September 2, 2009
The Civic Federation and our consultant L.E.K. Consulting testified yesterday before the Finance Committee of the Chicago City Council about our review of the financial aspects of the Chicago 2016 Olympic Bid. The Federation delivered its full 90-page report and 22-page narrative summary to all fifty aldermen on August 26, 2009.
On June 30, 2009, the Chicago City Council had asked the Civic Federation to perform an independent review of the “revenue and expenditure projections” contained in the Chicago 2016 Olympic Bid and “any financial impact on taxpayers.” The Council resolution also requested that the Federation review the insurance plan for the Bid.
The Federation and L.E.K. described the findings contained in the City Council-requested report in a 30-minute presentation to aldermen. Both the Olympic Bid Review and presentation examined the most recent insurance plan proposed by the 2016 Bid Committee.
After six weeks of review, the Civic Federation and L.E.K. found that the proposed operating budget provides adequate protection for taxpayers, but the development of the Olympic Village exposes the City of Chicago to continuing real estate risks that must be managed.
In order to effectively carry out the Olympic Games plan and manage the risk associated with the construction of the Village, the Civic Federation and L.E.K. recommend the following:
1. The Organizing Committee for the Olympic Games (OCOG) that will replace the Bid Committee must be led by a professional and experienced management team that executes the proposed Chicago 2016 plan. Employees and contractors must be chosen based on non-political criteria.
2. The City Council of Chicago must exercise its oversight role and require regular reporting on the status of the Games.
3. The proposed insurance coverage must be purchased, including capital replacement insurance for the Olympic Village.
Civic Federation President Laurence Msall and L.E.K. Partner Jamil Satchu fielded questions from aldermen on topics ranging from whether the City’s amusement tax would apply to Olympic Games tickets to the investments the Chicago Park District will be making in certain venues. Several aldermen commented that they are taking seriously the Federation’s warning that the City Council must exercise strong oversight if Chicago gets the Games.
The Olympic Bid Review has received quite a bit of media attention. Visit our press room to read articles and access TV and radio news segments about our report.
The Council’s Finance Committee will vote on whether or not to approve the Host City Contract that provides an unlimited financial guarantee of the Games at a meeting on Tuesday, September 8, 2009. The International Olympic Committee will decide which of the four candidate cities, Chicago, Madrid, Rio de Janeiro, or Tokyo, will host the 2016 Summer Olympic Games on October 2, 2009.
The City Council provided the Civic Federation a very short time frame to complete our analysis of the Bid, so the Federation hired L.E.K. Consulting to help with the analysis. L.E.K. is an international strategic financial consulting group with extensive experience examining Olympic-sized sporting events and has had no involvement with the 2016 Bid. L.E.K.’s consulting fees and the Federation’s own research expenses were funded by generous grants from seven Chicago area foundations.
The Federation and L.E.K.’s work was guided by the Civic Federation Olympic Advisory Committee, a group of experts with no ties to Chicago 2016. The Advisory Committee provided crucial oversight and helped maintain the Civic Federation’s independence in developing our position on the finances of the Bid.
In order to maintain the Civic Federation's independence, we have not and shall not take a position on whether or not the City of Chicago should sign the Host City Contract or whether Chicago should bid for the 2016 Summer Olympic Games. Both of these issues are outside the scope of the Federation's report to the Chicago City Council.