It's So Bad in Brazil That Olympians Will Have to Pay for Their Own AC (BusinessWeek)

• Hampered by economic crisis, Rio 2016 will cut $520 million
• Organizers say no changes to what broadcasters were promised

The Brazilian economic crisis has finally hit the 2016 Olympics. Following a new round of cost-cutting by the Rio 2016 organizers, athletes will be asked to pay for the air conditioning in their dorm rooms. Stadium backdrops will be stripped to their bare essentials. Fancy cars and gourmet food for VIPs are out.

"The goal here is to organize games without public funding and to organize games that make sense from an economic point of view," Rio 2016 spokesman Mario Andrada said in an interview.

That economic focus has changed radically in the six years since Rio was awarded the Games – South America’s first. At the time, Brazil’s government pledged $700 million toward any budgetary overrun. Then the economy tanked. Unemployment has soared, and the local currency, the real, has lost one-third of its value against the dollar in the last year.

Now, with costs that ran up to 2 billion reais ($520 million) over budget and the public commitment in doubt, the organizers must stick firmly to the 7.4 billion reais they expect to earn from sponsorships, ticket sales, and a grant from the International Olympic Committee. Final decisions on what to pare back and how much should be finalized by next week, Andrada said.

By the time the Games begin, the committee plans to have 500 fewer paid staff than the 5,000 it originally expected. The deepest cuts will probably come from operational areas like catering, transportation and cleaning services.

Shifting the cost for air conditioning and other amenities from the host city to each nation’s Olympic committee – or to the athletes themselves – is a big deal, said Nick Symmonds, a two-time Olympic runner.

“The world wants to tune in and watch the world’s greatest athletes compete at the absolute highest level," Symmonds said. "If you don’t provide them with good food, a good place to sleep and comfortable temperature, they won’t be able to recover and bring the A-plus product that the world is demanding. To cut the budget on athletes’ hospitality and comfort, that’s just going to cheapen the games.”

Andrada said air conditioning is an “absolute necessity” in some areas, though not bedrooms. The 17-day event, which kicks off on Aug. 5, takes place in Rio’s winter, and the average daytime temperature is in the mid-20s Celsius (mid-70s Farenheit). Some days are much hotter, though, with highs last August creeping into the mid-90s.

Others worry that the cuts will further underscore the chasm between athletes from wealthy countries and those from poorer ones. (Already some top athletes, including the NBA players who join the USA Basketball squad, choose luxury hotels over accommodations in the Olympic Village.) Those who can afford extra for air conditioning or who travel with laptops or iPads (the host committee has scrapped plans to provide TVs in individual bedrooms) will have it; others may not.

“Some people aren’t going to put up with it because they don’t have to, some will have to because perhaps there is no alternative,” said Rick Burton, the former marketing director for the U.S. Olympic Committee. “Is the IOC going to feel obligated to step in and raise the standards so that everyone is treated equally? Or is it going to be a statement, that this is the best this host country can do?”

An IOC spokeswoman called the adjustments in spending part of "a normal process" for Games organizers at this stage. "The IOC is working closely with the Rio team to make sure that it achieves its budgetary objectives while delivering great Games for all participants," she wrote in an e-mail.

For the hundreds of millions of people who watch the Olympics on television or online, all of the cost-cutting should be invisible. Organizers have assured broadcast partners that there will be no changes to what they were promised, and there are also no plans to scale down any of the competition specific infrastructure.

"As long as we don’t compromise the games, the quality of the competitions, the experience of the public; we have to look for efficiencies,” Andrada said. And while the process "hasn’t been painful so far, it will be painful from now on, because we need to finish the process."

Preparing Rio to become the first South American Olympic host has been bumpy. Massive public protests over the country’s spending priorities in 2013, ahead of last year’s soccer World Cup, jolted local politicians and Brazil President Dilma Rousseff’s government. That led to squabbling over who should pay what for the Olympics, which has a total price tag of almost 39 billion reais ($10.2 billion), and criticism from the IOC over delays at key projects.