Cost to Hungarian taxpayers of hosting 2017 Fina world championship balloons to over HUF 100 billion

May 9, 2017

“Today it is not the big fish that eat the small ones, but the fast ones who eat the slow ones.” — Viktor Orbán, prime minister, Hungary

Translation of article “Money is no object” appearing in the April 27th, 2017 edition of print weekly hvg (pp. 15-16).

There is no sacrifice we will not make — promised Viktor Orbán when winning the right to host the water sport world championship games.  He was true to his word.  Like a money vacuum, the project will swallow up billions in the future as well.

The Dagály swimming arena is being built on a multiple bluff and with it the entire Budapest water world championships.  In the original sense of the word.  The 40-kilogram time capsule buried under the building contains a rendering of a shining building facade featuring waves of gold even though they already knew at that time that it would not be realized.  Not all of the expected functions would have fit inside.  Moreover, the special facade would have increased by billions the cost of hosting the summer water world championships.  What nearly everybody was aware of was that the numbers didn’t make any sense.  True, Viktor Orbán launched preparations by promising that Hungary would spare no expense.  He even added his own economic interpretation: “Today it is not the big fish that eat the small ones, but the fast ones who eat the slow ones.”

Friendly companies mobilized for the business at incredible speed.  Companies considered close to the government — Market Epítő, Épkar, Penta, WHB, Young & Partners, Valton — each got one or two slices from the cake. The cost of hosting the event estimated at HUF 25 billion (USD 91 million) at the time of winning the tender is today approaching HUF 100 billion (USD 363 million).  And it is nowhere near the end.  Money has to be dumped by wheelbarrow into the project, which is in serious delay, in order to meet the deadline.  In this way, the premium price paid owing to the urgency of the project continues to increase.

But the knife is at the throats of the organizers. The head of government made it known that whoever fails to deliver is doomed.  Minister for National Development Miklós Seszták has been summoned before the cabinet, and government commissioner Balázs Fürjes has been marched to the edge of cliff. Orbán has established a separate committee uniquely headed by himself to oversee the Puskás Stadium project which is also being managed by Fürjes, but which the head of government thinks is moving too slowly.  The project must be completed for the 2020 football European championship games, and for the Eucharist World Congress to be held in Budapest that same year.  The scandal surrounding the application to host the Olympic games did not help the government’s opinion of  Fürjes.  And for this reason successfully completing the Dagály arena, which is to serve as the main, central venue, may be his last chance.  Especially given that his partners in construction are companies such as Market Epítő Zrt., Fürjes’ former employer. The company partly owned by István Garancsi can invoice HUF 43.3 billion (USD 155 million) in relationships to the world championship.  However, this amount does not come close to covering all the costs related to the venue where the event is to be held.

Although according to initial reports, the reconstruction of the Dagály public bathing facility was to cost a mere HUF 8 billion (USD 29 million), Fürjes (who first told the HVG but later retracted his statement) expressed in many places that it was out of the question that costs would get out of control. The first amount thrown out supposedly did not contain a number of expenditures, among them infrastructural development, and tasks expanding the scope of the project with time.  The government allotted the swimming arena a supplementary HUF 4.8 billion (USD 17 million) at the end of last year because the cost of renovating the old bathing area was added to the project.  But at least this was completed on time, although an army of workers are working in the area.  The rest of the facilities are not nearly in so good shape.

The budget for building the giant diving tower runs around HUF 3 billion (USD 10.5 million), even though it will serve as the temporary venue for just two events involving the awarding of medals.  In the first round they merely forgot to order the diving tower, or at least it was under this title that WHB, which does business with the head of government’s son-in-law, won the tender to build the platform.  The renovation of the Császár-Komjádi swimming pool is of a similar magnitude (HUF 3.46 billion/USD 12.3 million), but at least this will remain after the world championships, and was contracted for in spring of this year.  On the other hand, they were in no hurry to award the Széchy-Hajós swimming pool tender.  The winner was announced in the middle of March this year: Épkar Zrt. The company will undertake the project for HUF 3 billion (USD 11 million) originally estimated to cost HUF 1.7 billion (USD 6 million).  However, there is no answer for who will build the movable stands for the Hajós swimming pool where the water polo event is to be held.  This is the task of the same BP2017 Nonprofit Kft. created to manage the sporting event.  So far the company has spent HUF 24 billion (USD 86 million), of which the company’s operating expenses last year were budgeted at HUF 1.36 billion (USD 4.8 million).  The first step was the renovation of Tamás Gyárfás’ Nap TV headquarters for HUF 28 million (USD 100,000), which the former president of the swimming association then transferred to the world championship organizer.  Then in January of this year it turned out that they needed to move because Lőrinc Mészáros, billionaire gaspipe fitter from Felcsút, had purchased the Angol street building.  However, the organizer of the swimming world champion hardly had reason for complaint: news is that he received the imposing offices of the Olympic organizing team which, in the meantime, was disbanded.

Helping the clever trick

The CEO of Bp2017 Kft. is Gyárfás’ former right hand, Éva Szántó, the general secretary of the swimming association.  The company’s economical director, Sándor Balogh, is considered a confidant of Seszták. The businessman who tried to profit from the African Hungarian trading house is behind the company organizing the world championship, which is showering him with money.  Around HUF 6 billion (USD 21.5 million) has been spent on the hotel expenditures of players, journalists, officials, VIP guests, and sponsors, for example.  There were hotel expenditures that exceeded the original estimated cost by 146 percent.  The company organizes opening and closing celebrations as well at an expected cost of HUF 3.8 billion (USD 13.5 million).  It also ordered HUF 211 million (USD 750,o000) of uniforms, HUF 559 million (USD 2 million) of furniture, and paid HUF 833 million (USD 3 million) for health-care services.  Meanwhile, it ordered HUF 110 million (USD 400,000) of studies.  About virtually everything.  For example, security and broadcasting strategy, ethnographic research and impact studies about the realization of equal opportunity.

On the other hand, nobody has asked for an analysis of the public tender applications, even though such an analysis would yield interesting results.  Every tender was undertaken with urgency and involved invited bidders only.  Of the soon to be HUF 100 billion (USD 357 million) cake, nearly every friendly company received a bigger or smaller slice. Even the police made out well, receiving half a billion forints for the purchase of boats and trailers and HUF 250 million (USD 900,000) for cameras and data storage equipment.  The local government of Balatonfüred also did well with the world championship, in that HUF 3.4 billion (USD 8.8 million) is being spent improving its parks. Moreover, it will receive part of the revenue as the companies undertaking the work are partially owned by the local government. The HUF 18.2 billion (USD 65 million) allocated by the City government for the improvements is to be joined by HUF 8.3 billion (USD 30 million) worth of state funds.  True that from this they have to solve the canalization of the Margrit Island, the cost of which meanwhile increased by HUF 1 billion (USD 3.6 million).

The list is nowhere close to being complete as new tasks are added almost daily.  In fact, the money vacuum will not even end after the world championship.  Demolishing the temporary structures will cost billions.  Part of this is included in the original contract, like returning the swimming arena to its original state at a net cost of HUF 14 billion (USD 50 million), for example.  But here too “unexpected” costs can arise in light of all that has gone before.  On the other hand, the cost of operating the building has yet to be budgeted.  What is certain is that just the operation of the swimming facility will require billions of state supports annually.  Given the expected huge loss, it is not by chance that they have not yet managed to find an operator for the world championship.