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Les Leyne: Will B.C.’s World Cup costs go up? Of course they will

Having an entire continent host the World Cup doesn’t stop the cost creep. It just spreads it around so that more taxpayers can take part.
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B.C. Place stadium in Vancouver, where 2026 World Cup soccer games will be played. CHUNG CHOW, BUSINESS IN VANCOUVER

Horror gripped the beating heart of Canada (a.k.a. Toronto) this week after the shocking revelation that cost estimates for the 2026 FIFA World Cup are headed — you guessed it — up.

Since Vancouver is also hosting a share of the games being played in Canada, the U.S. and Mexico, the question naturally arises: “Could it happen here?”

The short answer is: Of course it will.

Having an entire continent host the World Cup doesn’t stop the cost creep. It just spreads it around so that more taxpayers can take part.

But you won’t find anyone in government willing to spill details on how much more the World Cup will cost B.C. than was first advertised.

That’s probably wise on their part. Cost overruns only happen after governments are forced to acknowledge them. Outsiders can’t just declare a cost overrun based on the fact that it’s inevitable. They only materialize when public sector accounting rules make it impossible to hide them any longer.

In Toronto the opening reassurance five years ago was that city costs would be $30 million to $45 million, tops. By 2022, they got a bit more serious and estimated $300 million. But city staff now report that it will be in the $380 million range, with two years still to go before kickoff.

There were no early lowball estimates from Vancouver because the provincial government bailed out of the game in 2018, saying: “The FIFA bid agreement contained clauses which government felt left taxpayers at unacceptable risk of additional costs.

“We tried very hard to get assurances that addressed our concerns. Unfortunately, those assurances were not forthcoming.”

But Montreal later dropped out and by 2022 Vancouver was back in. Those “unacceptable risks” were a thing of the past. The NDP government switched to jubilance at the prospect of hosting some matches. The minister responsible was “thrilled.”

The estimated costs in 2022 were put at $240 million to $260 million, with roughly half accruing to the city. But that was just as inflation started increasing substantially, and before games were added to the city’s schedule. Barely a year later, a closer look found that just the city costs would hit $230 million. An all-in cost wasn’t given.

There are still two years to go, so the next update should be an exciting one.

The Ontario government’s initial response was that rising costs are Toronto’s problem. It is holding fast to its $97 million commitment.

B.C. Tourism Minister Lana Popham on Tuesday was vague on the state of play in B.C. and it wasn’t by accident. She told reporters: “We don’t have the numbers yet, but we’ll be able to answer those questions in coming weeks.”

But a moment later she said: “The numbers have changed substantially since we have received news of getting two more games … so we don’t have any working number today to give but we’ll have that, too.”

The good news is that whatever the new much higher cost is, we’ve already started paying for it.

A “modest temporary” 2.5 per cent tax on short-term accommodation was imposed last year in Vancouver that will run for seven years and is expected to bring in $230 million. That projection just happened to be reasonably close to the cost estimate. So it looked like a neat and tidy win. The tax would cover most of the cost and all the new economic activity would be gravy.

But in addition to the new higher costs, the revenue estimate looks out of date as well. The government is shutting down thousands of Airbnbs and the like as part of the housing push. It’s also purchased a number of hotels to convert to social housing.

When Vancouver got the matches in 2022, officials were delirious at the thought of hotel rooms filling up. But they were already full at the time. A hotel room shortage was a fact of life then. A recent hotel building boom will have to run flat-out to make up for the short-term stay losses.

With up to 400,000 people expected, Popham said: “We’re going to see some really creative opportunities.”

It’s better for taxpayers to focus on the epic party that will accompany the World Cup rather than the undisclosed bill that will eventually come due.

Just So You Know: Another plus to look forward to: Popham said more late-night ferry sailings are planned to make it easier to attend the games from Vancouver Island.

lleyne@timescolonist.com

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