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Olympics: how the pandemic turned the financial equation upside down

by archysport
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Even if he is starting to get used to the exercise, the president of the organizing committee for the Olympic and Paralympic Games (Cojop), Tony Estanguet, remains nonetheless an athlete who much prefers the eddies of white water to upheavals in the political arena. Therefore, when he had to present at the end of September an overhaul of the Paris 2024 Olympic project in front of his entire board of directors, composed in particular of elected officials from the capital, the Ile-de-France departments and the Ile-de-France region, the triple medalist Olympic could not hide a slight apprehension. “This pandemic forced us to react. We had to review our copy. Somewhere, it tests us”, recognizes the canoe champion who, paradox of the athlete, quickly finds in adversity a familiar framework.

In order not to suffer, as early as May, before the end of confinement, Tony Estanguet had taken up the pen, in order to warn the main stakeholders of the file of the importance of moving the lines. In particular budgetary. A delicate turn, because, if Paris 2024 has always praised its environmental and financial sobriety, it is never easy to review the plans of the house Olympe. So, by small touches, Tony Estanguet distilled the clues and took the temperature. He warned communities that some sports were going to have to move, and revived potential partners who were wanted. If the president is in the front line, it is weeks of work in the shadows that have led to this revision of the concept. With, the key, a saving of 400 million euros, or 10% of the budget of the Cojop (3.8 billion euros), all the same.

“No financial drifts”

“We have looked everywhere at how to optimize, pool, while maintaining ambition. And the first position where we can save money is infrastructure,” sums up Tony Estanguet. “In all, they make 600 million euros of provisional work. It is indeed there that they can find leeway”, confirms an executive of the Company of delivery of the Olympic works (Solideo), which estimates in passing that the delay accumulated during confinement for the construction of the athletes’ village in Saint-Denis (93) does not exceed “ten days”. However, according to our information, a third of the envelope dedicated to construction hazards (endowed with 90 million euros) has already been consumed. “But there are no financial drifts, we remain in the starting model of 3.2 billion euros”, retorts the Solideo, second Olympic pillar, in charge of constructions financed by the public authorities.

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To lighten the bill, therefore, the Cojop has just announced the removal of two temporary structures. First, the sports swimming pool, its changing rooms and temporary stands. It will not see the light of day in Saint-Denis. Instead, the organizers want to install a removable swimming pool inside the Paris La Défense Arena in Nanterre, a U-shaped covered room that hosts the Racing rugby team all year round – technical feasibility studies in courses do not raise concerns. Exit also the volleyball hall which was to be installed at Le Bourget (93); the volleyball players could take the direction of Paris. But nothing is set in stone yet. One sport chasing the other, the final site map will not be known until December, at the next board meeting. Nevertheless, the savings expected for these two withdrawals amount to 140 million euros. On the other hand, there is no question of touching the Olympic aquatic center (diving, water polo, synchronized swimming) in Saint-Denis, one of the few facilities to be built for 2024 (budget: 170 million euros).

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But faced with all these equipment transfers, the president (PS) of Seine-Saint-Denis, Stéphane Troussel, was quickly afraid of being stripped. “Me more than others, I want to succeed the thirty days of competition, but especially the thirty years of inheritance. It is therefore necessary to compensate for these tests by at least two others”, pleads the elected official. According to the latest news, his wish will be granted, because rugby sevens would take the direction of the Stade de France instead of that of the Jean-Bouin stadium (Paris), and the climbing wall would leave Concorde for Le Bourget. The icing on the cake, Seine-Saint-Denis could inherit the skatepark and urban sports elements planned for the Concorde. “Seine-Saint-Denis will remain at the heart of the Games because we will keep more than 80% of the public funds invested in this territory,” recalls Tony Estanguet.

To reduce costs, the organization will also propose a drastic revision of an item unknown to the general public: services to the Games. These are the various transport, catering and hotel activities dedicated to the Olympic family (athletes, federations, media, etc.). A budget of over 500 million euros. The Cojop wants to pool transfers, bring people together to reduce costs by tens of millions of euros. “Think that, on an organization of this type, it takes 1,200 buses to transport everyone in a fortnight. As an indication, the RATP has 4,000 buses in Paris,” explains an Olympic official.

500 million euros from sponsors

There remains an essential part to be resolved: the search for partnerships. The initial promise of Paris 2024 was precisely to have 97% of the organization financed by private funds. With the objective of raising 1.1 billion euros from sponsors, the sales department has chosen to open initially only the “tickets” of rank 1, the most expensive, to more than 120 million euros. And the first to sign was the BPCE banking group, in 2018. “We want to be the benchmark network for the sports economy, and Paris 2024 will be the catalyst for our strategy. But, given the amount of this type contracts, it only makes sense to go there if the company has something to contribute to the organizer, ”explains Jean-Yves Forel, CEO of BPCE’s Olympic program. For the bank, it will be a question of providing solutions ofopen payment, manage the ticket office and help finance infrastructure. For EDF, the second premium partner, it will be green electricity on all sites, like what was done at the London Olympic Park in 2012. For Orange, the last premium group to have signed, the contract (300 pages!) Will include the network coverage of all the sites. “A huge human and technological investment, since we will deploy 400,000 kilometers of fiber. We will ensure the capture of images, timing and all connectivity”, details CEO Stéphane Richard, who on the same day offered the 5G and the Olympics. Sacred checkbook!

INTERVIEW >> Tony Estanguet: “Who could have said that we were going to raise 500 million euros in two years?”

By the end of the year, two new tier 2 partners (budget around 80 million euros) will be announced by the committee, which will then cross the 500 million euros commitment mark. “We have come halfway, even if we were very scared at the start of the crisis,” admits a member of the organization. To date, the only one to have officially given up is Total, which had however topped with the Cojop. But there, nothing to do with the crisis. It was Anne Hidalgo who vetoed her: no question for the mayor of Paris to see her “green” Olympic Games sponsored by an oil company, even if she came with a bunch of renewable energies in her hand. Since this episode, the possible partners are advancing quietly. When it is not the economic crisis which is holding back prospects. Latest example to date, FDJ, which was to launch its partnership in July and which, in full confinement, has changed its mind. No games to scratch with the Olympic colors this year, everything will be activated in 2021. “With this delay, FDJ has kept 18 million euros in its coffers”, indicates a source familiar with the matter.

However, the Cojop, which has opened more than 400 different categories of partnership, is still working hard. A painstaking job for Marlène Masure’s team, the new sales director. “We are studying engineering or cybersecurity files, sectors where it is urgent to accelerate. Besides, we are also in the process of sourcing companies for derivative products. It is a 2 billion market. euros and more than 10,000 references “, explains this former vice-president of Disney France. His arrival in April 2019 also coincides with a new impetus, because, in the opinion of several professionals, Paris 2024 has rather missed his departure.

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“During the first meetings, they arrived with mad arrogance, saying to us ‘Sign here!'” Remembers a senior executive of a French company. “We work with federations which are sometimes twice as structured as them. In this environment, it’s weird, but they are correcting the situation,” tackles another French leader. Will Paris 2024 succeed in recovering the lost points? “I have no real doubts, they will make the budget, reassures Bruno Bianzina, managing director of the Sport Market agency. But we were very likely to think that the Olympics were going to boost business. However, this is not yet the case. case. You really wonder when all this is going to trickle down. ” Patience, the Games are not yet over. The first markets, especially for everything related to derivative products (pins, medals, T-shirts, goodies…) are even in the process of being buckled.

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