ll help,” Paes said. “We won’t let the Paralympics not happen because of that.”
The mayor said he expected the city to pay around 100 to 200 million reais ($31 to $62 million), which he described as “small” in comparison to the committee’s budget of 7.4 billion reais. The total cost of the Games is around 40 billion reais.
A Reuters report last month put the committee’s deficit at between 400 million and 500 million reais. Given unexpected costs during the Games, that could have risen further still.
A Brazilian judge last week lifted an injunction which stopped the federal and city government using public money to help finance the committee, though the judge maintained a previous ruling that organizers make their accounts public.
Rio 2016 said it is discussing emergency funding with the municipal and federal governments but that a final figure has not been confirmed.
“We believe that the fact that we were able to do the Olympic Games in the middle of a crisis like the one we have without public funds is already historic,” Rio 2016 spokesman Mario Andrada told reporters recently.
Brazil’s economy is in the midst of its worst recession since the 1930s. The collapse in the economy, partly due to falling commodity prices, has been accentuated by a political crisis fueled by a huge corruption scandal and the impeachment of President Dilma Rousseff.
Paes dismissed concerns about the impact on Rio’s economy of the loss of thousands of construction jobs linked to building venues and infrastructure for the Games, saying a number of large projects were still in the works.
“I think the Olympics isn’t the end, it permits the city to become better with more opportunity, more vibrant,” Paes said, listing a number of potential mobility projects such as an extension of the light railway network built for the Games that could provide jobs.
In terms of legacy, the mayor said a tender process had begun to secure a public private partnership (PPP) for running the permanent venues in the Olympic park, including the tennis stadium and velodrome. “There’s interest … I’m confident it will work,” Paes said, adding that four companies had shown interest.
The mayor said lackluster sales of apartments in the Athletes’ Village and lack of plans to build commercial and residential real estate on the Olympic Park, as originally agreed, had nothing to do with Olympic legacy because they were predominantly privately funded.
Critics highlight the possibility that these sites are abandoned, after so much public investment to improve transport links to reach them, as one of the flaws of the Games.
“I don’t count that as legacy,” Paes said.
($1 = 3.22 reais)
(Reporting by Stephen Eisenhammer; Editing by James Dalgleish)