Despite controversies, Olympics ’08 to be profitable

Font Size

Print

Feedback

Email

Discuss

• Discount UK Shopping

Mumbai, Jun 3 : Though the Beijing Olympics is likely to run up a bill of significantly over $20 billion, the most expensive games till date, it will be a bonanza for the country, said Standard & Poor’s Ratings Services, an international rating agency, in an in-depth analysis of Olympics finance and economics.

“Some may question whether it will become a financial millstone for Beijing municipal government. While the cost of hosting the games is huge, S&P believes that Beijing is well equipped to handle it. The importance to China in terms of boosting its international standing is obvious, but the Chinese authorities appear to recognise that Olympics isn’t an end in itself. Indeed, their careful planning of this massive event suggests the benefits of hosting the Games will continue long after the closing ceremony,’’ said the rating agency.

With the advantage of a rich and long history, Beijing could experience an even greater tourism boost. Hosting the Olympics could lead to long-term improvement in the city government’s creditworthiness, rather than to a huge financial burden, argued S&P.

Moreover, of the amount spent on the Games’ venues, the government shoulders only about one-half, it said.

In planning for the Olympics, the government made conscious efforts to seek diversified funding. It tendered commercially viable projects out to the corporate sector and offered financial support and incentives where necessary, as was the case with the National Stadium.

The government also sought donations to build structures such as the National Aquatics Center, which it financed with contributions of overseas Chinese. These measures helped to significantly reduce the financial burden.

The Beijing government appears to have considered the issue of Olympic white elephants as well. Tenders for building sports venues encouraged winners to put these structures to commercial use after the games. Other venues went up in universities and other educational institutions for their use after the Games. These arrangements reduce the future cost to the government of maintaining these facilities.

The Chinese government is clearly eager to put its best face forward when the country is in the international spotlight this year. However, in doing so, it hasn’t thrown its characteristic fiscal prudence to the wind. In this regard, attention to execution appears to have led to timely completion of various projects without substantial cost overruns.

S&P hasn’t assigned a local government credit rating to Beijing, as it has with most bidders for the 2012 Olympics.