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London 2012 organizers fear companies may go broke

Dec. 09, 2008, 5:31 p.m. (ET)

LONDON(AP) London 2012 organizers are concerned companies supplying materials for the Olympic Park could go broke because of the global economic downturn.

The east London Olympic Park will feature key venues and the athletes' village. The plans for the village already have been scaled back from 4,200 apartments to 3,300 for the 17,000 athletes and coaches because of the fall in the housing market.

``The risk to companies getting into financial difficulty and perhaps going bust is a risk to us,'' John Armitt, chairman of the Olympic Delivery Authority, told a parliamentary committee Tuesday. ``Hopefully, we can keep a reasonable eye on the state of those suppliers, so if somebody is getting into difficulty we can perhaps take mitigating action to reduce the impact of that.''

The ODA, which has been in talks with Australian construction company Lend Lease, is having problems securing private financing from the banks to build the $1.5 billion village. After the games, the village is to be sold as apartments.

Olympics minister Tessa Jowell is pessimistic about raising more private money.

``Of course, there is a possibility (that we won't),'' Jowell told legislators. ``That does not mean that we will give up on the possibility that there is private sector investment from another source beyond government.''

The London 2012 Olympics are expected to cost three times the original estimate because of an absence of private finance. Armitt warned legislators Tuesday the contingency given to them by the government to keep the project on track could run out by early 2009.

Along with the slowdown in the housing market, planning has been hampered by the pound's free fall, which impacts on building materials bought overseas, Armitt said.

``That slowdown will increase pressure on all the companies in that sector,'' Armitt said.

ODA chief executive David Higgins said it would be shortsighted to reduce the quality of the apartments because it would harm the ability to sell them after the Olympics.

Also, the 2012 organizers want shorter Olympic sessions to allow more fans to see more events.

``In Beijing, they had five-hour beach volleyball sessions,'' said London 2012 organizing committee chief executive Paul Deighton. ``It was a great event, but we will shorten it so it increases the risk of not having the same person in that seat for the entire session.''

Deighton said he wants tickets to go to fans instead of groups that may or may not show up for the competition, which he said happened at the Beijing Olympics.

Talks are under way with the International Olympic Committee about reducing the number of tickets for officials and guests ``so that we can squeeze more people in'' at an affordable level, Deighton said.