Calgary, Canada work out Olympic compromise but math doesn’t really work and council is still mad and luge fans are madder ARGH

Sorry to be late with the posting today, but I had a morning appointment and time got away from me and anyway Calgary and Alberta and the Canadian government have apparently settled their $430 million difference over paying for a 2026 Winter Olympics bid, meaning the plan will now go to a public vote on November 13 as previously scheduled.

How on earth did this happen, after just the night before everything seemed to be headed for the bid to be pulled amid a budget stalemate? Partly by some sleight of hand: The total projected bid cost is now just $2.875 billion, down from $3 billion, but given that the typical Olympics goes 156% over budget, both those numbers should be treated as fictitious anyway. As for who’ll pay for what share of that:

  • From the City of Calgary, $370 million in cash, plus another $20 million to cover a premium on a $200-million insurance policy against cost over-runs, for a total of $390 million.

  • From the City of Calgary and Government of Alberta, $150 million in pre-authorized improvements to Victoria Park and access to the Calgary Stampede grounds.

  • From the Government of Alberta, $700 million in cash.

  • From the Government of Canada, $1.423 billion, which matches the amounts committed to the core event costs by the province, city and Town of Canmore; also, $30 million in “leveraging initiatives” which the letter said are identified in the hosting plan.

So basically Calgary and Alberta put in an extra $170 million, the feds put in $47 million less, and the total public contribution ($2.69 billion) is nearly $200 million short of the actual total public cost. Numbers are fun!

The numbers work out better if the $200 million insurance plan is counted as a city expenditure toward the $2.875 billion cost. But if it’s part of the cost, it’s not for overruns — you’re really saying that the projected cost is now $2.675 billion, plus have an insurance policy for the next $200 million. Seriously, did somebody major in doubletalk here?

Furthermore, an insurance policy against $200 million in cost overruns doesn’t do much good if the overruns are more than $200 million — which, as noted above, they’re almost certain to be — so who covers any additional costs?

Interestingly, as of last night one important decisionmaker hadn’t officially signed onto the deal:

It was signed by Alberta Premier Rachel Notley, federal Minister of Sport Kirsty Duncan and included a space for Calgary Mayor Naheed Nenshi’s signature.

Nenshi was “not available for comment” today according to several news outlets, and hasn’t tweeted in a while, so your guess is as good as mine what’s actually been agreed to and by whom. The city council is set to vote on a proposal to deep-six the Olympic bid entirely today, but presumably this announced agreement is set to forestall that, but councilmember still sounded unhappy about the new deal but they were being yelled at by angry luge fans NO SERIOUSLY ANGRY LUGE FANS and I need to go have a lie down right now. Let’s all tune in again tomorrow morning — morning, I promise this time — and see where the chips have fallen.

[UPDATE/CORRECTION: The $150 million Victoria Park money was actually already allocated, it’s just being newly counted as Olympic spending to qualify for matching funds. That’s good in that the city will just be on the hook for the $20 million in insurance premiums; it’s bad in that the only money actually committed to Olympic costs now comes to $2.325 billion, which is a lot less than the $3 billion originally projected. Basically, the feds seem to be dealing with the funding gap by saying, “Let’s shift $675 million from the ‘spending’ category to the ‘overrun’ category, and hope that we get lucky and it costs less than we expected!” This is not likely to go well.]

5 comments on “Calgary, Canada work out Olympic compromise but math doesn’t really work and council is still mad and luge fans are madder ARGH

  1. So, as I recall the original City of Calgary contribution was supposed to be $700m. Now, as a sign of their increasing commitment to the project, they have reduced their overall commitment to $465m, and also lowered the projected budget by about $200m (while taking out an insurance policy on overruns up to $200m, which sounds a lot like admitting you were lying when you said you’d found $200m in ‘efficiencies’ in the budget…)

    Meanwhile, the federal and provincial taxpayers are on the hook for more than $2bn of the total cost (maybe more than $3bn)?

    I don’t see this as city commitment to the concept.

    And, since we are talking about it anyway, how is it that Calgary ’26 thinks it can stage the games for less than $2.5bn come 2026 when the Vancouver 2010 games cost more than $4bn, not counting a bunch of expenses like transit improvements and athletes village etc?

    Are we supposed to believe that deflation will occur on a massive scale between now and 2026?

    The notion that ‘many venues already exist in Calgary’ has been heavily contradicted by athletes saying that most of the facilities from ’88 are near the end of their life and will need considerable investment very soon…

    I think we all know that most of the facilities from 1988 aren’t going to be acceptable by 2026 Olympic standards, don’t we?

    After all, the showpiece of the 2010 winter olympics (BC Place) was ‘renovated’ at a cost of nearly $600m… for a building originally built for C$110m in 1983/5 money.

  2. Do transit improvements or even an Athletes village count as Olympic costs? Sure some of them wouldn’t happen but for the Olympics but if those are necessary projects that you are having trouble marshalling the political will to get done, do you consider them as purely Olympic costs?

    1. If the transit projects cannot be prioritized without the artificial rationale of “the Olympics” then yes, I would consider them Olympic projects.

      If they were actually needed enough to warrant funding absent the Olympics, the prospective host city/region would already have them. This goes for both the sea to sky highway improvements and the sky train in Vancouver. Both projects had been ‘discussed’ before, but there had never been the political or financial will to make them happen. If they were priorities for the BC or city govt in Vancouver, both could have been funded (instead of a $600m renovation of BC place, for example). The suggestion that either is somehow an “olympic legacy’ betrays the fact that not one cent of olympic revenue offset their cost (in fact, they were arguably made more expensive via the artificial deadline of the olympic games than they might otherwise have been).

      As for an athlete’s village, of course this is an olympic cost… the IOC requires the provision of free housing for the athletes of all nations… ergo it is an Olympic cost.

      Whether the host nation/city can flog the units as condos (even at a spectacular loss, as has happened on occasion) is immaterial… they are built for the sole purpose of housing olympic athletes and are a prerequisite for the games.

      A wise games committee might partner with actual condo developers to build saleable condos and just call them the athlete’s village… but the cost to build the village will be much higher as the developer is building actual condos for resale… and will have to furnish them as well. At least in this type of partnership, in theory the units would be saleable afterwards.

      This is close to what Vancouver tried to do, but it failed quite spectacularly. The province had to bail out the village project more than once.

  3. I appreciate politicians putting the decision in my hands, but I didn’t need to vote unless a proper plan was in place. It’s Halloween today, but reading last night’s 11th hour news of a near-death bid suddenly coming back to life was like a horror movie scene where a rotting hand bursts through the top of a wooden casket to grab it’s next victim’s (us Calgarians) throat.

    1. It’s a classic tactical move by politicians, Mark. Give you something other than the actual deal to vote on, then when you say yes the real cost comes out (months or years later) and they say “but you said you wanted this!”.

      Politicians have learned to flog “undercoating” just like used car dealers…. come to think of it, the difference between the two professions is shrinking daily…

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