IOC Bailout of VANOC 'Has Limits'

Support to help mitigate a possible Games shortfall has limit,
official says

By Jeff Lee, Vancouver Sun, August 28, 2009

The extraordinary agreement by the International Olympic Committee to cover at least part of a potential deficit for the Vancouver Games came after IOC officials told president Jacques Rogge they felt they owed Vancouver a hand, despite a provincial government guarantee to cover any shortfall.

Rene Fasel, the chairman of the Vancouver Coordination Commission, said Thursday the deal was signed recently with Vanoc after he and Gilbert Felli, the IOC's executive director of Olympic Games, warned Rogge and Richard Carrion, the chairman of the IOC's marketing commission, of Vanoc's looming trouble.

Fasel said the arrangement was made in part because the IOC had altered a revenue-sharing agreement that radically changed how it funds organizing committees.

The IOC's new promise "isn't an open-ended guarantee" to entirely cover any deficit, he said. The figure is a secret, he said, but he agreed that it is "more than" the $30 million that the IOC would give Vanoc if it is able to sign an additional two international sponsors.

When asked why the IOC offered the extra payment when the province had already committed taxpayers to covering any shortfall, Fasel said the IOC recognized its new revenue-sharing agreement had affected Vanoc's financial ability.

Under the old agreement, in place until the 2006 Turin Winter Games, the IOC gave a percentage of broadcast revenues to organizing committees. However, it scrapped that deal after Turin, instead offering Vancouver a fixed amount based on Turin's modest budget, plus inflation. The change came as the IOC signed the most lucrative TV rights deals in its history, a volume that would have given Vancouver a substantially larger portion of the split under the old
arrangement.

The IOC recognized once before that changing the funding model had hurt Vanoc. In 2007, Vanoc negotiated a better revenue share, giving the organizing committee $579.7 million in broadcast rights payments, along with a one-time special $35-million payment for its $100-million contingency.

Fasel said that even with those payments, Vanoc was forced into a deficit position because of the recession.

"We were informed [by Vanoc] that there was an issue with balancing their budget," he said. "Gilbert and I decided we needed to have a meeting with our president and finance director. . . . We cannot leave our Vanoc friends standing in the rain."

Fasel said he still believes Vanoc could have a surplus after the Games. "Our goal will be that we don't need this additional guarantee," he said. "We're doing everything we can to get them to a surplus. I am going work 24/7 to make sure that happens."

Fasel's comments came as Vanoc clarified the arrangement. "It is important to clarify that the IOC is not guaranteeing to cover all outstanding costs or to ensure there is no deficit at the end of the Games," Vanoc said in a statement.

"The IOC's support to help mitigate a possible deficit has a limit. It does not and is not intended to replace the responsibility of the Organizing Committee and its partners and other entities in respect of their obligations to stage the Games."