Going for gold and profit, too

The Olympics haven’t been the financial windfall many hoped

Going for gold and profit, too

Warm weather and a lack of snowfall on Vancouver’s North Shore mountains, where some Olympic events will be staged, have forced organizers to dig out their contingency plans, which include scraping, shovelling and heli-lifting snow in from higher elevations. Now, if only there was a Plan B for all the companies that stand to lose a mountain of money on the event.

Awarded near the beginning of a decade-long upswing in global markets, the 2010 Olympics will be staged at the tail end of the worst economic downturn since the Great Depression—a fact that’s not lost on the broadcasters who bid record amounts for exclusive rights to the Games.

American broadcaster NBC, which a recent CreditSights report said has lost the most prime time viewers of the big U.S. networks, spent US$820 million on U.S. Olympic broadcasting rights, but has said it will likely lose around US$250 million as it continues to grapple with a depressed advertising market. The last time it lost money on the Olympics was 1992, in Barcelona. In Canada, meanwhile, a consortium led by CTV and Rogers Media Inc. (which owns Maclean’s) is reportedly struggling to make money after paying US$90 million for domestic broadcast rights, outbidding long-time Olympic broadcaster CBC in the process.

As if that weren’t enough, it was revealed last week that Intrawest, the company that owns Whistler-Blackcomb, where several alpine events will be staged, will be sold off at an auction during the Games, part of an effort by creditors to squeeze money from Intrawest’s cash-strapped private equity owners. Perhaps the only good piece of Olympics-related financial news comes for the athletes: gold medals may only contain a small amount of the precious metal, but the price of gold, considered a safe haven for investors during a recession, continues to hover near record highs.