Chicago is hoping its financial strength will help it win the 2016 Olympic Games. Organizers, led by a well-known Chicago insurance executive, have incorporated into their bid what they say is a $1 billion safety net if the games exceed their $4.8 billion price tag.
The financial safety net includes a $450 million “rainy day fund,” as much as $375 million in cancellation insurance, another $500 million in insurance coverage — and a “last-resort” $500 million guarantee of taxpayer money from the city of Chicago.
Olympic games are notorious for going over budget. The 2012 Olympics in London will cost an estimated $16.5 billion, three times its original estimate.
“Our aspirations for welcoming the world to Chicago and the United States are represented in nearly 600 pages in this three-volume document,” said Chicago 2016 Chairman and CEO Patrick Ryan. Ryan is founding chairman of Aon Corp., the large insurance broker, which is based in Chicago.
The economic crisis has had its effect. Chicago’s organizers are predicting a $500 million profit, down from the initial estimate of $725 million because they reduced the anticipated sale price of the Olympic village to a real estate developer for mixed-use housing.
The games run from July 22 to Aug. 7. Tokyo, Madrid and Rio de Janeiro have also submitted bids. The winner will be chosen Oct. 2.
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