(Updates with home prices by Olympic venues in 19th paragraph.)
July 27 (Bloomberg) -- Budget overruns, last-minute building work and a legacy of obsolete stadiums are as synonymous with the Olympic Games as the colored rings in its logo. London is poised to break that chain.
Preparations for next year’s Summer Games are on time and under budget, with 88 percent of construction completed a year ahead of the opening ceremony. Development costs may drop 16 million pounds ($26 million) to 7.25 billion pounds, the U.K. Department for Culture, Media and Sport said on July 19.
The government more than tripled its original budget after failing to get companies to finance and develop the site. Led by double Olympic gold medalist Sebastian Coe, London beat bids from Paris, New York and Moscow in July 2005 after telling the International Olympic Committee that the 30th Olympiad would regenerate east London. Six years later, disused railways, wasteland and local companies have made way for new sports complexes, homes and Europe’s largest urban shopping mall.
“London has in some ways raised the bar and set some really good precedents and future markers for bidders of the Games,” Alan Seymour, a professor of sports marketing at the U.K.’s University of Northampton, said in an interview. “It’s definitely a first” for an Olympics site to be almost ready with 12 months to go, he said.
Along with the cost of the Paralympics, London will spend about 9.3 billion pounds on the Games, which start July 27, 2012. China spent $70 billion on the 2008 Olympics in Beijing and the 2004 Athens Games cost more than 11 billion euros ($16 billion).
The last two Summer Olympics left the host cities with underutilized facilities. In China, officials are turning the iconic Bird’s Nest stadium into an entertainment and shopping center. Athens has leased out just six of the 22 venues used in the Games, according to former Finance Minister George Papaconstantinou.
“It is a tragedy to go to a city that has hosted the Games and find facilities that are sitting there and not being used,” Keith Mills, deputy chairman on the London organizing Committee, or LOCOG, said in an interview. “When we went and learned the lessons from Sydney, and Athens in particular, we were determined that we wouldn’t make the same mistakes here in London.”
‘No White Elephants’
It’s important to show to “your government and population that they’re getting a good return on their investment and that means only spending money where you need to spend it and not leaving behind white elephants that the taxpayer has to fund for many years to come,” Mills said.
To save money, London is building temporary facilities or re-using arenas, such as Horse Guards’ Parade for the beach volleyball, Greenwich Park for equestrian sports and Wembley stadium for soccer.
London will be ready half a year before Sydney was for its Olympics and that gives the city “every prospect” of surpassing the event held 11 years ago, said John Coates, president of the Australian Olympic Committee.
“Many people say that Sydney remains the benchmark, but from where I’ve been sitting, London has been six months to a year ahead of us in their preparations all the way through,” Coates said today at a function in Sydney to mark the one-year countdown to the next Games.
The use of existing facilities has allowed London to concentrate on the post-Games future for the buildings.
London received competitive offers for the 80,000-seat Olympic Stadium, which was awarded to soccer club West Ham United along with Newham borough. Their bid, which beat one from Premier League soccer team Tottenham Hotspur, promised to retain the running track, allowing the stadium to host athletics events.
Tottenham asked the U.K. High Court in April for permission to bring a claim over a loan that will help West Ham take over as occupant of the 537 million-pound stadium. The venue will be reduced in size before being used for soccer as well as track- and-field events.
“People need to give us credit for the fact that a year before the Games, we have an anchor tenant in the stadium and we have a plan to transfer it,” Margaret Ford, chairwoman of the Olympic Park Legacy Company, said in an interview.
The Games will be held in Newham, the sixth-most deprived district in England out of more than 350 assessed by the government. The development didn’t always have the support of neighbors.
Lance Forman had the best seat in the house before the 106- year old H. Forman & Son salmon-smoking company was knocked down to accommodate the site of the opening ceremony.
“We were in the middle of the Olympic Stadium,” said Forman, proprietor of the four-generation family-run business, in an interview. “We couldn’t understand why the athletes couldn’t run around us, but the javelins were always going to be a problem.”
The average residential real estate price in Stratford, home of the Olympic Stadium and part of Newham borough, fell 3.9 percent to 226,008 pounds in year through July, according to Zoopla.co.uk.
The London organizing committee has been criticized by U.K. consumer groups for the way it’s selling the 8.8 million Olympic tickets. Only 700,000 people were successful in a first-round public ballot, with 1.2 million sports fans missing out. Another sale allowed some of those who missed out on the first round to gain entry to events.
“This has been an Olympic ticketing system that has been left on the starting blocks for many consumers,” Matt Bath, technology editor at London-based consumer group Which?, said in an interview. “A lot of people are incredibly frustrated with the whole process. It was absolutely unclear and lacked transparency.”
After the second round of sales, more than 3.5 million tickets have been sold and about 850,000 successful applications have been made for tickets, the organizers said. Only soccer, volleyball and wrestling tickets remain.
“We now have at least 150,000 more successful applicants, and they and their friends and families are now going to the Games,” LOCOG Commercial Director Chris Townsend said in a statement. “Our goal is to get as many members of the British public to the Games as possible, and we have sold over 750,000 tickets to people who were unsuccessful in the first round.”
The Olympic Park Legacy Company, or OPLC, is in charge of seeking operators for all aspects of the 560-acre (227-hectare) Olympic Park to make sure east London benefits after the Games. The space will host the swimming, cycling, handball and basketball, and also house the press and broadcast centers as well as the Olympic stadium, where the opening and closing ceremonies and the athletics events will be held.
The deepest government spending cuts caused by the worst U.K. economy since World War II have failed to block efforts to adapt the new arenas for different uses after the Games, said Ford of OPLC.
“It might seem counterintuitive, but a lot of the work we are doing hasn’t been altered by the financial crisis,” she said. “The investment wasn’t just for six weeks of Games, it was for the next 30 years of east London. For every pound spent on the Olympic park, 75 pence stays there in legacy. So all of the infrastructure, the transport upgrades, the remediation of the land, the venues, all of those things remain in the park.”
Britain also will benefit from 750 million pounds of consumer spending during the seven weeks of London’s Olympic and Paralympic Games next year, Visa Europe said earlier this month.
Not only retailers stand to profit from the Games. The Olympic Delivery Authority, which oversees construction of the venues, said last week it had awarded more than 1,500 contracts valued at more than 6 billion pounds, 98 percent of which went to U.K.-based companies.
The building of the Olympic facilities involved extending contracts to more than 240 U.K. businesses, including the country’s largest construction companies such as Balfour Beatty Group Ltd. and Sir Robert McAlpine Ltd., as well as smaller operations like Adlington Welding.
“The work we did for the London 2012 Games definitely helped to safeguard jobs,” Adlington director Nigel Turner said. “We have been able to retain our full complement of staff, despite the tough conditions.”
Forman, whose business had to be moved from what is now the Olympic Park, has relocated his fish-smoking factory to the banks of the river Lea, a stone’s throw from the Olympic stadium. Besides smoking salmon for clients including Fortnum & Mason and Buckingham Palace, Forman’s Fish Island expects to benefit from the Games with a newly built corporate event and party venue that overlooks the stadium.
“For an Olympic sponsor, there will be aerial shots of the Olympic Park and they cannot physically miss our roof space,” the 48-year-old said. “It would be a brilliant space for them to stick their logo.”
--With assistance from Tim Barwell and Tariq Panja in London, Eleni Chrepa in Athens and Dan Baynes in Sydney. Editors: Christopher Elser, Andrew Blackman.
To contact the reporters on this story: Danielle Rossingh on the London sports desk at email@example.com; Chris Spillane in London at firstname.lastname@example.org.
To contact the editor responsible for this story: Chris Elser at email@example.com.