Questions are being asked about the viability of the =20 Cape Town Olympic Bid Company’s budget, presented =20 to Cabinet this week, reports Rehana Rossouw=20
THE green light for South Africa’s Olympic dream shone =20 faintly this week when Cabinet decided to support the =20 preparations for the 2004 Games, but warning lights =20 flashed over the possible cost to taxpayers.=20
The Cabinet’s decision came in the same week as the =20 organising committee for the 1996 Games in Atlanta — =20 the home of mega-corporations like Coca-Cola and CNN — =20 admitted that its prospects for making a profit are =20 virtually non-existent.=20
A budget presented to Cabinet by the Cape Town Olympic =20 Bid Company in preparation for the Cabinet decision =20 required central government to spend R979-million over =20 the next 10 years, but promised a separate surplus of =20
The government will now assist the Bid Company to fine-=20 tune its budget and will provide expertise to examine =20 preparations and report back to Cabinet for its final =20 decision in April next year.=20
Bid chief executive Chris Ball welcomed the Cabinet’s =20 decision and said national and provincial finance and =20 transport experts would now join his staff to form =20 “Team South Africa” to prepare for the bid process.=20
A bullish Ball said the message to the world now was =20 that the South African bid was proceeding — it had the =20 full support of the Cabinet and national business.=20
But serious reservations about the budget presented to =20 Cabinet were raised this week by a chartered =20 accountant, who analysed it on behalf of the Mail & =20 Guardian. He said a major question left unanswered was =20 how it could be assumed that South Africa could make a =20 profit out of the Games while other more sophisticated =20 countries failed to do so.=20
The Cape Town Olympic Bid Company predicts a total =20 revenue of R4.2-billion, an expenditure of R2.9-=20 billion, a gross surplus of R1.3-billion and, after =20 expenditure on sports facilities, housing subsidies and =20 a contingency fund, a net surplus of R94-million. The =20 private sector is required to provide R279-million.=20
“Cape Town’s budget is generally optimistic, even =20 though it is difficult to predict the situation in nine =20 years’ time,” the accountant said. “We don’t know what =20 the state of the South African economy will be in 2004 =20 and what exchange rates will be.=20
“The problem this creates is that the budget is a bit =20 of a thumbsuck as this is a once-in-a-lifetime affair =20 and there are no annual budgets to compare it to.=20
“The accelerated capital budget makes no provision for =20 interest on loans the government would have to raise if =20 they bring that expenditure forward. There is a risk =20 that those additional costs will be passed on to =20
Another serious problem identified by the accountant =20 was that the budget predicts that Cape Town requires an =20 additional 70 000 hotel beds for the Games, a =20 staggering amount for the private sector to meet and =20 continue to fill after the Olympics.=20
Although the budget allows for a R150-million subsidy =20 on Olympic housing, which could be sold to low-income =20 earners after the Games, he believed not enough thought =20 had gone into the upgrading and development required =20 outside the site, which he believed the IOC would =20 require and the new owners might not be able to afford =20 to support.=20
He doubted whether the number of tickets sold would =20 come close to that of the Barcelona Games, which were =20 little more than a train ride away from Britain and =20 other European countries. Tickets would probably be =20 relatively expensive for South Africans.=20
The accountant said he was also concerned that South =20 African business would not be able to afford to sponsor =20 the Games. Although the budget predicts sponsorship at =20 40 percent below Sydney’s projection, South Africa’s =20 market was much smaller.=20
Ball responded by saying he was condifent South Africa =20 would receive sufficient corporate sponsorship. He =20 admitted that ticket prices would probably be beyond =20 “Soweto’s” reach and that issue would need to be =20
“The big difference between our bid and Atlanta’s is =20 that Atlanta received zilch from central and state =20 government. Every cent had to be raised by their =20 committee,” he said.=20