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Full Text: Boston 2024 response to the Brattle Group report

BOSTON 2024 RESPONSE TO THE BRATTLE GROUP REPORT

We appreciate the serious attention Governor Baker, Senate President Rosenberg and Speaker DeLeo gave to reviewing Boston 2024’s Bid 2.0. Boston 2024 closely collaborated with the Brattle Group in an open and transparent manner during this process. We are gratified that the Brattle Group report noted that Boston 2024’s ideas to improve housing, transportation and parks are worthy of future discussion and we look forward to supporting Gov. Baker, the Legislature and Mayor Walsh in those endeavors.

While the Brattle Report confirmed many of the risks and opportunities that were identified in Bid 2.0, we were surprised that the report failed to thoroughly and accurately account for important cost differences between Boston’s bid and other Olympic Games. Boston 2024 appreciates the work of the Brattle Group, however we respectfully disagree with some of their assumptions and analyses and have identified several misrepresentations and/or errors within the report. Unfortunately, the Brattle Group never fact-checked many of their findings, which would have prevented these errors.

To correct the record, Boston 2024 offers the following facts:

- The Brattle Group suggested that our International Broadcast Center/Main Press Center estimate of $50.5 million was 90% lower than London’s and thus was a $450 million shortfall in our bid. This is a critical, nearly half-billion dollar error on the part of the Brattle Group. Our budget estimate was to lease and retrofit space only, while London’s cost included construction of a brand, new permanent facility. London actually built one million square feet but used only 600,000, while we budgeted rent for one million square feet but most likely would have needed far less space;

- For the Aquatics Center, Boston 2024 budgeted $69.5 million for a temporary facility for swimming and synchronized swimming while London spent $423 million for a larger permanent facility. Also, London’s Aquatics Center included diving and triathlon swimming, while Boston 2024 included an additional $24 million for separate facilities for those sports. Other Olympic cities have built aquatics facilities for far less than London. London had a different plan for a permanent facility with long-term social use. We budgeted for an acceptable, low-cost facility but as we stated repeatedly, we also had universities interested in building a permanent facility.

- For the Olympic Stadium, Brattle merely assumed Boston would experience an overrun exactly the same as London’s (48%), and simply applied that percentage to our Olympic Stadium budget. No analysis of our detailed construction estimates was actually done to refute our cost estimate. In addition, the report suggests the $176 million cost for the temporary stadium was not feasible. As Boston 2024 stated several times, the price quote for the stadium provided by firms that build similar temporary facilities around the world was significantly less than $176 million. We built a 15 percent contingency into the stadium cost and believe that the $176 million figure was conservative.

- The Brattle Group believed our contingency figures were too low and arbitrarily increased the percentage to 25% for all smaller venues. Again, no detailed critique or analysis was done of our construction budgets.

- The Brattle Group states that it was not provided with incremental costs associated with venues outside of Boston and suggested that those costs would impact potential revenue upside. In fact, those costs were provided, and more importantly were accounted for in our projections. We specifically budgeted in Bid 2.0 for $33 million for regional venue costs including overlay, transportation and accommodations;

- More broadly, the Brattle Group's analysis is a simple comparison of our budget to past Games including London. There was no effort to critique our venue by venue construction budgets which we provided, down to very specific costs of steel, concrete, plumbing, electrical and HVAC on a square foot basis;

- The Brattle Report suggests that a financial guarantee for the Olympics is “generally signed by a combination of national, regional, and local government authorities,” falsely implying that the governor or other authorities of the Commonwealth would have had to sign a contract with the International Olympic Committee. In fact, only the City of Boston and its mayor would have been required to sign a taxpayer guarantee;

- In addition to working with Boston 2024, the Brattle Group consulted a number of organizations for its analysis, including: No Boston Olympics; Metropolitan Area Planning Council; Massachusetts Smart Growth Alliance; Transportation for Massachusetts; the Massachusetts Department of Transportation; and the Massachusetts Bay Transportation Authority (“MBTA”). It is worth noting that the Brattle Group never consulted the City of Boston for its report, despite the city's involvement in the planning and bidding process.

- With regards to revenue, the Brattle Report states that “Boston 2024's estimate was already 43% higher than the $1.05B that London received; if Boston were to have received the same contribution as London, its revenue would have been nearly $450M lower than projected.” In fact, the IOC guidance was for all bid cities to assume $1.5 billion, with a high possibility for upside. In addition, NBC's new $7.75 billion broadcast rights contract from 2022 through 2032, coupled with international broadcast rights increases, will almost certainly mean even higher revenues by 2024;

- The Brattle Report states that Boston 2024 “disclosed no detail on the potential costs of the Paralympics.” In fact, the Brattle Group was informed that the Paralympic costs were included in the OCOG budget. Boston 2024 also reported to the Brattle Group that ticketing revenue from the Paralympics was projected at $75-80 million and that Paralympic sponsorship revenue in London was roughly $300 million. Without the Paralympic revenues included in Bid 2.0, Boston 2024 still projected a $210 million surplus. Figuring in this revenue, the surplus would have more accurately been in the $400-500 million range;

- The Brattle Report suggested Boston 2024 would have a potential financial risk with regards to security costs, but Bid 2.0 – like all American Olympic bids – is dependent upon the federal government paying that cost. The fact is, there can be no American Olympics – in Boston, Los Angeles, or any other city – if the federal government doesn't pay that important cost;

- The Brattle Group never mentioned that the last three United States Games were privately funded and all had surpluses – even without the Agenda 2020 reforms reflected in Boston 2024's Bid 2.0.