Britain's Olympic woes

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LISA MULLINS: Well, London could certainly use a little economic pick-me-up, especially when it comes to its 2012 Summer Olympic Games. The price tag for the London Olympics is ballooning and it's happening just as the deepening recession cuts into plans for more private investors to help out. The World's Laura Lynch reports on Olympic dreams giving way to financial nightmares.

LAURA LYNCH: The main Olympic location is still a noisy, muddy construction site in East London. The stadium is only just starting to look like a stadium. Even so, the projected cost of that one building has already almost doubled to $790 million. Add that in to the total cost for the games--it's now almost tripled to $13.5 billion. It's a long way from those days in 2005 when Londoners felt like a winners.

ANNOUNCER: The games of the 30th Olympiad in 2012 are awarded to the city of London.

LYNCH: The city celebrated and ignored the warnings about the winner's curse. Get the games at your peril; it goes, because the price tag will almost certainly go up. It has, and that coupled with the worst recession in decades has dampened a lot of the enthusiasm among Londoners.

WOMAN #1: It's a shame that the costs weren't estimated very accurately in the first place, but I think we sometimes live in a bit of a negative culture and we should really try and focus on what's good about the Olympics.

WOMAN #2: You have to ask yourself don't you, whether the Olympic Games is a good investment at a time like this.

WOMAN #3: I mean if it needs to be more money, it needs to be more money. There's too much gloom and doom going on at the moment.

LYNCH: Private funding was supposed to pay for a good part of the athletes' village and the media center, but there's none to be had. One corporate sponsor has gone into bankruptcy. The financial problems mean the government has already spent a quarter of its $3 billion contingency fund. Tessa Jowell is the Cabinet Minister responsible for the Games. Last fall in a moment of candor, she admitted that if they knew what lay ahead they almost certainly wouldn't have bid for the Olympics. Now, she's got a new more upbeat message: Olympic Games as stimulus package.

TESSA JOWELL: Oh this is undoubtedly a good thing, 30,000 people will work in the Olympic Park between now and 2012. We've very substantially increased way above the industry baseline, the proportion of apprenticeships, and right round the country small and medium-sized businesses are benefiting. Their books have orders because of the Olympic contracts.

LYNCH: Conservative Opposition politician Edward McMillan-Scott says the games simply aren't worth it.

EDWARD MCMILLAN-SCOTT: This country is bust already. To add the additional cost of the Olympics to that debt, which is going to be paid for generations to come seems to me an attack on the British taxpayer which is not going to be popular whatever sort of gloss.

LYNCH: McMillan-Scott cites all the other Olympics that have spent well beyond their budgets, and argues it's time for the games to go home to Greece and stay there. The head of London's organizing committee Sebastian Coe, disagrees. The Olympic gold-medalist points to the Games wider legacy--inspiring youth, rebuilding a neglected area of the city and reaching out to the world.

SEBASTIAN COE: It's about the regeneration of a part of this country that had been long neglected. And the issue about one venue, I know that's quite an attractive proposition for some people. I think actually the uniqueness of the Olympic Games, the very beauty of Olympic Games, is its ability to have a global presence. And we would lose something if we just simply located it in one place.

LYNCH: Still, as costs rise and the economy continues to slide the debate over whether the Games are worth the cost will almost certainly race ahead. For The World, I'm Laura Lynch in London.