Regional Business News
regarding the 2010 Olympics
in British Columbia, Canada
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especially in Vancouver / Whistler and throughout B.C. We also
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Mainstream Media Misses the Mark
I'm not sure, and I hope it wasn't because mainstream media wants to coddle
people into thinking "all was right" in Athens, but glowing
stories of a successful 2004 Games are misleading if you don't also report
in the same breath that Greek taxpayers are looking at a $10 billion USD
and maybe $17 billion dollar debt to pay for the event. No one knows for
sure how much the Games will cost taxpayers because deferrals and outright
deception make it hard to decipher. But this is guaranteed, Greek Deputy
Finance Minister Petros Doukas estimates the overall cost at $8.6 billion,
$5.5 billion over projected costs. (If he's estimating $8.6 billion you
know it's going to be at least $10 billion and up.) **After this article
was published and everything was tallied up it turned out the actual debt
was $15 billion US - $75,000 US per Greeek household.
Throw enough money at anything and it'll look good on the surface, but
on what level can it be considered a success?
Here's an interesting side note regarding gold medal expenses, the United
States Olympic Committee feels they will have to invest even more money
in their Olympic program in order to keep countries like Russia, China
and Japan at bay in 2008. They have committed $480 million for the next
four years. Now that is commitment!
Read more here . . .
Olympics Cost $10-12 Billion - MutualFunds.com
Occasionally though it's nice to see mainstream media reporting some of
the things I've been saying over the last few months. And although in
this case I truly hate to be right, nothing can be more validating than
to see stories in newspapers about construction cost overruns regarding
Olympic facilities. Even though I do comprehensive research regarding
the economic history of past Olympic organizations and I feel confident
regarding my understanding of the situation, it's nice to know someone
else is in my corner when I make claims no one wants to hear.
Already VANOC is considering
hosting speed skating at a facility other than the proposed SFU
site. It may look benign, but this is exactly how taxpayers and SMBs (small
and mid size businesses) end up footing the bill for overruns. I don't
want to get bogged down in why at this late date people in the know are
concerned about overruns because it isn't important. Projecting why it
will cost more to build the oval at SFU is moot. It's a fact of life that
when numbers are first crunched, labour and material costs will rise by
the time it's time to put the honorary gold spade into the pre-softened
Price gouging goes with the Olympic territory. If you want to ignore it
that's your prerogative, but it isn't going to go away. Already cement
and steel prices are shooting through the roof, and the labour shortage
is only going to go from bad to worse. According to the Vancouver
Sun, John Furlong, CEO VANOC
regards rising costs as "unanticipated". Common sense alone
should have told him to build sizable headroom into the equation. 30%
would be a realistic place to start. According to Dr.
Bill Krane of the SFU Olympic Legacy committee, overages for the oval
rink may be as high as $13 million.
The only real concern is who is going to pay for overruns. Quite often
it is downloaded to the municipality and that's all that matters. Many
SMBs I talked to over the last few months regarding overrun costs told
me it wouldn't be an issue. They felt the powers that be would manage
it differently than all others who have gone before them. They stuck to
their convictions even when I told them Utah taxpayers got stuck with
$400 million in overrun costs. They insisted it couldn't happen here.
Unfortunately overruns are usually inevitable, especially when there isn't
a solid plan out of the starting blocks. I say usually, because Sydney
managed their program responsibly and came out ahead on almost all fronts.
Hopefully we'll be as fortunate in Vancouver. In spite of this SFU snafu
I'm not counting John Furlong out at all. I have faith in the man even
if he seems a little too trusting because trust is a good quality. Except
of course when your herding grizzlies so maybe he'd better make a bit
more noise walking through the Olympic forest.
The point here is that if all taxpayers and all SMBs are going to have
to pay for it they better also get more out of the Olympics than just
a warm fuzzy feeling and a new skating rink. At the very least, economically
speaking, they better break even.
In order to keep your sanity over the next few years resign yourself to
the fact that it is going to cost considerably more than anyone expected
to get the Olympic show on the road. Also accept that you will probably
have to pay for it one way or the other. Get over it and instead concentrate
on how you're going to generate added revenue through your business to
make up for it. It's a given that the Official Sponsors and BIG BOX companies
will make a profit. The question is, will you?
*Ed. Note: We invested two years and a six-figure budget researching
Olympic organization relationships with sponsors, contractors, suppliers,
partners, etc. The results surprised us too -- mouseover below
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businesses face. Leverage
Olympic organizations are
BIG BUSINESS MACHINES that attract corporations like Kodak,
CocaCola, McDonald's, Wal*Mart, etc. Consequently, VANOC (Vancouver
Organizing Committee) will be stretched thin trying to also develop ways
to assist small and midsize businesses leverage Olympic momentum. Surprisingly,
many people don't realize the event can also be lucrative for smaller
businesses including agriculture, manufacturers, entertainment, technology,
retail & obviously tourism, even when they don't have products
or services that appeal to Olympic fans or serve a direct Olympic need.
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