ORGANISERS of the 2014 Commonwealth Games have insisted their lasting benefits will far outweigh rising costs, after they were forced to pump in an extra £81 million, taking the budget to £454m.
Read the opinion of Lord Smith, chairman of the Games organising committee, hereThe Scottish Government, Glasgow City Council and the Games Organising Committee yesterday announced they had had to plug a funding gap caused by an increase in broadcasting and staffing costs. It followed a budget review by the organising committee, which had put the initial cost at £373m.
The increase – making the Games £23m more expensive than the cost of building the Scottish Parliament – was described as "appalling" by the Scottish Conservatives' deputy leader Murdo Fraser.
"This is every bit as bad as we feared and it is no wonder people believe that every single public works programme runs over-budget," he said. "At any moment, it would be a problem, but in these difficult economic times, it is simply appalling."
Of the extra cash, £59m is coming from the Scottish Government, £9m from Glasgow City Council and £13m from the organising committee.
Two years have passed since Glasgow beat Nigerian capital Abuja to host the event, which will be held over 11 days, starting with an opening ceremony on 23 July, 2014. Thousands of athletes and officials will stay in an athletes' village in the east end of the city, which is to also to be home to a new national indoor sports arena and velodrome.
Speaking at Hampden Park yesterday, Lord Smith, the Games chairman, insisted: "This organising committee is committed to running a tight ship.
"We understand fully our responsibilities to the taxpayer, as well as the athletes, spectators and other stakeholders in the Games. None of the Games' partners want a position to emerge where the budget keeps creeping up over the period between now and 2014, so we have approached this exercise with a desire to be as realistic as possible.
"We are all united in the belief that these Games can be the catalyst for significant change, and that they will generate enormous sporting, social and economic benefits for the whole of Scotland." Lord Smith said broadcasting costs had increased "dramatically" due to advances in technology, such as the introduction of high definition. This had been compounded by the failure so far to sell the domestic rights to the BBC.
He went on: "Previous Games have been able to offset the host broadcast costs against the sale proceeds for the domestic rights. At this stage, the organising committee has been unable to engage the BBC on this basis and, with the current categorisation of the Commonwealth Games as a 'B-list' event, is unlikely to be able to secure another domestic broadcaster. In effect, the Commonwealth Games is viewed as a 'BBC event'."
Organisers said an extra 100 staff would be needed to help host the Games, taking the total to between 950 and 1,000, and putting an extra strain on costs.
Since the bid was finalised, companies are now also legally required to pay compulsory pension contributions to all staff. The rise in staffing costs was estimated at £8.8m, while the specialist support provided by people involved in previous Games required an extra £5m.
The contingency fund is being increased from £40m to £60m, to cover risks associated with hosting the Games, such as the conversion of Hampden into an athletics track.
An additional £20m has been also set aside by the Scottish Government as a special reserve to ensure no future budget increases. First Minister Alex Salmond said: "The budget increases are going to be challenging, but they are necessary. It means we can guarantee the successful delivery of the Games."
Glasgow City Council leader Steven Purcell said: "I'm disappointed that we found ourselves in this position. I'm certain that this is necessary if we are to stage a Games that will leave a lasting legacy."
Mr Salmond said: "Bringing the Games to Glasgow will boost business, tourism, infrastructure and regenerate the city. Of course, this funding represents an enormous commitment to Glasgow, but the benefits and value will be felt throughout Scotland."
Liberal Democrat sports spokesman Ross Finnie said: "What Scotland cannot afford now is for question marks to be raised over the future of these Games. Everyone in Scotland is committed to delivering a top-class Games, but it must be done at the right price."
Key questions
Why did you bank on the BBC buying it?"As a publicly funded event, one that seems a BBC event, one that the BBC itself said to the Davis commission ranked alongside the World Cup, the Olympics and the European Championship as one of the key events, we don't think that is unreasonable." – Alex Salmond.
Why did you underestimate staffing costs – pensions, number of people, etc? "(There were] employers' pension contributions (now a statutory requirement] and relocation allowances to recruit certain specialist skills. Also, the organising committee's analysis of Melbourne's actual staffing levels (for the 2006 Games, available only after the bid was finalised] suggests staff numbers require to be increased." – Press briefing.
Why do we need a contingency fund for the contingency fund? "To allow for the unexpected and the unknowable aspect." – Alex Salmond.
Will you need more money?"I don't see it. But if you look at the Olympics in London, with a 400 per cent overspend, even Beijing with 75 per cent overspend, we have gone to a lot of trouble to bottom out what this core budget will be and I think we should be able to live with it.
"These events are five years away and strange things happen. I would be very disappointed if we eat much into that contingency but, if we do, I will be absolutely devastated if we can't do it within that contingency" – Lord Smith, chairman of Games Organising Committee.
