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S&P: Olympic Games Too Expensive for Moscow
Standard & Poor's has downgraded Moscow chances to host 2012 Olympic Games, Vedomosti wrote Friday. According to the S&P analysts, from five candidate cities (London, Paris, New York, Moscow and Madrid), Russia’s and Spanish capitals will find it most difficult to gather money for such expensive event.
Anton Terlyatka, sports consultant at A.T. Kearney, thinks Moscow will lose because of cross-border negative attitude to Russia. Moscow competitors endeavor to make the sources of financing open and transparent, while everything depends on the government in Russia.
Moscow said it will invest $10.07bn to arrange the Olympic Games. Exactly this amount was specified in the application submitted to the International Olympic Committee. However, it is yet unclear who will provide the funds. The private investors will construct hotels, Olympic village, medical and broadcasting centers as well as certain sports facilities, said an official from Moscow-2012 Committee.
The city’s budget will allocate funds to set up transport infrastructure, the source said declining to elaborate. Transports costs are principal in the city’s budget, the amount reaches $7.78bn.
The required sum could be raised on the debt market. The city has around 25 percent debt-to-revenues ratio today. Should Moscow decide to cover all costs, the debt burden on the budget will stand between 80 percent and 90 percent.
According to Aton analyst, Moscow revenues in 2004 are estimated at 380bn-400bn rbl (around $14bn). The amount may widen to $28bn during a 7-year period left before the games. Theoretically, Moscow can always borrow the sum required for transport costs. However, under the Budget Code, it is unable to go to the eurobond market, while raising such money on the rbl market seems hardly possible, the analyst said.
The RF Olympic Committee’s President Leonid Tyagachev told Vedomosti the S&P’s appraisal is rather conditional and could be regarded as “one of the means in pre-running campaign against Moscow”. “If Moscow wins, we will get from the IOC more than a billion dlr, but in any case, the city’s authorities guarantee construction of complete infrastructure – an airport, hotels, Olympic village, etc,” Mr Tyagachev pointed out.
A host city for 2012 Olympic Games will be chosen in July of 2005 in Singapore.
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Photo: Yury Martyanov
