Thursday, April 9, 2009

"Host City Contract" Could Prove to Be an Issue for Chicago 2016

There are a host of reasons why many Chicagoans and other opponents feel the city of Chicago shouldn't host the 2016 games. Whether it's the lack of funding for basic local needs (schools, infrastructure, etc) or simply the cities infamous run of corruption, there is a extensive and valid list as to why Chicago shouldn't host the games.

Another potentially problem that we haven't read or heard much about is the "Host City Contract" that the winning city historically has to sign. The problem can be summed up here:
At issue is a complexity rooted in the American system of federalism as it intersects with Rule 37 of the Olympic Charter. That rule essentially shifts the ultimate financial responsibility for an organizing committee to the city in which the Games are staged. In practice, it has proven typical in other countries for the national government to backstop an organizing committee's operating budget. In the United States, it can't work that way.

Chicago has proposed an addendum to the contract, but the issue hasn't been publicly resolved or addressed. Chicago's rivals for the 2016 games have already pounced on this issue and probably will continue to bring it up to IOC members. Our guess is that this will be resolved, but this is still a big issue that is hanging over the Chicago bid.

This article by Universal Sports does a great job going into more detail about the "Host City Contract" issue. The article also brings up an interesting point that Chicago's financing approach could be seen as an innovation:

There's the possibility it (The Chicago 2016 Bid) may, in time, come to be seen as an innovation -- a new model of financing for future bids, even in those nations that typically have relied on national government underwriting. With the downturn in the global economy and the erosion in the credit ratings of some governments, among them Spain, it may yet prove shrewd indeed to spread risk not only across different levels of public entities but to obtain insurance coverage.

How much, for instance, would a guarantee backed by the government of Iceland
be worth now?

Will the IOC see it that way? Who knows...

(image from

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