British Olympic legend Sebastian Coe didn’t face any hurdles when he was winning gold in 1980 and 1984. He was a distance runner. But as chairman of London 2012, he faces a big one: The economy.

Steering the city’s summer games got a lot more daunting in the midst of a global financial crisis. Coe’s organization has so far sold 500 million pounds in corporate sponsorships en route to a goal of 700 million pounds (just over $1 billion U.S.). The games will cost an estimated 2 billion pounds ($2.8 billion) overall.

That means putting less effort into selling and more into bartering–the Olympic business lingo is “value in kind”–in trying to trim the cash requirements for the event.

“A lot of organizations are not cash rich, but they have excess capacity of things we need,” says Coe, in Denver, Colo., for an international sports business conference. He’ll be seeking out companies to climb aboard the sponsorship train in return for supplying athletes with food and equipment, among other needs.

One such firm on board is Crystal Digital, a Beijing-based tech firm that’s helping the committee with promotional material designs and presentations. Others figure to follow soon, though Coe says it’s too soon to announce any pending deals.

“This will be the shape of the next three years, we’ll be having lots of these conversations,” he says. That an Olympic organization would get some of its corporate lift from goods and services instead of cash isn’t new, but 29% (200 million of 700 million pounds) is an unusual challenge.

The good news: None of the sponsors that London 2012 already signed up are backing out or renegotiating deals, according to Coe. Among the major players he’s lined up are Lloyds TSB (nyse: LYG – news – people ) Bank, British Telecom, British Airways and energy firm EDF. Those are in addition to the larger overarching Olympic sponsors like Coca-Cola (nyse: KO – news – people ) and McDonald’s signed up by the IOC.

Cities from around the world have descended on Colorado to bid on being the next host of the Olympic Games, but the bid comes with new challenges.

In 2004, Olympic organizers for London were thrilled to learn the city would host the 2012 Summer Games. But they couldn’t predict that five years later, the cost of the games would triple.

Not long after Beijing hosted the world for two weeks in August, the cost of future Olympic games skyrocketed while the global economy tumbled.

A good part of private funding for London’s Olympic Games has vanished during the credit squeeze. One of the major corporate sponsors for the London games has also declared bankruptcy.

That is why the cities at the Sportaccord in Denver this week have a ready response to any question about the recession.

“We can offer, financially, the safest plan,” Mihoko Nakagawa with the Tokyo delegation said.

“We have identified our bid as the safest bid,” Mercedes Coghen with the Madrid delegation said.

“For Rio, the games are certain,” Carlos Osorio with the Rio de Janeiro delegation said.

Rio de Janeiro may look like the postcard vacation spot, but the head of Brazil’s Olympic committee says the country’s economy grew 5 percent last year and the city has the money in place.

“That means we can be very conservative in terms of sponsorship revenues forecast. We can also have the funds to start working on day one. We don’t need loans, we don’t need donations,” Osorio said.

Chicago is trying to become the first U.S. city since Salt Lake in 2002 to host the Olympics. Illinois lawmakers recently pledged to cover any losses, ranging up to $250 million for the city.

Right next door to Chicago’s booth is Tokyo’s. That city’s delegation says it already has the stadiums in place and $4 billion in the bank dedicated for the 2016 games.

“Fortunately, the city of Tokyo is very healthy budget wise,” Nakagawa said.

Madrid’s team is eager to show off a new tennis court with a retractable roof to prove Spain is ready to host again, even if the sponsors may not be because of the economy.

“For future bid cities, it’s going to be extremely difficult, I think,” Coghen said.

Thursday, the four cities bidding on the 2016 Summer Games will make their presentations in Denver. The winning city is announced in October.

London Will Do Everything To Attract Olympics Tourists Tourism agencies will do all they can to attract visitors to London during the olympic Games in 2012, a travel expert believes.

Branding is an element which needs to be considered, according to Jerome Touze, co-founder of Where Are You Now?, a social networking website focused on travel and lifestyle.

He suggests that making use of social media to generate publicity and engage the public is one way of running a campaign.

Mr Touze adds: “The tourism boards like VisitBritain will do everything they can to make sure Britain is at the forefront of tourism to the other nations.”

According to a survey conducted by Where Are You Now? which investigated the potential tourism to be generated by the London Olympics, 38 per cent of people said high costs will be the main factor that will deter people from visiting London during the Olympics.

Just over half of respondents indicated a belief that London will do a good job of keeping them informed about plans and progress of staging the sporting event.

People in construction jobs are helping London’s 2012 Olympic Stadium to take shape.

Developers are hoping that the Games’ showpiece will be completed in summer 2011, which will allow for a year of test events before the Olympics commence in 2012.

Referring to the stadium’s progress, an article in the newspaper said: “Its foundation is nearing completion, with more than 3,500 of the 4,000 permanent piles installed.

“It will contain 10,000 tons of steel – the lightest Olympic stadium to date.”

Over 800,000 tons of earth were removed from the site to allow for the stadium’s platform to be constructed.

The platform will eventually be able to hold 25,000 permanent seats and 55,000 temporary ones, which will form part of a lightweight steel upper tier.

The 2012 Olympic Stadium is being built at Marshgate Lane in Stratford. Once the Games have finished, it will be used as a new athletics venue.

A survey by online company WAYN.com (Where Are You Now?), of thousands of travellers, indicates there are widespread negative attitudes about the London 2012 Games, with potential visitors worried about terrorism and prices.

According to the poll, of the 7,500 travellers surveyed, 22 per cent had previously visited a city which has hosted the Olympics and only four per cent said the London Games would be better than other summer Olympics, with 29 per cent saying the 2012 Games would be worse.

But the survey showed that the Games would still be a major tourist attraction for London, with only 16 per cent saying they would be less likely to visit the city during the Olympics and 47 per cent saying they were more likely to come.

The survey also showed that 59 per cent say that despite the high cost of bringing the Games to London the potential benefits justify the expense, and 62 per cent believe London will provide a better visit experience for the Games than Paris, which lost the Games to London.

WAYN co-founder Jerome Touze said, “clearly there is a huge amount of interest in London’s Olympic Games and the event does have the potential to be the biggest visitor attraction ever. However, if that potential is going to be converted into serious visitor numbers, London urgently needs to address the negative perceptions and key concerns highlighted by our survey”.

He added, “it may be that attitudes have been tainted by reports about costs and cutbacks, but the risks associated with London 2012 being considered a second-class event should not be taken lightly. Meanwhile there also needs to be reassurances about containing the threat of terrorism and about containing costs, and last but not least, a major charm offensive to show the friendly face of London”.

ALSAGER School pupils are to play a major role in raising awareness of the 2012 Olympics.

A number of Year 11 pupils have been chosen to become Sporting Ambassadors.

Their role will be to promote a wide range of sports and raise awareness of the 2012 London Olympic Games and Paralympics.

Leading ambassador Emily Pumford has already attended a conference at Lancashire County cricket ground.

She learned about the key role of the ambassadors, that of spreading good news about the benefits of sport throughout their communities.

Emily has been joined as a Young Ambassador for Sport by Jack Sherratt, Caroline Edgely, Courtney Fumerola, Zoe Young, Eve Griffiths and Ami Priestman.

They have the responsibility of being top sporting role models among primary schools in Alsager and the surrounding area.

They will be promoting the key ideals of respect, friendship and excellence through a wide variety of sporting activities over the next few years.

“I am amazed by the passion and dedication young people are prepared to devote to helping others get involved in sport,” said Alsager School sport co-ordinator Steph Moore.

“I am proud to be associated with these pupils, and with this initiative.

“Pupils like this make my job even more enjoyable.”

Australian firm Lend Lease have been trying to raise £1billion in private finance for more than a year, and the lock-down agreement with the Olympic Delivery Authority that gives them exclusive rights to the project is due to expire in the new year.

Telegraph Sport understands that Lend Lease are likely to invoke an option to extend that period to next March in the hope that they may yet secure a deal. The move comes with the Qatari development agency expressing an interest in stepping in should Lend Lease withdraw, and at least one UK-based property developer are also understood to be considering expressing interest.

The ODA have denied that they are in active talks with the Qataris.

Lend Lease agreed to put £1billion of equity and private finance into the village but the banking crisis has severely impacted on their ability to meet their commitment. The Government are resigned to contributing up to £400million of contingency funding to the project and have already forwarded £95million to Lend Lease to enable work to continue.

The ODA are hopeful that negotiations with a new partner for the social housing element of the 2,800-apartment development will ease the financial pressure on Lend Lease and enable them to remain involved.

Two housing associations are already committed to the project, East Thames Housing Group and First Base, but the ODA are in talks with a third, the Southern Housing Group, aimed at spreading the financial risk.

If the three agencies are able to put up significant funding towards the one-third of apartments that will be affordable or social housing, it will significantly improve Lend Lease’s chances of persuading their banks to deliver finance.

A deal on the village is crucial to the project’s chances of staying within the £9.3billion budget set by the Government.

About 100 million pounds (C$186.4 million) is being spent every month on construction for the 2012 London Olympics despite the economic downturn.

Olympics Minister Tessa Jowell said Wednesday that about 64 per cent of the 9.325 billion-pound (C$17.4 billion) budget for the Games will come from the government and 11 per cent from London taxpayers. She said there will be no more public money available, whatever happens.

“There is no more money and, as I have said before, we are on time and on budget,” Jowell said. “The budget is identified and remains the same now as it did when I made the revised budget.”

Jowell said that hosting the Olympics is still be a positive thing for London despite the huge cost and funding difficulties during the global financial crisis.

“The Olympics is essentially economic gold at a time of economic need,” she said. “A shot in the arm for investment.”

Olympics minister Tessa Jowell has denied regrets over London’s successful bid to host the 2012 Olympics Games.

It has emerged that earlier this week she told leisure chiefs “had we known what we know now” about the economy “we would almost certainly not” have bid.

But she insisted to the BBC that she had meant people may have seen a bid for the games as a “distraction”.

She said thousands of UK jobs generated from the games could be “economic gold at a time of economic need”.

Ms Jowell’s comments to leisure industry bosses on Tuesday evening were revealed in Thursday’s Telegraph.

‘Austerity Games’

Speaking at the Olympic Park in Stratford, East London, Ms Jowell defended her comments.

She told the BBC: “The important thing is to understand the whole of what I’ve said, not a little bit of it which has been taken out.

“What I was reflecting was that had we known the economy was going to turn down, the perception of some people might have been that the Olympics would be a distraction or not a solution to this central problem.”
The Olympics minister spoke of the economic regeneration in Stratford, saying that the creation of 3,000 jobs on the site, an overall £6bn injection into the economy was “exactly what the economy needs now and it wouldn’t have happened without the Olympic Games”.

The last time that the games were held in London, in 1948, they were nicknamed the “austerity games” for the frugal nature of the facilities as the UK faced an economic crisis as it struggled to recover from the war.

Ms Jowell rejected the comparison on BBC Radio Four’s World at One programme, saying that “these are not austerity games”.

She added: “They are games that are being run and delivered within a very clearly defined public sector budget.”

The original Olympics budget of £2.4bn rose to £9.35bn last year.

Labour MP Graham Stringer, who never thought the Games should come to London, wants a return to the original budget as “we’re living in times of austerity”.

The Manchester MP told BBC Radio 4 that existing facilities should be used to create the savings needed to do this, such as hosting cycling events in Manchester’s velodrome, housing the Olympic stadium at Wembley and basing equestrian events at Hickstead.

‘Fortunate’

Mayor of London Boris Johnson, responding to Ms Jowell’s comments, told the BBC that, if he had known of the current recession at the time of the 2005 bid, he would still have supported it.

He said: “There is never a bad time to stage a spectacular event like the Olympics and Paralympic Games, and, in the current economic climate, I believe London is extremely fortunate to be hosting the games.

“The case for the games – if anything – is stronger in difficult times, and I believe that the development under way in the East End will prove a vital shot in the arm for the city when it needs it most.”

Asked later about suggestions that foreign investors, such as China, could be asked to help the project in some way, amid concerns about the crisis in the UK construction sector, Mr Johnson said he and government ministers were talking to “many people” about ways they could contribute to the Games’ success.

“I would like to see anybody involved who is going to bring in investment to that part of London,” he told Channel 4 News.

Meanwhile, Labour MP Frank Field said it was vital ministers squeezed every last penny out of Olympic contractors to make sure they were not “taken to the cleaners”.

He added: “We must make the best of this and we must protect more of these jobs for British workers.”

Organizers of the 2012 Summer Games are looking for ways to scrimp amid the worldwide credit crunch, tumbling domestic property values and rising unemployment.

The Summer Games in Beijing wrapped up two months ago, but Britain is still drunk on the heady wine of victory. Thousands of people lined the streets here this week for a boisterous parade honoring the nation’s Olympians, whose surprising haul of gold medals provided extra reason — if one were needed in this pub-strewn country — to party.

London is set to host the Olympics in 2012, but the global financial crisis has left organizers looking for ways to scrimp amid a worldwide credit crunch, tumbling domestic property values and rising unemployment.

Already, the size of the athletes’ village has had to be pared down. Plans to erect temporary sporting venues might be scrapped. And the government could be forced to hollow out its contingency fund of $3.9 billion, out of a total Olympic budget of $16.5 billion, if some of the private financing fails to come through.

“When the budget was agreed [to] two to three years ago, we certainly did not expect a financial meltdown in the world,” said Keith Mills, deputy chairman of London 2012.

Olympic projects that were to be funded by a combination of public and private funds “are all constantly being reviewed,” he said, adding, “We’re in a very volatile market.”

Two of the biggest projects, the Olympic village and a mammoth $700-million media center, are now under scrutiny because of potential funding difficulties. Officials have had to cut the number of housing units in the village from about 4,000 to about 3,000, meaning that each apartment will have to hold five athletes instead of four.

Londoners never expected their Games to match Beijing’s extravaganza, which cost more than $40 billion. But neither did anyone expect grim reminders of the last time their city was the Olympic host, in the summer of 1948, when Britain was still staggering from wartime losses and the bombed-out capital was in such ration-coupon straits that the Games were dubbed the “Austerity Olympics.”

Now the sudden crash of Britain’s economy has chastened investors and officials and left them humbler about what to expect from their Summer Games.

Londoners who were used to cash and credit flowing as freely as champagne in recent years have had to rediscover a more traditional British value: thrift.

“The credit crunch is hitting the Olympics hard, but we remain resilient,” John Armitt, chairman of the Olympic Delivery Authority, told London’s legislative assembly this month.

“We cannot and do not expect to compete with Beijing in terms of scale, and I don’t believe we should try. London will be different, and we should celebrate that difference.”

Organizers say construction of Olympic Park in London’s East End, which they hope will help revitalize one of the city’s most economically depressed areas, is three months ahead of schedule. During a recent tour of the site, hard-hatted workers were busy moving tons of earth, ferrying around supplies and unhooking power lines from electricity pylons destined for removal.

At its peak, construction of the park will require a labor force of 9,000, planners say.

The $1.8-billion Olympic village was to be financed privately as part of a possible deal in which its Australian developer would be able to sell off the apartments after the Games. Such an arrangement was extremely appealing when London’s real estate boom seemed destined to last forever, but it’s less so in a time of tighter credit and tanking home prices.

Instead, the government has had to sink an initial $170 million from its contingency fund into the village while it tries to hammer out a deal by year’s end with Sydney-based Lend Lease.

“At worst, we continue building on a fee basis,” said Mark Gell, a spokesman for the development company. “The work’s getting done. The bills are getting paid. The difference is that we were looking at the potential of doing a debt-equity bill, and we’re negotiating the parameters on that.”

The difference for British taxpayers is that they could end up paying the entire tab if a deal isn’t worked out.

“That could be an extreme situation,” Armitt told the London assembly. “It’s not one which we are working toward, and it’s not one which anyone would want to see. We will do our level best to avoid that situation arising.”

Organizers of other coming Olympics are also looking warily at the global credit crunch. The organizing committee of the 2010 Vancouver Winter Games reported a deficit last week, though it said it had no indication of financial turmoil affecting advance ticket sales. And the Russian government, which is relying on private investment to shoulder about half the $12-billion cost of the 2014 Sochi Winter Games, said it would step in if private financing were to dry up.

For the London Games, organizers have already moved fencing events to a shared venue and are rethinking plans for temporary sites for other sports. The British Broadcasting Corp. said this week that a planned venue for badminton and rhythmic gymnastics could also be on the chopping block.

source:latimes.com