Mayor Richard M. Daley announced Wednesday that Chicago will take on full financial responsibility for the 2016 Olympics, a plan that may drive the cost of hosting the Games beyond the $500 million in private insurance already bracketed by City Council.
5th Ward Alderman Leslie Hairston learned of the new guarantee plan with the rest of Chicago—on the news.
“It was a shock,” she said. “The deal is something that should have gone before the city council …[it] shouldn’t have been made unilaterally.”
The city has already put forward $450 million in "rainy day funds,” close to $375 million in IOC cancellation insurance, $500 million in insurance coverage, and another $500 million guarantee of taxpayer money from the city to be used as a “last resort.” City officials say the guarantee will be financed through the city’s organizing committee, Chicago 2016.
Daley’s promise, made at the International Olympics Committee meeting in Lausanne, Switzerland, will make the city fully responsible for any financial loses the Olympics may incur on top of the $4.8 billion projected cost of hosting the games—a plan that diverges from previous talks about pioneering a limited-guarantee plan for the city.
“The benefits of the Olympics are great,” Hairston said, but she would be more comfortable with the deal if Mayor Daley had presented the Council with transparent research on the guarantee’s possible financial impact on the city first.
“From everything I’ve heard, Chicago stands to do really well, but I would still like to see the numbers…and that hasn’t been provided yet,” she said.
4th Ward Alderman Toni Preckwinkle echoed Hairston’s concern that Daley did not brief the city’s aldermen before announcing the decision—but she wasn’t so surprised to hear the news.
“My understanding is that cities have all signed the agreement in the past,” she said, referring to the host city’s agreement that all bid candidates will be required to sign two days before the IOC announces its decision on Oct. 2. The agreement makes Olympics host cities completely responsible for the games’ financial loses.
According to Preckwinkle, the city council signed an ordinance earlier this year giving the Mayor the power to sign contracts on behalf of the city at the IOC, including the host city’s agreement. Though the promise of a financial guarantee will make the city a much more viable contender against Tokyo, Madrid, and Rio de Janeiro, the new plan faces skepticism, especially over how much Chicago taxpayers will be on the hook to cover the losses.
“The more you put on the line, the more you’re going to lose,” said Richard Taub, a sociologist at the University of Chicago. “As far as we know, the Olympics in Atlanta and the Olympics in Seattle ended up costing a lot of money, and it didn’t make money for those cities at all.”
Taub, author of There Goes the Neighborhood: Racial, Ethnic, and Class Tensions in Four Chicago Neighborhoods and Their Meaning for America, compares the city’s approach to the Olympics to the way American cities have approached sports stadium-building.
“When a city uses tax dollars to build stadiums, they never pay off for the city or the people in the city. If you’re going to put [tax dollars], at risk then you’re going to get in trouble,” because individual citizens do not stand to gain from the Games, he said.
Preckwinkle is more optimistic; “The reason Mayor Daley has chosen to pursue this so energetically is because he wants to raise Chicago up on the international stage,” she said.
“I think when people think of the U.S. internationally, they think of New York, they think of L.A., maybe Disney World,” she said. “But Chicago is a really beautiful city and I think [Daley] believes this will really benefit us.”
More news on the full financial guarantee:
*from the Chicago Tribune: "Olympics funding: City Council in no mood for games."
*from Chicago Public Radio: "Alderman Wants to Cap City Spending on Olympics."
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