Assessing Chicago 2016 financial risks

Chicago learns next Friday, October 2, whether it will host the 2016 Summer Olympics. But if they do win the games, the taxpayers in Cook County won’t learn until much later just how big the bill might be.

There is a 12% profit factored into the $3.8M budget, but that pales in comparison to the potential cost overruns, as described in this eyes-wide-open article “Peeling back the coverage” at chicagobusiness.com.

For instance, while there is $1.1B of insurance promised, there is no insurance coverage (or not enough) for:

• “… the risk that private lenders won’t shell out $1 billion to finance construction of the Olympic Village”
• “… shortfalls in corporate sponsorship sales, which they predict will rake in $1.8 billion, two-thirds more than London expects to collect for the 2012 games”
• “… overruns on the construction of Olympics venues tops out at 10% over budgeted costs”
• “… $246 million in contributions from private donors, a source already tapped for $72 million to finance the city’s bid”

And that’s just the insurance piece of the pie.

Predictably, construction costs are key, with the main costs being the Olympic Village and the sports venues. The plan is to convince private developers to “transform the former Michael Reese Hospital into athletic quarters to be sold later as condominiums or rental housing”. I’m not quite sure if this means converting the actual buildings themselves–which seems sort of crazy to me–or if it means first tearing down the whole thing and building new.

As for sports venues, the 2004 Athens games went double what they budgeted. The 2010 Vancouver games are running 23% higher than projected. Chicago 2016 is only allocating a 10% overrun, plus another 10% in insurance on top of that.

Then we have concerns about revenue projections.

Just read the whole thing.

The money quote by Allan Sanderson, a sports economist at the University of Chicago: “Athens was three times over budget; London is four times over budget. I don’t see that happening here. But are they going to come in at $4.8 billion? No, I just don’t see it.”

Friday Links

Worth Mulling: A Late-Summer Reading List – a few books on this list I’d like to track down:

• Be the Solution: How Entrepreneurs and Conscious Capitalists Can Solve All the World’s Problems by Michael Strong
• Meltdown by Thomas E. Woods, Jr.
• The Housing Boom and Bust by Thomas Sowell

Bolt shreds 200m mark, sets second world record this week – 19.19 for the 200m. Sliced .11 off the old world mark of 19.30 he set in last year’s Olympics. This guy is amazing, and I hope he’s clean. We don’t need more reasons to be suspicious of athletic performances.

Giants’ owner and teammates say Burress jail term is an American tragedy – I’m not a Giants fan, I don’t care about Plaxico Burress, but it sure seems odd to me, the way that whole story has evolved. Two years in jail for a weapons violation? Wow. Whose interests are served by it?

Bus drivers reject paying red-light tickets – Issuing automatic $100 tickets for not stopping at some exact spot on a road is a DUMB idea. It annoys drivers who are doing nothing wrong, and is nothing more than a cash grab by cash-obsessed local governments. Just because technology enables a particular idea is NOT justification enough for implementing it. In fact, that might be an argument against it.

Quote of the Week, International Laughingstock Edition

From ESPN, FIG Investigating China’s 2000 Team, Too:

“If we had a look at all the articles that came before, during and after the games, there were always rumors about the ages of China’s athletes in Sydney,” Andre Gueisbuhler, secretary general of the International Gymnastics Federation, told The Associated Press on Wednesday.

“We did not have another choice,” he said. “If we want to remain credible, then we have to look into things.”

Ah, I see. So let me get this straight.

The head guy at the International Gymnastics Federation relies on news articles from 8 years ago, that raise questions about whether competitors in his sport played by the rules. And then waits until he has no other choice but to “look into things”, in a late bid to salvage any remaining credibility he may or may not have, rather than to establish the truth and therefore restore any sense of justice or fair play to the competition.

Apparently, Inspector Clouseau lives, and is on the case!

Lewis on Bolt

Carl Lewis says what lots of us are thinking about sprinter Usain Bolt:

“When people ask me about Bolt I say he could be the greatest athlete of all time. But to run 10.03 seconds one year and 9.69 the next, if you don’t question that in a sport with the reputation it has right now, you’re a fool. Period.”

Chopping .34 seconds off your time in one year is a pretty radical improvement. We’d certainly like to believe such gains are possible via standard training methods. For some reason, though, no elite sprinter has ever managed to do that. Huh.

Via Deadpsin.

Little Chinese Girls Win Gymnastics Gold

At least, that’s what this column by Helene Elliott of the L.A. Times says:

It’s difficult to write about female athletes who compete in sports that put a premium on small, compact body shapes. Calling them tiny seems disrespectful and sexist. They’re athletes who happen to be small, no less an athlete than a basketball player or swimmer.

These Chinese gymnasts are tiny.

Pre-teen tiny. Haven’t-lost-all-their-baby-teeth-tiny.

[...]

If the gold medals around the necks of the Chinese girls weighed almost as much as they do, the international gymnastics federation has only itself to blame.

Pushing for gymnasts to perform bigger and more dangerous tricks is a noble idea, but it has a big downside. The elegance of the sport has largely been lost, obliterated by armies of stick-figured girls who can twist their bodies more tightly, soar higher, tumble faster and score more points than girls who are on the far side of puberty.

The ages of at least three Chinese women—Jiang, He Kexin, and Yang Yilin—have been questioned based on conflicts between registration records that were found online and the ages that were listed on their government-issued passports. Gymnasts must turn 16 in the year of the Olympics or world championships to be eligible for that competition, but records provided for lower-level events showed all three are 14.

FIG, the federation that governs international gymnastics, said it accepts the Chinese passports as valid. The International Olympic Committee has said the same. If it truly had any doubts the IOC would probably have remained silent, so eager has it been to praise its Chinese hosts for reasons both merited and arguable.

Read the whole thing. It’s a rarity these days, a well-written column that makes a point without beating you over the head with it.

I can’t speak for the reliability of the “registration records” found online, since I haven’t looked into this issue at all. But assuming the birthdates on those records are legit — and I’m not sure why they wouldn’t be, unless one believes somebody purposely made these girls appear too young at some prior point, for some incomprehensible reason — this would cast serious doubt on the veracity of the Chinese passports for these girls.

But for Dan Wetzel of Yahoo Sports, apparently, if the Chinese government says the passports are correct, and that is good enough for the IOC, then it’s good enough for him, too. Dan’s b.s. detector is apparently not as well-calibrated as some.

When a passport is issued by the same government that has a vested interest in falsifying ages, and then that government says “no worries”, well, it might be worth checking into. Especially when that same government uses its power to manage information in other ways, like denying access to embarrassing info on the Internet.

And the IOC? Well, their record of integrity is not exactly sterling.

Wetzel is also concerned that the registration records are “old”. This is silly. Information on a document does not suddenly and spontaneously become falsified as the document ages. Or does he think somebody actually falsified it to make them appear younger? When? And why would they do that, knowing the controversy it would inflame?

Oh, I bet I know. Bush did it, just like he wired the World Trade Center to explode. Chumped again! What a diabolical genius … there he is, running around at the Olympics, flirting with the beach volleyball players and hanging out with Team U.S.A at the basketball arena, acting like a regular guy, and at the same time, running a top-secret mission to falsify “old” documents to embarrass the Chinese!

Also, Dan thinks this is all really just Karolyi sour grapes, because Bela coached Nadia Comaneci at the 1976 games, and she was only 14. One problem: it wasn’t against the rules then. And since the whole discussion is about alleged cheating, that is a pretty key distinction.

(note: slight edits made 15 Aug)

Good Morning, Beijing!

Mmmm, Smells Like Factories and Construction Dust!

A perfect place to host thousands of athletes from around the world, and make them breathe really hard.

Picture yourself as a U.S. Olympian, flying to Beijing for the first time. You’ve seen the pictures, and heard the stories, about the air quality there. You’ve been issued masks by the U.S.O.C., to protect your lungs, but at your option. Would you then immediately apologize for wearing those masks to Beijing in order to not offend the host country? I’m not so sure.

But there is no risk to the athletes, we’ve been assured by the head of the I.O.C., who says “”We must make a distinction between fog and pollution.”

Fog? Hmmm. That’s not what this report says:

The Associated Press has been compiling its own pollution data since mid-July, recording snapshot readings of Beijing’s worst pollutant — tiny dust particles known as particulate matter 10.

The independent spot checks collected from the Olympic Green, the main sports thoroughfare, showed that, even though there are dramatic ups and downs, PM 10 concentrations were often much higher than what the World Health Organization considers healthy. On Friday, AP readings showed a PM 10 concentration of 373 micrograms per cubic meter — far above the WHO guidelines for healthy air of 50 micrograms per cubic meter.

It also informs us how “difficult and elusive a target clear skies can be”. Yeah, especially when you have few pollution controls, and your economy therefore dumps millions of tons of crap into the air every day. Maybe that has something to do with the air looking like the picture above.

Click the pic to see a bigger version, or here to see the gallery.

Beijing Air Quality Measures Not Working Too Well

I’m Shocked. Shocked I Tell You!

China recently implemented severe restrictions on cars and factories, to try and clean up the air a little bit. Above, we can see the results after one week.

Click the pic to read the story, which is titled “Worst smog in a month”.