How do we mitigate the risks?

 

What are potential risks with hosting the Games?  What will it cost to host the Games? 

Hosting the Games is certainly not cheap, but because Calgary already has 87% of the venues required, its budget will be substantially lower than if we had to build all new facilities.

The budget for the Games consists of two components: (i) operating budget and (ii) the public investment budget. The total amount required to host the Calgary 2026 Olympic and Paralympic Winter Games is $5.325 billion.

Let’s break down the budget into the two main areas: 

  • The Games operating budget of $2.45 billion covers the actual expenses to run the Games (other than security).
  • The public investment budget of $2.875 billion. Think of this part of the budget as the government contributions for facilities and public services required to host the Games. This will pay for building new venues, renewing existing venues, housing, security, essential services (like garbage pick-up and street cleaning), and the Legacy Fund, which is money set aside for facility operations after the Games as well as social, cultural, and sport programs.

 

Where does the money come from?

  • For the operating budget, the bulk of the revenue for the Games operating budget comes from private revenue sources including the International Olympic Committee’s contribution from the sale of broadcast rights and international sponsorships. Other revenues come from domestic sponsors, ticketing, and merchandising.
  • For the public investment budget, those investments are split between the governments of Canada, Alberta, and Calgary. The Federal government has committed to contributing $1.453 billion, the Provincial government has committed to contributing $700 million, and the City of Calgary is contributing $390 million.

 

What is the risk of a cost overrun?

With any major project that spans seven years and includes public and private contributions, care must be taken to identify risks early and take action. The Games organizers will implement an Enterprise Risk Management (ERM) framework so any risks can be identified quickly and proactively managed. An executive will be in charge of this area and will report to the Chief Financial Officer regularly.

 

Is there a contingency fund?

In preparing the financial plan, each infrastructure project (new venues and renovations) includes a healthy contingency in its budget (18-23%). In addition to the project contingency budget, there is an additional $210 million in contingency funds.

 

Why do we believe that we can stay on budget?

There’s plenty of detail in Calgary’s financial plans for the Games. And Government Partners have been preparing cost estimates for the essential services such as security. We only need to build limited new facilities – a community arena, affordable housing, and a fieldhouse. This means we get what we need and avoid building facilities that we don’t need over the long term.

When we hear about cost overruns on Olympic projects, those usually happen on the construction side of things - as well as the addition of new projects, after the bid is won. Because our main public investment for the 2026 Games facilities is to renew existing venues, we can avoid the cost escalation that has surprised other host cities. Remember, the 1988 Games venues are now 30 years old. It makes sense to renew them. The 2026 Games are a perfect, cost-effective, opportunity to do that.

Calgary 2026 took a robust methodology and approach to develop the cost estimates to host the Games. Those who prepared the hosting plan also looked at previous Games such as Vancouver 2010 and considered the new norms put forward by the International Olympic Committee to help reduce the complexity and costs to stage the Games.

 

The following is a summary of the key reasons we believe Calgary can stay on budget:

  • Calgary 2026 only needs to build limited new facilities like the field house, community arena and affordable housing, so we get what we need and avoid building facilities we don’t need.
  • Most Olympic cost overruns happen on construction projects. Because the primary investment for Calgary 2026 is to renew existing facilities, Calgary can avoid the sort of cost escalation that has surprised other host cities.
  • Cost escalation can also occur if cities try to build too much all at once, resulting in inflationary pressure. With Calgary’s limited building requirements, that risk is much lower.
  • By setting aside significant contingency funds, Calgary can be assured that costs are not going to exceed budgets.
  • The 2026 budget also takes account of 5% in “super-inflation” to account for the escalating value of dollars between now and 2026.
  • Calgary 2026 is already well advanced in the planning of the Games. The level of detail generated to this point is years ahead of where other cities are in the process. This enables our bid to have cost certainty not seen before with the Olympics.
  • Calgary and Canada, through Vancouver 2010, has a lot of experience in executing the Games. We know how much things should cost and are able to predict it well.
  • In fact, the City of Calgary is excellent at predicting the final costs and timelines for projects. In the last three years, not a single major project has gone over budget or been delayed.

 

 

YES Calgary 2026