Behind the grandeur of the Olympic Games lies a huge financial challenge - how to keep budgeted costs in line with revenues. For example, the 2006 Winter Olympics in Turin, Italy, narrowly avoided going into bankruptcy before the Games even started. In order for the event to remain solvent, organizers cancelled glitzy celebrations and shifted promotional responsibilities to an Italian state-run agency. Despite these efforts, after the Games were over, the Italian government created a lottery game to cover its financial losses. As another example, organizers of the 2002 Winter Olympics in Salt Lake City cut budgeted costs by $200 million shortly before the events began. According to the chief operating and financial officer, the organizers went through every line item in the budget, sorting each one into “must have” versus “nice to have.” As a result, the Salt Lake City Games produced a surplus of $100 million. Source: Gabriel Kahn and Roger Thurow, “In Turin, Paying for Games Went Down to the Wire,” Wall Street Journal, February 10, 2006.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Part b: Service Company Insight: Without a Budget, Can the Games Begin?
Behind the grandeur of the Olympic Games lies a huge financial challenge - how to keep budgeted costs in line with revenues. For example, the 2006 Winter Olympics in Turin, Italy, narrowly avoided going into bankruptcy before the Games even started. In order for the event to remain solvent, organizers cancelled glitzy celebrations and shifted promotional responsibilities to an Italian state-run agency. Despite these efforts, after the Games were over, the Italian government created a lottery game to cover its financial losses.
As another example, organizers of the 2002 Winter Olympics in Salt Lake City cut budgeted costs by $200 million shortly before the events began. According to the chief operating and financial officer, the organizers went through every line item in the budget, sorting each one into “must have” versus “nice to have.” As a result, the Salt Lake City Games produced a surplus of $100 million.
Source: Gabriel Kahn and Roger Thurow, “In Turin, Paying for Games Went Down to the Wire,” Wall Street Journal, February 10, 2006.
Requirement
Why does it matter whether the Olympic Games exceed their budget?
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