Rio 2016 Olympic Spending Shortfall Raises Delay Concerns

Photographer: Dado Galdieri/Bloomberg

The Maracana Stadium, also known as the Mario Filho Stadium, stands in an aerial photograph in Rio de Janeiro. Close

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Photographer: Dado Galdieri/Bloomberg

The Maracana Stadium, also known as the Mario Filho Stadium, stands in an aerial photograph in Rio de Janeiro.

Organizers of the Rio de Janeiro Olympics have spent only a fraction of the 1.67 billion reais ($746 million) that was budgeted for 2010-12, raising concern over delays, Brazil’s national auditor said.

The organizers have spent only 92 million reais, or 5.5 percent, in the three years through 2012, the Federal Court of Accounts, or TCU, said. The findings come a month after an inspection team from the International Olympic Committee said it was concerned about delays in getting Rio ready to become the first South American host of the biggest multisport event.

“Although it’s not possible to state that the actions tied to organization of the games are practically paralyzed, it is reasonable to infer that the current flow of budgetary resources represents a potential risk of delays in the progress of those actions,” the auditor said in an e-mailed report.

The ministry of sport declined to comment, saying in an e-mail that it’s awaiting official correspondence from the TCU. Rio 2016 organizers said they will release their budget after negotiations about the roles of municipal, state and federal governments are completed.

“The Rio 2016 organizing committee is working towards staging the games under the constant scrutiny of the International Olympic Committee, our partners in the three levels of government (municipal, state and federal) and public opinion,” the organizing committee said in an e-mailed reaction to the TCU report.

2009 Estimates

The estimates the TCU used were from Rio’s 2009 bid plan. The games have come under scrutiny following delays in publishing an up-to-date operational budget for the actual amount of money needed to host the event.

Leo Gryner, chief operating officer of the organizing committee, told reporters Aug. 2 that $700 million from a government contingency fund will be required to cover likely overruns. In its bid, Rio said organizing the Olympics would cost $2.8 billion. A separate $11.6 billion is going toward work on infrastructure such as bus and subway networks.

The TCU also raised concern about the start of construction work, legacy use of several of the venues being created for the 2 1/2-week event and pollution in the Guanabara Bay, the iconic location where the sailing competition will be held. The situation may lead to significant budget overruns like those Brazil encountered when it hosted the 2007 Pan American Games, the report said.

‘Viable Legacy’

“The mission of leaving a tangible, economically viable and socially relevant legacy guides our work every day,” the organizing committee said. “We are under obligation to organize sustainable games and this is something we are completely committed to.”

The report added that the majority of demand for materials and labor for the construction of sports facilities will be between 2014 and 2015, yet there currently isn’t an estimate for demand.

“Such lack of planning makes it difficult for potential national suppliers to prepare for the increase in demand, which opens the possibility of delays, international contracting, emergency contracting, etc.,” the report said.

The TCU, like the IOC inspection team, said there are question marks about the future use of the canoe-slalom venue in Deodoro, one of Rio’s poorest districts. Organizers may scrap construction there in favor of using an existing venue outside Rio. IOC inspectors said delays with the project were worrying canoe federation officials.

Olympic Authority

Another area where spending is below forecast is at the Olympic Public Authority, or APO, an organization created by President Dilma Rousseff to coordinate work between national and local governments.

It’s spent about a quarter of the 455 million reais it was estimated to between 2010 and 2013, according to the report. The national auditor described the work of the APO, whose president Marcio Fortes quit in August, as being inadequate.

The APO has been sidelined by the 2016 organizing committee, which has dealt directly with federal bodies, the report said. Rio Mayor Eduardo Paes has said the games could be coordinated without the APO, an organization requested by the IOC.

To contact the reporter on this story: Tariq Panja in Rio de Janeiro at tpanja@bloomberg.net

To contact the editor responsible for this story: Christopher Elser at celser@bloomberg.net

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