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Regional Business News
regarding the 2010 Olympics
in British Columbia, Canada

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CURRENT NEWS:

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 . . .

2004 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 turf.

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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