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Vancouver Olympic Organizers Face Cold Economic Realities

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Link to Article in Context: http://www.latimes.com/sports/la-sp-vancou...7020,full.story

From the Los Angeles Times

Vancouver Olympic organizers face cold economic realities

Those planning the event that begins a year from now say they are reining in costs amid global downturn but won't skimp on making it a great experience.

By Helene Elliott

February 12, 2009

Reporting from Vancouver, Canada — Vancouver is where sky and sea meet in stunning harmony, where homes with lush, English-style gardens sit a few blocks from sleek skyscrapers that jostle for slivers of million-dollar views.

This idyllic spot is also where ambitions for a grand and green Winter Olympics are combating a global recession, which has organizers watching every penny and might turn the Vancouver Olympic Village into a costly souvenir for taxpayers.

Uncertainty over the state of the world's economy a year from today, when the XXI Winter Games will open, is darker than any cloud that ever dumped rain on Vancouver or snow on Whistler, two hours north, where skiing and sliding events will take place.

"We'll be the first organizing committee to face a phenomenon like this that anybody can remember. You can't find two people who describe this the same way," said John Furlong, chief executive of the Vancouver Organizing Committee, known as VANOC.

"So it is what it is, and we just have to face up to it. We have a project to deliver, so we're doing the best we can to manage," he said.

The budget calls for 74% of revenue to come from private funding such as international and domestic sponsorships, ticketing, merchandising, TV rights, licensing and International Olympic Committee contributions. The remaining 26% is from public funding.

Partly through changes in how some costs are accounted for, the budget has grown to $1.43 billion from $1.32 billion. It won't grow again, Furlong said.

"We won't spend it if we don't have it. We will run the Games with the budget we have," he said. "That isn't to say we're not going to look under every rock for every dollar we can find, but we will run the Games for the resources that we have and not a penny more. That's the promise we've made."

Ticket sales are robust -- Furlong said the value of orders received during the initial sales period exceeded that for the entire Beijing Games held last summer -- but some anticipated revenue hasn't materialized. Some corporations are providing in-kind services instead of cash. Furlong said no one had reneged on any sponsorship commitment.

Still, to economize, planned medal ceremony plazas in Whistler won't be built and cuts were made in behind-the-scenes areas.

"I think the public expects us to make the tough choices, but they don't want the experience diminished, so it's a tough challenge," Furlong said. "People have bought tickets, they're traveling here from all over the world, they expect to have a good time. It is a bit of a balancing act."

The biggest money pit is the athletes' village at False Creek. It wasn't a VANOC project, but it has become the committee's headache -- and a potential nightmare for the city.

It seemed like a good idea at the time. The city made an agreement with a developer, Millennium Development, and a backer, Fortress Investment, for high-end, high-rise condominiums to house athletes during the Games and later be sold to the public.

But a souring real estate market and costs that soared from a projected $603.7 million to $704.3 million led Fortress to stop advancing money in September. The city had to step in with more than $80 million to continue work. Taking that risk -- a commitment made in 2007 by a city council turned out of office last year -- dented its impeccable credit rating with Moody's Investors Service and led Standard & Poor's to put the city on "credit watch."

The province of British Columbia gave Vancouver permission to borrow $368 million to finish construction to meet a Nov. 1 deadline.

"We are refinancing the project and expect to have a better deal for Vancouver taxpayers and put the project back on solid footing," Mayor Gregor Robertson said.

"We're going to get the village built. There's no question about that. There's time constraints with the deadline, but the whole city is focused on getting this done now. I'm confident we're going to get it done. It's not a worry."

Not now. But in a down economy, the condos might not sell for enough to cover the city's costs.

"Ultimately, we're at the mercy of the market. Particularly with luxury condos, there's risk," Robertson said. "But it's a beautiful neighborhood. Eventually it will be a highly desirable, green neighborhood. Waterfront, big views. And I'm sure it will attract investment.

"But right now we've got to get through the current economic conditions and see where we end up in terms of the bottom line for taxpayers."

Fear that Olympic-related projects will become a burden to taxpayers and reduce spending for social programs has sparked sporadic protests.

Most notably, three protesters trashed the Vancouver office of British Columbia Premier Gordon Campbell in May 2007 in response to his support for the Games. That same year, a group estimated at 60 interrupted a three-years-out ceremony outside an art gallery by throwing eggs and rocks, leading to seven arrests. More recently, police broke up a protest in downtown Vancouver in November, making several arrests.

Anti-poverty activists and advocates for the homeless have protested the elimination of low-income housing units that have been upgraded for use by tourists. Groups condemning what they call the theft of land belonging to indigenous people have also opposed the Games, uniting under the name Olympic Resistance Network.

Security is another potentially contentious item.

Initial projections put the cost, to be shared by the provincial and federal governments, at $141 million. Later estimates have multiplied that by four or five. The finance minister of British Columbia, Colin Hansen, told the Canadian Broadcasting Corp. this week he was awaiting cost estimates from the federal government.

Two major projects are unfinished. One is expansion of the winding Sea to Sky Highway, which links West Vancouver to Whistler. It's expected to be done this fall. Traffic to Whistler will be limited mainly to Olympic buses, but a scarcity of housing there could force more people to commute from Vancouver.

Also, a subway line from the airport to downtown is being completed.

At least the venues are ready, or nearly so.

GM Place, home of the NHL's Canucks, will be renamed Hockey Canada Place for the Games but won't need much change, because the tournament will be played on NHL-size ice. Other venues are playing host to events that test security, parking, crowd control and the field of play.

Last week, more than 300 freestyle skiers competed at Cypress Mountain, west of the city; more than 100 figure skaters whirled at the Four Continents competition in the Pacific Coliseum, on the city's east side; and 250 bobsled and skeleton athletes slid through a World Cup event at the new Whistler Sliding Center.

The Pacific Coliseum, whose ice will be widened 15 feet to meet international standards, was praised by skaters. The arena also will host short-track speed skating.

"I love the rink. The arena's amazing," said Rachael Flatt, from Del Mar, Calif. "I love the ice. The ice is amazing. And actually, the way the building was constructed, I really like how the audience is. It's close to the ice but not too close."

The skeleton course drew some criticism. Canada's Jon Montgomery told reporters racing there was like being "in a washing machine." Terry Holland, coach of Australia's women's team, called it "an elevator shaft with ice."

Other venues will be tested soon. Among them is the Richmond Olympic Oval, home of long-track speedskating. Its arched beams and "wave" roof of wood salvaged from beetle-infested forests give it the iconic appeal that the Water Cube aquatic facility had in Beijing.

Its "green" features include benches in the team rooms made of wood from trees cleared from the site and rainwater funneled off the roof and recycled. After the Games, it will become a community recreation center, as will the curling venue.

The goal is for the venues to have useful post-Games lives, unlike some from the Sydney and Beijing Games.

Furlong is determined that these Winter Games will provide a legacy to all Canadians.

"Our vision for the Games was not about two weeks of sport in Vancouver. Our vision for the Games was a project, a moment of time for the country, when every Canadian felt connected," he said.

Robertson believes that connection has been made.

"It feels like there's good buzz around the world leading to these Games," he said, "like it's a piece of the hope puzzle that the world's looking for."

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Considering that these Games are being held in the middle of one of the worst recessions since the Great Depression, they'll probably be known as the "hope and feeling good" Games.

And considering we are in a recession, this is exactly what the province needs.

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