LONDON: Paris’ “lean” Olympic Games are unlikely to do any lasting damage to France’s finances, thanks to 95% of its venues either already being built or needing only minor refurbishment, credit rating agency S&P Global estimates.
The near €9bil (US$10bil) budget to host the July and August Games is comfortably below those of Tokyo, Rio and London and only a fraction of the record US$52.7bil Beijing is estimated to have spent in 2008.
Paris’ main outlays have included just three major builds. Its Olympics Village is expected to cost about €1.5bil, the Aquatics Centre €175mil and a €138mil badminton and gymnastics arena.
“We do not expect the Games to weigh significantly on French public sector entities, including Paris and the central government,” S&P, which specialises in assessing creditworthiness, said.
The budget is expected to be evenly split between €4.5bil being spent on new venues and facilities and the other €4.4bil on related operating expenses such as hosting and running transport networks.
S&P’s AA credit rating on France is two steps below the AAA maximum countries can have. It also has a “negative outlook” on the country, which is a red flag that the rating could get cut.
France’s overall public spending on the Games, including by the state and local and regional authorities like Paris, will be only 28% of the total budget, S&P estimates.
Ticket sales and TV and marketing deals should bring in around €4.2bil which could cover up to 96% of total operating costs, according to the International Olympic Committee (IOC).
France’s government has agreed to provide the IOC with a €3bil guarantee, which equates to 0.1% of its gross domestic product.
The tax windfall from full hotels and restaurants and other visitor-related spending should also help cover the bill, and the government said the economic benefits could be as high as €10bil.
Cost overruns remain a risk however if past Games are anything to go by.
London’s 2012 Olympics overspent by more than US$5bil. Tokyo overran by nearly US$26bil after the Covid-19 pandemic forced it to delay its 2020 Games by eight months and then spectators were not allowed, while the state of Rio de Janeiro defaulted in 2016 after the cost of its Games saw its debt levels soar.
The 1976 Montreal Games remains the worst example in Olympic history however. The bill came in at 13 times the original estimate and the cost of the main stadium took more than 30 years to repay in full.
Paris’ infrastructure spending has overshot the initial budget by over 37% compared with its 2016 projection although it is a more moderate 14 percentage points once inflation is factored in.
Its operating expense budget has ballooned 15% compared with 2019 estimates. — Reuters
