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Olympics impacted by economy

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Old
01-14-2009, 11:56 AM
  #1
LadyStanley
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Olympics impacted by economy

2010 Olympics lose sponsor to bankruptcy

http://www.edmontonsun.com/Sports/Ot...4/8021116.html

While not strictly "hockey", there seems to be enough interest in the Vancouver Olympics that I thought a thread might be worthwhile.

Nortel Networks has declared Chapter 11 bankruptcy in the US and is seeking the same in Canada.


And of course there have been stories in the past week dealing with the high cost of the athlete village and other endeavors that the Vancouver tax payers may be caught funding.


Last edited by LadyStanley: 02-26-2009 at 06:58 PM. Reason: expand scope of thread
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01-14-2009, 01:02 PM
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Quote:
Originally Posted by LadyStanley View Post
http://www.edmontonsun.com/Sports/Ot...4/8021116.html

While not strictly "hockey", there seems to be enough interest in the Vancouver Olympics that I thought a thread might be worthwhile.

Nortel Networks has declared Chapter 11 bankruptcy in the US and is seeking the same in Canada.


And of course there have been stories in the past week dealing with the high cost of the athlete village and other endeavors that the Vancouver tax payers may be caught funding.
I haven't gone into the nitty-gritty regarding the Village, but it's my understanding that any publicly-funded building costs are to either A) be repaid, or B) to give the the governing body equity in the project(s).

This is key because the units of the Village will be sold as strata units after the Games, with the (public and private) investors being repaid/compensated by proceeds of the sales.

Under ordinary circumstances in a stable real estate market, this would would be a low-risk proposition and a relatively short-term outlay of cash on behalf of taxpayers. Unfortunately, in an unstable and slow real estate market, these units may sell far more slowly, and for less than was orginally projected, raising the spectre of possible losses for all parties involved.

These losses, however, would not be dollar-for-dollar but more akin to selling a house at under cost, where the recovery of funds winds up being 90 cents to the dollar (pure speculation on my part) less carrying costs for the debt.

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01-15-2009, 08:01 AM
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I have to say that is a huge economic gamble, especially with taxpayer money. What type of buildings will they be, a townhouse type of complex or hotel style condos? Is that something the area even needs? It really is a tough situation.

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01-15-2009, 08:15 AM
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I really don't think the market in Vancouver is that bad that they would make a loss, even in all of this turmoil. This isnt the US, it's BC Canada an area with a red-hot economic development for years and good fundamentals, plus strong Canadian banks(ie I didnt see any big decline in credit over here).

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01-15-2009, 09:43 AM
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Two things here:

1) Nortel has not gone bankrupt. They have filed for bankruptcy protection.

2) As of now this has no effect on them delivering infrastructure for the 2010 games. In fact they've already delivered on some of their commitments.

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01-15-2009, 11:21 AM
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Originally Posted by DaleCooper View Post
Two things here:

1) Nortel has not gone bankrupt. They have filed for bankruptcy protection.

2) As of now this has no effect on them delivering infrastructure for the 2010 games. In fact they've already delivered on some of their commitments.
Exactly - filing for bankruptcy is not the same as going out of business nor does it mean services/obligations to provide service will be discontinued. The thread title is fairly misleading, I'd say.

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01-15-2009, 04:50 PM
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Nortel has already giving VANOC some of what was promised and said they would fulfill their agreement.

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01-15-2009, 05:30 PM
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Who knows how bankruptcy would work towards their commitment to Van. But wouldn't common stock holders be wiped out, most bond holders and other creditors get a haircut on their investments? I would be pissed if Nortel gave money for this before investors

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01-16-2009, 06:10 AM
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Who knows how bankruptcy would work towards their commitment to Van. But wouldn't common stock holders be wiped out, most bond holders and other creditors get a haircut on their investments? I would be pissed if Nortel gave money for this before investors
That's true for Chapter 7 bankruptcy. For Chapter 11, there are a lot more possibilities, including some that may allow common stock holders to retain some equity stake in the company if and when it emerges from the re-organization process.

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01-17-2009, 09:34 AM
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I really don't think the market in Vancouver is that bad that they would make a loss, even in all of this turmoil. This isnt the US, it's BC Canada an area with a red-hot economic development for years and good fundamentals, plus strong Canadian banks(ie I didnt see any big decline in credit over here).
Really? There's more than a few out there who would disagree with your assessment.

http://futronomics.blogspot.com/2009...n-hitting.html

The whole article is quite enlightening ... especially if you're not up to speed on what's been going on in Vancouver [and I suspect the vast majority aren't]. The article highlights several issues now rearing their collective ugly head, none of which scream "this is getting better any time soon."

-- the B.C. legislature is getting asked for $450 million to complete the Olympic Village.
-- Vancouver has already agreed to pick up $100 million of the cost overruns, and is considering picking up another $30 million.
-- S&P is considering dropping Vancouver's credit rating from AA+ due to the costs associated with the Olympic Village.
-- Home prices are down by double-digits, while home sales are off by at least a third; with the Olympics still coming, it's quite likely that speculators are sitting on inventory expecting to make huge profits in the next year and change.
-- One real estate developer is putting unsold condos on the market at 20-40% off. It's quite likely this will not be the last time this happens.

The best line of the article is really in the middle - but it really sums things up quite nicely.

Quote:
The Olympics in Vancouver-Whistler are turning out to be an unmitigated disaster. All of the planning going into the preparations assumed that economic expansion was a given. There was no contingency for a worldwide business slowdown. Surely, the economists they had hired assured them that no such thing had any statistical probability of occurring, and therefore wasn't worth planning for. This arrogance was prevalent regardless of numerous Olympic experiences gone awry over the decades (the Montreal 1976 summer games had debts only repaid 30 years later, in 2006).

I'm guessing the attendance figures the olympic committee have assumed will also turn out to be wildly optimistic and revenue for the games and small businesses alike will turn out to be far lower than expected.

I'll give my readers two guesses as to who will be paying for this financial disaster, but you'll likely only need one.

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01-21-2009, 04:34 AM
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Originally Posted by Irish Blues View Post
Really? There's more than a few out there who would disagree with your assessment.

http://futronomics.blogspot.com/2009...n-hitting.html

The whole article is quite enlightening ... especially if you're not up to speed on what's been going on in Vancouver [and I suspect the vast majority aren't]. The article highlights several issues now rearing their collective ugly head, none of which scream "this is getting better any time soon."

-- the B.C. legislature is getting asked for $450 million to complete the Olympic Village.
-- Vancouver has already agreed to pick up $100 million of the cost overruns, and is considering picking up another $30 million.
-- S&P is considering dropping Vancouver's credit rating from AA+ due to the costs associated with the Olympic Village.
-- Home prices are down by double-digits, while home sales are off by at least a third; with the Olympics still coming, it's quite likely that speculators are sitting on inventory expecting to make huge profits in the next year and change.
-- One real estate developer is putting unsold condos on the market at 20-40% off. It's quite likely this will not be the last time this happens.

The best line of the article is really in the middle - but it really sums things up quite nicely.
That has nothing to do with the market in Vancouver. The $450 million is because an American company pulled out, not a Vancouver company. Real estate is still strong in Vancouver.

The losses for the Olympics is because Campbell & Co are crooks.

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01-21-2009, 05:03 AM
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Originally Posted by garnetpalmetto View Post
Exactly - filing for bankruptcy is not the same as going out of business nor does it mean services/obligations to provide service will be discontinued. The thread title is fairly misleading, I'd say.
Interesting. Everybody here thinks that filing for bankruptcy means that the Coyotes are moving to either Hamilton or Winnipeg in the near future or there will be a dispersal draft when they contract.

Very interesting indeed.

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01-21-2009, 08:40 AM
  #13
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Real estate is still strong in Vancouver.
http://www.cbc.ca/canada/british-col...d.html?ref=rss

Quote:
The once familiar hype of condo-mania returned to the Metro Vancouver real estate market on Monday evening as a crowd of eager buyers lined up for a chance to pick up some deals.

The Onni Group of Companies announced last week that it was slashing prices on condominium units in several buildings after the recent market slowdown left them with more units than they wanted to hold.

The sell-off came as prices and sales in Metro Vancouver's until recently soaring real estate market continued a decline from the peak of the market last March.
http://www.theglobeandmail.com/servl...c-millennium17

Quote:
VANCOUVER — It was March 27, 2006. The Vancouver real-estate market was still in a frenzy, high-rise developments were selling out in days at skyrocketing prices, and Bob Rennie, the city's undisputed condo king, was on top of the world.

He decided to let an otherwise lacklustre housing workshop in on a little secret. Within days, Mr. Rennie confided, the city-owned, downtown waterfront land earmarked for the Olympic village would be sold for a price so high it would send shockwaves through the entire development community.

Sure enough, 10 days later, Vancouver City Council made its fateful decision to award the blue-ribbon Olympic village contract to a reputable but mid-sized development company with shallow pockets, anxious to show it could play with the big boys. The price paid by Millennium Development Corp. for the 2.6 hectares of prime property, destined for luxury condos, rental units and social housing once the 2010 Games were over, was a staggering $193-million. That was believed to be the highest sum per square foot ever paid for land in Canada.

...

Just 15 months ago, North Vancouver realtor Austin Gangur spent five sleepless days and nights, lining up with dozens of other hopefuls for a crack at the first batch of the project's luxury condos to go on sale. The hoopla was palpable.

“Everyone was talking about it. Everyone was excited,” Mr. Gangur recalled. “We were out there for days on end. The weather was cold and rainy, but the mood was great.”

No one saw what was coming. “Everyone thought that in three years [when the condos would be ready for occupancy], prices would be up. Absolutely. We knew there might be a dip, but nothing like this,” Mr. Gangur said. “I just can't believe the change. It's devastating.”

Despite that initial enthusiasm, the first phase of condos did not sell out. A planned second marketing last spring was cancelled. When the hundreds of remaining condos will finally be sold and at what prices is the billion-dollar question.

By last fall, the developers were in the soup. Fortress had stopped lending them money, construction bills could only be met with an extraordinary $100-million advance from the city, and today, an emergency session of the legislature is being convened to provide Vancouver with the power to borrow hundreds of millions of dollars to prevent the project from going belly up.
http://www.ctvbc.ctv.ca/servlet/an/l...shColumbiaHome

Quote:
A seven-year real estate bubble has burst in the greater Vancouver housing market.

Sales of homes in 2008 dropped by over 35 per cent, compared to 2007 sales of more than 38,000 homes.

Dave Watt, president of the Greater Vancouver Real Estate Board, says the last half of 2008 showed a consistent drop in prices.

At one point the market was so overheated that buyers would enter into bidding wars for properties and forgo inspections just to undercut other potential purchasers.

Prices have dropped almost 11 per cent between December 2007 and the end of 2008, and Watt says the perception is that prices are still falling so it's hard to identify the bottom of the market.
I'm sorry, but I'm going to have to disagree. Of course, if you'd like we can revisit this in 6-9 months and see if real estate is still as strong in Vancouver as you claim to be, or if it's continuing to weaken like is being reported.

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01-21-2009, 09:14 AM
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Originally Posted by Irish Blues View Post
http://www.cbc.ca/canada/british-col...d.html?ref=rss



http://www.theglobeandmail.com/servl...c-millennium17



http://www.ctvbc.ctv.ca/servlet/an/l...shColumbiaHome



I'm sorry, but I'm going to have to disagree. Of course, if you'd like we can revisit this in 6-9 months and see if real estate is still as strong in Vancouver as you claim to be, or if it's continuing to weaken like is being reported.
You don't understand. Your American, no? The Vancouver real estate market was already inflated by about 50% in many areas. Even though it's dropping, it's still much higher than it should be. The market is just not as strong as it was before, but it's still much stronger than 95% of North America. It really should be much lower when you compare it to cities like San Diego, Boston, Seattle...etc.

It's like saying a can of coke is 25% cheaper today. Well if the price was originally $10, then it's still priced too high. Similar to the Vancouver market, problem was it was stronger than it should have been. It'll go back up in 4 months, people are just trying to get their hands on real estate so they can flip it next year for profit. My uncle own a hotel in East Van and is getting huge offers (130% above value) on the property for before the Olympics. You have to live in BC to understand the Vancouver market.

Plus, Vancouver/Vancouver Island is the mildest climate in Canada. Tons of people retire here, it's like Florida and Arizona combined.

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02-26-2009, 07:03 PM
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http://calsun.canoe.ca/Sports/OtherS...6/8544591.html

Looking at the economic impact of the Olympics, and the economic downturn's impact on the Olympics (specifically 2010 games).

On hosting Olympic games......
Quote:
“It gives the local population, the host city, a huge buzz and gives local athletes the chance to perform in front of a home crowd. That’s not to be underestimated,” said Richard Cashman, the former director for the Centre of Olympic Studies at the University of New South Wales in Sydney.

“But the other reasons are to promote a city and infrastructure.”
VOC still looking for two key sponsors.

And governmental entities that in the past may have purchased tickets are reconsidering such expenditures with their budgetary dollars bailing out banks and other economic concerns.

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02-26-2009, 11:01 PM
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Tons of people retire here, it's like Florida and Arizona combined.
can't be. I know Vancouver is a great city but the population just doesn't support that conclusion does it? Phoenix has 4M now. South florida, alot more.

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02-26-2009, 11:02 PM
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Bottom line for someone not in Canada following the Olympic news: Are the Vancouver Olympics projected to make or lose money?

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02-26-2009, 11:21 PM
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can't be. I know Vancouver is a great city but the population just doesn't support that conclusion does it? Phoenix has 4M now. South florida, alot more.
I think he was talking about Canadian retirees, middle class and above. They will indeed often move to the West Coast, especially Vancouver Island, which has a very mild climate. They often have multiple residences, including some in places like Phoenix, but need to spend 6 months or so in Canada per year to maintain medical and social/retirement benefits. There are also tax issues.

.....

I have no idea what the Olympics have to do with the Business of Hockey. The Olympics will be a success and the gov'ts in Canada will pick up the cheque/check. If anything it will be justified by the "stimulus" such spending provides.

.....

There is a fundamental difference in the real estate markets between Canada and the USA. Canadian financial institutions have been inherently more regulated and conservative than their counterparts in the USA. Hence, Canada doesn't have a sub-prime mortgage market, for example. There was an asset bubble in certain select parts of Canada in terms of real estate prices, but the situation is not nearly as bad as in places like Arizona, Nevada, California or Florida.

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02-26-2009, 11:28 PM
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Bottom line for someone not in Canada following the Olympic news: Are the Vancouver Olympics projected to make or lose money?
I haven't seen any specific numbers, but my gut is that it's looking like millions (if not tens of millions) in losses.

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02-26-2009, 11:56 PM
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I haven't seen any specific numbers, but my gut is that it's looking like millions (if not tens of millions) in losses.
Again, I'm not sure why the Olympics merits discussion in the Business of Hockey forum?

The hockey games will take place in pre-existing facilities and the Olympics are at any rate a gov't sponsored (socialistic) event.

The Olympics are mainly about amateur sporting events and hosting an Olympics is more about national prestige in the international community and upgrading sports and other infrastructure in the host city. Millions or tens of millions of losses is not unheard of in hosting these types events. Yes, some recent Olympics have made some money due to large TV contracts, but traditionally a lot have not.

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02-27-2009, 12:01 AM
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Olympics never make money, the only one in recent memory is Salt Lake, everyone else took decades to recoup the costs.

Luckily, VANOC and all the infrastructure, including the light rail system is relatively on budget and on schedule. I still don't think the Olympics is worth it as a Vancouver taxpayer.

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02-27-2009, 12:04 AM
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Olympics never make money, the only one in recent memory is Salt Lake, everyone else took decades to recoup the costs.

Luckily, VANOC and all the infrastructure, including the light rail system is relatively on budget and on schedule. I still don't think the Olympics is worth it as a Vancouver taxpayer.
I'm reading that security is a huge concern WRT budget. (Currently millions projected over budget.)

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02-27-2009, 12:05 AM
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Real estate is still strong in Vancouver.
HAHAHA. No it's not.

Vancouver was late to the party, and Vancouver is waking up late but still with a hell of a hang-over.

RE prices are beginning to drop like bricks over here.

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02-27-2009, 12:07 AM
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I'm reading that security is a huge concern WRT budget. (Currently millions projected over budget.)
The reason being is they're going way overboard with security. Although I can understand them not wanting anything to go wrong. VANOC had better; however, allow for olympic protesters. If I'm going to be footing the bill as a taxpayer, people who oppose it should have their voices heard as well.

They're literally going to shutdown the downtown core of Vancouver (bridges into Van will be closed except for the entrance via Main st.) As somebody who lives downtown and works out in UBC, it's going to monumentally suck for that week.

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02-27-2009, 12:35 AM
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HAHAHA. No it's not.

Vancouver was late to the party, and Vancouver is waking up late but still with a hell of a hang-over.

RE prices are beginning to drop like bricks over here.
Vancouver is probably the biggest "bubble market" in Canada. There is huge national and international demand there especially in the case of downtown condos, but with an average price of a tiny, old house in Kitsilano around 1 million or above at one point you've got to wonder if things have gone overboard. A correction, in that case, in the current economic situation would seem more than rational.

Quote:
Detached housing average prices were just over $1.6 million. The highest list price was at $4.9 million. There were seven properties listed above $2 million and thirty seven properties above $1 million. There were only ten properties listed below $1 million.
http://www.prlog.org/10163786-kitsil...ownhouses.html

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