BidWeek, Reporting From Toronto, Canada – Once again, confusion and misinformation have brought Calgary’s 2026 Winter Olympic bid to the edge of a cliff, but this time less people are reaching out their arms to pull it to safety and more are just turning away and hoping it jumps.
The issue this time? A technicality.
And one likely caused by the International Olympic Committee’s (IOC) Agenda 2020 – the policy put in place to make bidding more attractive and affordable for municipalities.
In actual terms, the federal government has added a matching-funds clause to its offer of CAD $1.75 billion. That forces the city and/or province to up their respective antes from CAD $370 million and CAD $700 million in order to activate enough of Ottawa’s contribution to fulfill budget goals.
According to the Calgary Herald Nenshi shot back at Prime Minister Justin Trudeau in a letter Friday night claiming that the discussed deal was to waive the typical dollar-for-dollar matching funds clause – paving the way for the agreement that was said to be on the table. He has threatened to cancel the bid if a revised agreement is not put in place by Monday, explaining the Games could not be held under the newly outlined terms.
Negotiations lasting until late Sunday afternoon failed to produce a deal. Calgary’s Olympic Assessment Committee is to meet Tuesday.
The three government parties that are charged with working together to deliver a funding package supporting the Olympics – the City of Calgary, Province of Alberta and the Canadian Federal government are engaged in an epic Game of chess. Or poker. Or darts. It’s really hard to tell which one.
But the root cause of the competitive struggle among the three “partners” is an IOC policy that has lead to a convoluted budget structure designed with multiple strategic end games.
And, it should be much simpler than that.
It was on April 3 this year that seven cities entered the 2026 race, and the IOC President Thomas Bach was quick to credit Agenda 2020, and its corollary cost-saving initiative the “New Norm,” for the strong field of interested candidates. The new IOC rules, he claimed, made it financially possible for them to vie for the Games.
As the cities dropped out, one-by-one – Graz in Austria, Sion in Switzerland and Sapporo in Japan – the IOC continued to defend that the remaining cities had fully embraced Agenda 2020 and it was their “raison d’être” (reason for being – I need to inject some IOC mandated French in here somewhere).
Of Calgary’s rivals, Stockholm’s bid has estimated a budget that includes 13.1 billion SEK (USD $1.454 billion) for operational costs with a 1 billion SEK (USD $111 million) contingency. The cost for security would be about 3 billion SEK (USD $333 million). The whole deal could be delivered for under USD $2 billion, and costs to taxpayer would be limited to security and government supporting services.
But the Swedish Capital is without government backing for this seemingly low risk plan.
In Italy, a joint Milan and Cortina d’Ampezzo venture is trying to stitch together a myriad of venues spattered across regions occupied by the two cities – and potentially Turin – and all this after the national government refused to provide funding. Financing is proposed at the regional government level, and through private sources.
The Italian project is so far behind the other two bids that a concrete venue plan or budget proposal has yet to be released, and the IOC made its first inspection only last week. But politicians behind plans vow that taxpayer exposure will be extremely limited.
What we end up with is this complicated budget that is over-priced, super-safe, and sends all of the wrong messages. It also makes it difficult for the three partners to work together effectively.
Then there’s Calgary, a city that “has it all,” according to IOC Executive Director Christophe Dubi while speaking about venues as he visited the sliding track at Calgary Olympic Park last week.
Calgary 2026 is asking for CAD $3 billion (USD $2.3 billion) from taxpayers (all remaining figures in Canadian dollars) to fund the $5.2 billion project.
How can Calgary possibly be put in the same Agenda 2020 bucket as Stockholm or Milan-Cortina? It can’t.
I wrote emphatically, in part of my “Dear Calgary” series, that plans should not include too much infrastructure investment, if any at all. That goes along with Olympic Agenda 2020 goals, and helps separate the costs of long term investment and the strict organizational costs of the event. If you throw in an arena, a field house and potentially other facilities – the time-boxed Olympic-size sub-projects will almost certainly go over budget.
But a key element of any bid is the story – a narrative that drives the passion behind such projects. In Calgary that is, and has always been, about legacy. 1988 legacy helped define the city for a generation, so why would it be different today? If Calgary invests in the future, why wouldn’t it be conditional that the city stage all of the events and win a wealth of legacy?
The IOC has framed Agenda 2020 in terms of human legacies such as increased volunteerism, positive reinforcement for young people to pursue healthy lifestyles and igniting pride and passion within an entire nation. They won’t tell you you’ll get a new arena, and they certainly won’t offer to pay for it.
Calgary’s 1988 human legacy was sustained by the Games physical legacy – a stadium, ski jump, speed skating oval, sliding track and other key facilities that helped make Canada a Winter Olympics powerhouse only after it failed to win a single gold medal at those Games.
A Games with little taxpayer involvement and few additional venues is just not interesting to Calgarians. Italy’s proposed project to use mostly existing venues with almost no build would end up as a hard pass if it were presented instead in Calgary.
So Calgary 2026 budget-makers were pressed to propose a solution that could include funds for limited needed legacy, keep costs as low as possible and at the same time “seem” like a full-on Agenda 2020 concept. It had to be palatable not only for politicians representing Calgary, Alberta and Canada, but also to the IOC.
It also had to to be incredibly conservative in order to answer bid opposition critics who would compare the project to those with major capital overruns in the past including in PyeongChang, Rio and Sochi.
And, elements of the the budget had to be kept secret in order to maintain the integrity of the tripartite negotiations, and perhaps a competitive advantage over bids from Sweden and Italy.
What we end up with is this complicated budget that is over-priced, super-safe, and sends all of the wrong messages. It also makes it difficult for the three partners to work together effectively.
But worst of all, an included pre-set funding goal sets a benchmark for failure that really doesn’t exist.
So now, with the federal demands for matching funds – Calgary will struggle to come up with the cash necessary to reach the over-bloated taxpayer requirement – and is left with few options.
Except maybe these last-minute radical ideas.
(1) Reduce the contingency. A $1.1 billion contingency on a $5.2 billion project where only a portion is at risk seems like a bit much from this observer, and to many project managers I’ve spoken with. Many critics will immediately point to epic cost overruns in Sochi, Tokyo and London. I will point out that Calgary is not in Russia, is not trying to host a Summer Games, and is not building an entire Olympic Park.
If that fund were cut in half, the federal offer, as is, might be sufficient. But at this point in the campaign, that option may be toxic to the hopes of a ‘yes’ vote in the plebiscite.
(2) Connect other projects to the bid. I’ve said before, this is generally a bad idea. But Nenshi suggested in his letter to Trudeau that the $1.5 billion in funds already committed to a light rail transit project could be, maybe, sort of, connected to the Olympic bid. The new line, after all, will service some of the venues. Perhaps some of the funds could be “counted” as part of the Calgary Olympic offering, deserving of matching funds.
Leveraging this option may be tricky since a deal among these same three levels of government was already struck last year over the named Green Line LRT Project. Each level will have equal participation.
But Nenshi has a point. Rail and transport projects are common in many Olympic bids.
PyeongChang’s plans for the 2018 Games included a high speed rail link to South Korea’s Incheon Airport. Vancouver expanded its Canada Line LRT and improved the Sea-To-Sky Highway to Whistler as part of its 2010 Olympic plans.
Beijing will prepare a USD $3.4 billion (CAD $4.4 billion) high-speed rail line between venues in the city and the ski slopes in Zhangjiakou for its 2022 Winter Olympics. But Chinese organizers didn’t include it in the bid budget because that was drawn just after the Agenda 2020 reforms were approved by the IOC, and the high-cost rail project “that would be built even without the Games” would not comply with the new IOC cost-cutting standards.
IOC officials told me before Beijing was awarded the Games in 2015 that the rail project, with an Olympic Park station in Zhangjiakou proposed at a location with almost no other structures in sight, was so unrelated to the Olympic bid that they didn’t even want to know the cost.
So additional infrastructure, including the LRT and a highly desirable Calgary Airport rail link, were likely left out of Calgary 2026 plans due to the pressures of Agenda 2020.
Had bid organizers included elements of the Green Line LRT, and perhaps the airport connection to the plans – upping it’s own financial commitments – additional matching federal funds would have been activated making the overall budget more attainable.
I’m guessing this scenario had been discussed months ago when, according to Nenshi’s reported comments in the letter, a possible deal without the matching-fund request had been raised.
The IOC has been quick to trumpet the successes of the Olympic Agenda 2020 as applied to the Winter Games, but those cities that fully embrace the concept often lack the support necessary to stay in the race. In Calgary’s case where the new reforms aren’t necessarily the right fit, the complex budget approach includes a large contingency amount and a set funding goal combining both legacy investments and the operational gap.
This strategy shows the conservative approach that the IOC is looking for, but lacks the flexibility needed when partner contributions have yet to be confirmed – as we are seeing now.
Did a funding goal need to be set ahead of the full budget release?
Consider additional private sources of revenue that haven’t really been discussed that could help fill the funding gap. Don’t think that’s possible? Think again.
Calgary 2026 has said that their budget is very conservative, and they haven’t disclosed what they expect from domestic sponsorship revenues.
At bid time, Tokyo 2020 estimated sponsor revenue from Japanese sources to be USD $820 million. But with over 20 months to go, that sponsorship program has already become the most successful in Olympic history with over USD $3 billion signed revenue. That’s something to be said, even amid reports that budget scope creep is causing massive cost overruns in the Capital.
Of course Calgary is not Tokyo, Canada is not Japan, and the Winter Games are not the Summer Games – but if the Calgary 2026 organizing committee could be even half as successful at raising private revenue as Tokyo 2020, then wouldn’t that help fill the gap? A second look at the revenue side of the equation might be another way to balance the budget.
Agenda 2020 has tied the hands of Calgary’s Olympic bid. Perhaps it’s time to do something different. If it’s not too late.
There’s a time crunch ahead of the plebiscite, indeed. But the current funding feud among partner governments seems artificial. Surely someone at the table can take charge, solve the perceived budget crisis, and let voters decide the bid’s fate on plebiscite day.
So long, Agenda 2020.
