Cost of hosting Glasgow Commonwealth Games rises by £81m

Published on Monday 16 November 2009 11:29

THE cost of staging the 2014 Commonwealth Games in Glasgow has risen by £81 million to £454 million, it was confirmed today.

• Part of the area where the 2014 Commonwealth Games arena and velodrome will be built between Celtic Park and Dalmarnock

The Scottish Government, Glasgow City Council and the Games Organising Committee have been forced to plug a funding gap caused by an increase in broadcasting and staffing costs.

The announcement follows a budget review by the Organising Committee who put the initial cost at 373 million.

The figure now stands at 454 million, with 59 million being met by the Scottish Government, 9 million from Glasgow City Council and 13 million from the Organising Committee.

Speaking at Hampden Park today, Games chairman Lord Smith said: "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 Games' 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.

"We are confident that the budget announced today will enable all those potential benefits to be realised."

Two years have passed since Glasgow beat the Nigerian capital Abuja to host the major sporting event.

The Games will be held over 11 days with an opening ceremony on July 23 2014.

Thousands of athletes and officials will stay in an athletes' village in the east end of the city which will also welcome a new national indoor sports arena and velodrome.

An extra 41 million will go on the "core budget" for the Games, a rise from 333 million to 374 million.

Lord Smith said the cost of delivering the broadcast signal had increased "dramatically" due to advances in technology, including the introduction of high definition, and the failure to sell the domestic rights to the BBC.

Lord Smith said: "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 will be needed to host the Games, bringing the total to 950 – 1,000 and putting an extra strain on costs.

Since the bid was finalised there is now a legal requirement for companies to pay compulsory pension contributions to all staff.

An extra 20 million will go towards the contingency fund – a rise from 40 million to 60 million which covers risks associated with hosting the Games, such as the conversion of Hampden into an athletes' track, which will involve raising the ground's base level by a metre-and-a-half.

Thirdly, an additional 20 million has been set aside by the Scottish Government as a special reserve to ensure there will be no future budget increases.

First Ministry Alex Salmond, who attended today's announcement, 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."

The review found that the original budget estimate did not include the cost of CCTV coverage for the area around the athletes' village (1million), specialist work required at Hampden (2 million) and the leasing of offices as it was assumed that organisers could use council buildings when the bid was won.

This raised the budget by 3.3 million.

The rise in staffing costs was estimated at 8.8 million and the specialist support provided by people involved in previous Games required an extra 5 million.

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.

"All partners involved in staging this prestigious event are determined to work together to ensure the best value for money.

"The fact that 70% of the Games venues are already built will help guarantee no further pressure on the public purse."

The First Minister added: "There are still issues to be resolved.

"The Scottish Government will continue to make the case for the recovery of 150 million lottery funds diverted from Scotland to pay for the London Olympics.

"And to call for Scotland to receive its share of Olympic regeneration investment.

"An estimated 165 million has been lost because this funding was not subject to the Barnett formula in the normal way.

"However we can't wait for this to happen to guarantee the position of

the Games and therefore this detailed review takes account of all eventualities and will ensure that the Games are funded adequately and properly."

Of the revised total budget 297 million will come from the Scottish Government, 88 million from the Organising Committee and 69 million will come from Glasgow City Council.