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Beijing will likely become the first host city in Olympic history to milk every financial outlet to make the 2008 Games a success, a government-backed think-tank said.
"Since colossal sums of money are needed to not only build up competition venues and sports facilities, but also to improve and enforce urban infrastructure and environmental protection efforts, it is necessary for the Beijing municipal government to establish unconventional channels to raise funds from wherever possible, especially from the gold-packed capital market," said He Xiaofeng, vice-dean of the Beijing Development Institute at Peking University.
Compared with expenses for event facilities and sports gear, spending on the environment and infrastructure demands much greater investment from the host city. And conventional ways of collecting money, such as bank loans, could result in fiscal jeopardy for the local government, He said.
Roads, bridges and waste disposal plants all need to be built to stage a successful sports gala.
Although these facilities were under the government's consideration even before Beijing won the Olympic bid, it is now urgent to complete them in time because of promises Beijing made to the International Olympic authorities.
"Authorities must open their minds and find special money-raising channels, such as public bond issues and stock listings by State-owned firms and venture capital," He said.
Diversified financial tools should be adopted to avoid laying excessive fiscal burdens on the government, He said.
"Rather than depending on one single approach, a variety of feasible measures are recommended to generate capital, including venture capital and securitization of assets," He said.
In return, the new trials will accelerate the pace of reform in the domestic financial market.
"It's a great opportunity to make a breakthrough regarding the capital market, which is relatively conservative and lags behind international standards."
For instance, no industrial fund is allowed in China to invest in various events. But Beijing could set up a specialized Olympic fund to raise money for infrastructure, the vice-dean said.
He said a seminar will be held on February 23 at Peking University in which many officials will discuss the best funding options.
Although still immature, He's proposals have garnered positive feedback from local authorities.
"Besides full governmental supports, Beijing will be bold enough to try new ways of market development in preparation for the global sports gala," Mayor Liu Qi said.
Since winning the bid to host the 29th Summer Olympics in 2008, the capital has spared no effort preparing for the grand sports meeting.
It has announced plans to spend US$22 billion on preparations for the Games so far, including US$1.6 billion on the sports venues and billions more on improved transportation and the environment.
The Beijing Organizing Committee of Olympic Games needs to collect as much as US$1.3 billion, 80 per cent of the US$1.6 billion budgeted for organizing the Games.
The money will come from television broadcasts, sponsorships, facility suppliers, donations and souvenir sales, officials said.
Committee officials are strengthening their team work with International Olympic Committee (IOC) marketing pros and hope a draft plan can be completed by the end of this year.
A creative but rational marketing plan would ensure the most profitability, officials said.
(Business Weekly February 5, 2002)
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