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$22 million guarantee from IOC keeping 2010 Games budget balanced

The 2010 Winter Olympics are likely to avoid a deficit in part because of $22 million from the International Olympic Committee, The Canadian Press has learned.

The IOC and Vancouver organizers had reached a deal for the extraordinary payment this summer, but a firm dollar figure had not been made public.

Sources at both the local and international Olympic committees have told The Canadian Press the contribution is capped at $22 million.

Vancouver's organizers have admitted they budgeted for more international sponsorship dollars than the IOC was legally obligated to provide, but that wasn't the reason the IOC agreed to the extra money.

They agreed to the first-of-its-kind bailout because without it, spending for the Games would have come to a halt and major cutbacks would have been necessary, sources say.

When the deal was announced, the IOC said they would only give the money in the event of a shortfall. Flexible, affordable and responsive.

But the Vancouver committee, known as VANOC, is spending it now.

"The main reason they've given it to us is to give us the certainty we need to execute the program we have right now," said Dave Cobb, deputy chief executive officer of the Vancouver organizing committee.

"So for us to know the money is there, we can spend it as though it will be there, and so we don't have to make cutbacks into our budget."

The IOC's contribution, VANOC's existing $27 million revenue contingency and a warming economic climate are together placing the Games on much safer financial footing than they were six months ago.

"With the budget we have, and as of today . . . we are not looking at significant changes to anything we're doing that a major stakeholder group would notice," Cobb told reporters in a conference call on Monday after the release of VANOC's annual report for the financial year ended July 31, 2009.

But just over six months ago, organizers had been mulling over cuts to the Games in everything from staffing to transportation to printing costs in order to stay in line with their $1.75 billion operating budget.

It does not include the $580 million that's been spent to build all of the venues, nor the estimated $1 billion cost for the Olympic athletes village in Vancouver.

Revenue projections were taking a hit, as organizers saw sales of VIP Games packages stall and billboard advertising space not getting the buyers they were looking for.

But now, only $6 million in unsold ad space remains, and the committee said they believe VIP packages will sell out.

Organizers will also save about $9 million by borrowing employees from the public and private sector through their extensive secondment program launched over the summer.

In their last fiscal year, VANOC made $629.3 million and spent $403.9 million.

Some major spending is still to come, as organizers deal with the last details for the Games.

Final agreements have also not been signed on how much VANOC will compensate the owners of the two major mountain venues for lost revenue.

There is also the matter of the what-ifs around the Games themselves.

Weather or other unforeseen problems could also wreak havoc with plans and drain operational contingency funds.

While things are looking up, caution is still the buzzword going ahead, said John McLaughlin, VANOC's chief financial officer said in the call.

"It's what lies ahead not what's behind us that is the most important," he said.

The ebb and flow of revenue and expenses around a Games however, does mean they're still looking at borrowing more money to see them through the next few months.

The way sponsorship and other deals are structured in the Olympic movement see payments come in on a pre-scheduled basis, so the cash isn't always there exactly when organizers need it.

"Current projections indicate that additional short-term financing will be required, which management is confident will be achieved through negotiation with (the committee's) lenders," said their year-end financial statements.

Though several of VANOC's major sponsors have faced serious financial difficult in the last year - among them General Motors and Nortel - none have defaulted on any payments and aren't expected to, said Cobb.

"Our concern is less than it was six months or a year ago," he said.

"Frankly, I'd be quite surprised if this close to the Games, if one of our partners did default."

To date, VANOC has raised about $966 million dollars and has spent about $768 million.

They noted Monday that 75 per cent of their payments to suppliers have been to B.C.-based businesses and a further 16 per cent to businesses in Canada, but outside B.C.

For the latest from The Canadian Press, scroll down The Tyee's home page or click here.

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