to provide a second facility with an Olympic-size ice surface because the Denver University Arena ice surface cannot be enlarged.

DOC also informed us that, at an IOC meeting in Lausanne, Switzerland, in May 1972, the International Skating Union--the sports federation governing the Olympic skating events--requested that Denver provide a new arena for the skating events.

Press housing

DOC initially planned to house members of the press covering the Olympic games in housing units to be built as part of an urban renewal project in Denver. This project was to be financed with HUD assistance and was estimated to cost $29.6 million, excluding the cost of the housing units. The housing units would be constructed with private capital. The city of Denver plan for the urban renewal project was not approved by HUD, and in June 1972 the city submitted a revised plan which changed the boundaries of the project to eliminate the most expensive land subject to acquisition. The revised project was estimated to cost $18.9 million, primarily for land acquisition, relocation, demolition, and site-clearing costs.

A HUD Denver regional official informed us that the revised city plan had received a favorable recommendation by the regional office staff but was subject to final approval by HUD headquarters. As of July 1972 the revised project plan had not received final approval.

DESIRABLE FACILITIES

DOC believes the following facilities would be "nice to have" but are not essential for the games.

Improvements to Mile High Stadium

The city proposed to increase the seating capacity from 53,000 to 59,000, to replace some existing seats, and to improve the lighting at the stadium in time for the 1976 games. Proposed funding would be through a city appropriation and bond issue.

University of Denver facilities

The University of Denver proposed to construct a health center and a student union which could be used in conjunction with the housing of Olympic athletes competing in events in or near Denver. Firm funding arrangements for these facilities had not been developed, but DOC officials informed us that the facilities could possibly be funded through either private sources or existing Federal Government programs. University of Denver officials, however, doubted that funding from those sources could be arranged.

In July 1972, the chancellor of the university advised DOC that the university expected that the costs of housing the athletes could be substantial and that the university could not afford to absorb such costs. He stated that the university intended to cooperate in providing athlete housing during the games but that the use of university facilities was contingent upon the negotiation of an agreement between DOC and the university's board of trustees, which would guarantee reimbursement to the university of all costs of housing the athletes. DOC was in the process of developing an estimate of athlete housing needs and costs before opening new negotiations with the university.

CHAPTER 3

PROPOSED OPERATING BUDGET

DOC had prepared an operating budget, dated March 1972, for the period starting with planning and construction activities in fiscal year 1973 through completion of the games in 1976. The budget estimated expenses totaling $15 million and operating income ranging from $10.3 million to $15.8 million, depending on the amounts received from admissions and television revenues. A summary of the budget follows..

*Television revenues were also proposed to be used to finance improvements to Denver's Currigan Hall. (See p. 17.) However, other financial arrangements for these improvements may be needed.

OPERATING EXPENSES

DOC projections of costs to be incurred for planning and staging the games were based on the cost experiences at recent games, primarily those held at Grenoble, France, in 1968 and at Sapporo, Japan, in 1972. DOC did not adjust these costs for possible price inflation but did include a $1,013,000 contingency item in its total estimate of operating expenses.

The cost estimates were contingent upon the availability of extensive volunteer support by individuals, businesses, other private or public organizations, and the military services to provide services, materials, and equipment. (See ch. 6 for a discussion of proposed assistance by the Department of Defense.) DOC's president told us that DOC did not plan to obtain firm commitments on volunteer services and equipment until the Munich games are completed in September 1972. A DOC official further informed us that about 350 individuals had volunteered their services to DOC for the games.

OPERATING INCOME

Our analysis of the several types of incomes which DOC estimated it will receive follows.

Admissions

The basic factors involved in estimating admissions revenues were the experience at Sapporo, the location of events and their expected spectator interest, the planned spectator capacity of the facilities where the events are to be held, and the expected price of tickets.

Our review indicated that DOC's estimates of admissions revenues need further refinement because they did not reflect the cost of marketing tickets and certain revenues to be received from concession fees. We also noted that the impact of television upon ticket prices and sales had been considered only to a limited degree. DOC agreed that television would have an impact. DOC also stated that, until

all facility sites were selected and a ticket marketing contract signed, it would be impossible to know what firm ticket revenues might be developed and what commission DOC would have to absorb for marketing the tickets.

Licensing and franchising

DOC estimated that it would receive $1.8 million in revenues from licensing and franchising. These revenues were to be derived from the commercial use of the emblems designed for the 1976 winter Olympics on commemoratives, advertisements, and giveaways and from other uses by local and regional small businesses. The State had passed a law which gave COC and DOC exclusive use of the emblems and which allowed COC and DOC to license their use.

The projection of $1.8 million in revenues was based on previous licensing and franchising experience of the United States Olympic Committee. Factors considered in estimating the revenues included the licensing fees which DOC believed it could charge and the number of contracts it believed it could negotiate. No such contracts had been signed at the time of our review. We were told by a DOC official that franchising activities would be maximized without cheapening the emblems by flooding the market with them.

Television

DOC estimated that its net share of revenues from granting the rights for television coverage would range from $5 million to $8.5 million. No hard negotiations had been held with the national television networks because DOC had agreed with IOC to delay signing television contracts until after the 1972 Munich games.

DOC had preliminary discussions with two networks, and a DOC official told us that, on the basis of such discussions, it would be reasonable to expect a $10 million television rights contract. Under current IOC regulations for distributing television revenues from Olympic events, a $10 million contract would provide DOC with a share of about $5.7 million. For the 1972 winter games in Sapporo, the rights were sold for $8.5 million, from which the Sapporo Organizing Committee paid television production costs resulting in net proceeds of about $4.2 million.