Chicago Mayor Richard Daley: a factor for the city’s bid for the Games, says the USOC 2016 evaluation commission chairman. (ATR)

(ATR) The Chicago bid for the 2016 Olympics passes a key test with overwhelming city council approval of a $500 million last-resort guarantee to cover the costs of the Games, but there still be could be questions about the business model underlying the bid.

The legislation was approved Wednesday, 45-5, one week after the chairman of the U.S. Olympic Committee Evaluation Commission warned that the city of Chicago needed to put in place a guarantee, given the amount of construction called for in the Chicago bid.

Bid chair Patrick Ryan said in a statement that the timing was right.

“Today also marks one month to the day the United States Olympic Committee will make its decision. As we work to prepare our final presentation to the USOC, the continued support from the community and civic leaders of Chicago is a tremendous lift.”

The vote, though lopsided, was accompanied by an hour-long debate.

The swift passage of the guarantee at the urging of Mayor Richard Daley could be a big tick for Chicago when the USOC Board of Directors chooses a U.S. nominee April 14. Evaluation commission chair Bob Ctvrtlik named Daley’s ability to get things done in the city as one the strengths of the bid. And, Daley is just three weeks into a new four-year term, his sixth, with no limits on how many terms he can serve.

The Chicago plan calls for a privately-financed $1.1 billion Olympic Village and a $366 million temporary stadium, funded by the organizing committee operating budget.

The guarantee approved by the city council is part of a multi-layer package that puts $250 million of city money at risk as the second bulwark against a deficit and the remainder as the last resort. First source of money in the guarantee is $200 million from the sale of luxury sky boxes at the Olympic Stadium and air rights sold to the developer of the Olympic Village.

Chicago bid leaders, projecting a $525 million surplus, believe the city pledge money will not b

USOC chief executive Jim Scherr and USOC international vice president Bob Ctvrtlik in Chicago last week. (ATR)

But that surplus could become an issue for Chicago if the bid is chosen as the 2016 nominee from the U.S.

While USOC evaluation commission chairman Bob Ctvrtlik last week issued a statement approving the direction Chicago was taking toward satisfying the guarantee, he’s also on the record as leery about guarantees.

He said as much in Los Angeles earlier this month during the commission visit. Bid organizers in LA are also talking about a surplus from the Games, but not as much as Chicago.

Speaking at the press conference at the end of the visit he warned that it was too early for bid committees to count on sur

Overt plans to generate a $500 million surplus may not play well in the international arena, where rival cities could attack the U.S. bid as a money-making venture.

Expecting a surplus could also undercut sales of sponsorships, with companies wondering whether their investment would go to stage the Games or leave a nest egg for a city.

One marketing executive familiar with Olympic sponsorships tells Around the Rings it would be “impossible, especially in the U.S. market” to sell sponsorships with a surplus the size of Chicago’s being bandied about.

Regardless of which city gets the USOC nod, some changes could be coming to the way business models for both plans are presented in order for them to be palatable to IOC voters.

While Chicago had to present a guarantee, Los Angeles has not had to do anything extraordinary for the USOC, says bid chair Barry Sanders. Using the existing Coliseum, UCLA dorms for an Olympic Village and a backbone of high-quality existing venues, LA currently plans to build only one permanent venue, for shooting.

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