London Olympics Could Cost Taxpayers $17B

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The London Games could cost in the neighborhood of $17 billion.

How much will the Brits spend on their upcoming Olympics? The tally won?t be available until weeks after the final medal ceremony (for Men?s Handball, of course). But already government agencies are squabbling over the projected public cost of the games, which looks primed to soar above $15 billion.

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In one camp sits the Commons Public Accounts Committee, the agency charged with overseeing government expenditures. On Friday it released a scathing report saying it expects the full cost for taxpayers to be $17 billion, about $3.1 billion over budget.

?The public sector funding package is close to being used up and we are concerned about whether the running of the games will be held within budget,? said Margaret Hodge, the committee?s chairman.

In the other is the Department for Culture, Media and Sport, which says the games? cost to taxpayers should come in at around $14.5 billion, the approximate budget that was agreed upon in 2009.

Security costs have added to the bottom line. In December the London Olympic Organizing Committee (LOCOG) more than doubled the number of security guards from 10,000 to 23,700, which equated to an added $420 million cost.

But the DCMS is not counting one sizable line item, the$1.23 billion spent on buying the 180 square acre swath of land in east London, which houses the Olympic Park and Europe?s largest urban shopping mall. The area is being built by Australian developer Westfield. The plan is to transform the area into a huge mixed-use development zone, which will include the largest urban park built in Europe in the last 150 years, and then use revenue from home sales rents to pay for the land purchase.

?The cost of buying the land was excluded because the public purse would be reimbursed by selling it off after the games,? said a spokesperson for DCMS.

The $14.5 billion also overlooks about $1.3 billion in ?legacy spending,? which included a government plan to get 2 million Britons more active by 2013. The government scrapped the plan in January.

Whether the two line items are included in the final tally is yet to be seen. But it does not change the? fact that the projected cost is almost four times higher than the initial $3.7 billion budget that was discussed in 2005. Or the fact that only about $156 million remains of the $14.5 billion in taxpayer cash earmarked for Olympic spending, with the opening ceremonies just five months away. Or that the former 2012 Olympic chief thinks it could go as high as $31 billion.

The Straford City area will become a mixed-use development.

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These sums may sound like pocket change when compared to the estimated $45 billion the Chinese spent on the 2008 Olympics in Beijing. I covered those games, and my jaw dropped every time I walked past one of the enormous, temple-like structures the Chinese had erected for obscure sports like air rifle and canoe racing.

Source: http://www.forbes.com/sites/freddreier/2012/03/10/london-olympics-could-cost-taxpayers-17b/?feed=rss_home

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