Research Paper on Vancouver Olympic 2010: An Economic Point of View

Research Paper on Vancouver Olympic 2010: An Economic Point of View

Table of Contents:
1. Introduction
2. Vancouver 2010 Olympic and Paralympics Projects and It's Cost
3. Projected Economic Profit
4. Risk Associated with Big Sporting Events
5. Why to Bring Financial Risk
6. Incentive to be a Host City
7. Actual Economical Impact From Vancouver 2010
8. Conclusion
9. Reference

Introdcution
The year 2010 was a great year for Canada because of the Vancouver 2010 Olympics and Paralympics. It was a great opportunity for Vancouver as well as for Canada to host this event. The boost in the economy was arguably the major incentive for the event. US $ 7 billion was invested for the sum total of projects that have been taken on. US $ 1.3 billion was the projected cost of operating the event According to Intervistas Consulting. Vancouver 2010 was supposed to return US $ 2.1 billion in direct GDP and US $ 8.4 billion in total GDP. The tourist sector was one of the greatest sources of revenue for Vancouver. The city was enriched by various new infrastructure and beautification projects. All these will probably and inevitably attract international tourists and business in the upcoming years. In this paper we will examine the Vancouver 2010’s projects, its cost, projected revenue sources and actual contribution to city’s economy.

Vancouver 2010 Olympics and Paralympics Projects and It's Cost
British Columbia executed number of projects for the Vancouver 2010 winter Olympic and Paralympics, which directly or indirectly cost over US $ 7 billion. Of note is the fact that if Vancouver had not won the competition to host this event, these projects would have never been planned. US $ 1.6 billion went to the projects directly associated with the event. These sums have been allocated for on security and medical services (US $ 122 million),operation of the various venues(US$ 120 million ),events workforce (US $ 170 million),opening-closing media and culture ceremonies(US $163 million) and food catering (US $12.5 million).

Vancouver doubtlessly becomes a bustling city with these projects. Canada Line is the most expensive of these and worth US $ 1668 million, which connect Vancouver airport with the city’s downtown. The city has also expanded its convention center and the seaport, which cost US $470 million and US $ 1040 billion respectively. Translink, Vancouver’s regional transportation authority, has adapted a long term plan named ‘Translink Transportation Project’ worth US $ 2.5 billion. Associated with the Canada Line program Vancouver International Airport planned an expansion project costing US $ 1.47 billion, which includes an additional nine gates and widening of taxi ways. Upgrading the See to Sky highway which cost approximately US $484 million has become a great attraction for the tourist.

Both the “Vancouver Olympic Village’ and ‘Whistler Olympic Village’ projects cost US $76.6 million each, which was built for the athletes and the team members, offering dining halls, polyclinics, training facilities and convenience store. Other major funds were being sunk into Richmond’s Indoor Speed Skating Oval (US $ 125 million), Whistler Sliding Center (US $ 42.8 million), Whistler Nordic Center (US $ 80.7 million), Hillcrest Park (US $ 22.8 million), Hastings Park (US $18.6 million) etc. The ‘UBC Sport Center’ has replaced the old Thunderbird Sport Center with a cost of US $ 32.9 million. Blackcomb resort at Whistler and Cypress resort at West Vancouver is modified with a cost of US $ 12.9 million and US $ 8.7 million. ‘Emergency Service and Communications Facility’ a project worth of US $30 million ensure a great modern way of communication and emergency services during the event. Most importantly The Olympic committee took a strong plan to win 35 medals, for which it spend US $110 million.

Projected Economic Profit
The Olympics is one of the greatest events on earth which gathers most of the countries on to one stage. This event involves billions of dollars. Vancouver was the lucky city for 2010. The city opened its doors for tourists and new business opportunities. The Olympics has always been a great opportunity for the host city to boost its economy strongly in the world. Before proceeding to Vancouver 2010, Vancouver Organizing Committee (VANOC) and some other org. did some financial projection. In this paper we will try to show the actual and desire economic outcome from the event. Some of the projections were following:
Vancouver 2010 expected to create US $ 2.1 billion direct GDP and US $ 8.4 billion in the total GDP.
According to RBC Financial Group, just because of the Vancouver 2010, its provincial GDP will go up by 0.9 to 1.2 percentage points.
The revenue is going to come from
Broadcasting rights (US $ 546 million)
Corporate sponsorships (US $ 537 million)
Ticket sales (US $ 180 million). Tourists are going to contribute thirty percent on the revenue of ticket sales
During 2002 due to the lumber tariffs, slowing US economy and struggling Japanese economy the GPD growth rate for Canada was 0.71% which was the worst growth rate ever for the country. The host city is expecting a growth rate of 4%. This would make Vancouver the fastest growing City.

Risk Associated with Big Sporting Events
But these big sporting events have not always been as successful as estimated on paper. Most of the sporting facilities and infrastructure that are being constructed from taxpayers’ money kept underused. With the exception of the legitimate profit made from Los Angeles 1984, all other recent Olympics had to deal with significant losses. Examples are following:
Athens 2004 went over-budget
Sydney 2000 officials had to ask money from Govt. a number of times even only a few days before the event
The most alarming thing is that so far the Games which have been held in Canada were the worst yet from an economic point of view
Calgary 1988 had a final budget of more than double the budget that was first proposed. It had a surplus between US $90 million and US $ 150 million
The poorest so far was the Montreal 1976 which created a US $2 million debt for the local taxpayers

Why to Bring Financial Risk
So, why countries still host big events and invite a financial uncertainty. The main incentive behind hosting a city is not only financial profit. By hosting a big event like this, host cities stand out in the world. More business and tourists will be attracted even after the event. Expenses that are incurred for the projects are long term assets. They add to the overall GDP. Local companies and businesses experience an economic boost. It has been seen that businesses which had contracts with Sydney 2000 made an additional US $2 billion after the following year of the games. Most importantly there are several incentives to be the host city which is discussed in the next section.

Incentive to be a Host City
The Olympic is an event which is worth even if it goes for financial loss. Beside financial impact it also put some beneficial influence on the host city.
Some of the impacts are noted below:
Construction of new infrastructure gives the people of the city better facilities and an increase in investment which leads to better economic activity.
Beautification of the city builds a clean and clear image of the city. It attracts tourist from other countries.
Recognition as a Powerful City is very important to attract business. Cities like Tokyo, Beijing, New York, and Toronto has established their power as a major city of the world by hosting various events.
Foreign Investment can be encouraged by hosing such an event. It’s not only an event but also a way of sending an invitation to the world for investing.
Presenting your city to the World through the Media coverage is a great to advertise your city.
Development of Transportation System not only serves during the event but also after the event.
Construction for Future Need
Improvement of Local Sports: Local sports are greatly inspired and get the opportunity to use the facilities build for the athletes after Olympic.
Modernization of the City
Reviving Local Economy: GDP get a boost due to increase in labor demand and investment.
World-Class Recreational Facilities
Change in Standard of Living
Boost in Telecommunication and Media Sector
Stimulation of the Local Economy
High Profit for Local Hotel and Restaurants
Increase in Employment
Tourism: An Olympic event is very expensive to host given that it only lasts for four weeks. Within that short time all the Olympics hosts try to create fast revenue. To do so their best strategy is tourism sector. Vancouver has always been a significant tourist center and Whistler is a top resort for skiing. Therefore it is hoped that the number of tourists will increase massively before and after the Olympics. However to gain these revenues Vancouver must have huge publicity advertising their city and create attractive feature which will attract visitors. Report made by the ‘Inter Vistas Consulting’ shows an idea of expected revenue.

LOW CA$920 MILLION US $ 787 MILLION
MEDIUM CA$1295 MILLION US $ 1108 MILLION
MEDIUM/HIGH CA$228 MILLION US $ 1906 MILLION
HIGH CA$3145 MILLION US $ 2690 MILLION

To obtain high revenues Vancouver must have a high number of tourists between 2009 and 2015. Projections are forecasting 1.1 million additional tourists over this time. But to do so they must have an effective strategy to collect profit from both tourists and visitors.

Actual Economical Impact from Vancouver 2010
Vancouver 2010 Olympic brought lot of uncertainty for the BC people. But with the passing of time uncertainty has got cleared. In most cases the actual output has outperform the projection. Some of the major financial information is given below:
Boost in GDP: From 2003 to the end of 2010, the Games generated at least $2.3 billion in real gross domestic product to B.C (projected 2.1 billion).
Increase in Spending: Overall spending in Vancouver surged, however, statistics released by Moneris, North America’s largest provider of Credit Card, Debit, and online payment services, indicate. According to Moneris's press releases, spending in Vancouver and Whistler rose by 48 percent. Souvenir sales increased the most, by over 373 percent.
Broadcasting right: The bulk of the IOC’s revenue came from TV broadcasting rights, which totaled $1.28 billion (projected US$546 million), a 54 percent increase from the $830 million paid in 2006.
Corporate sponsorship: The International Olympic Committee offset a decline in sponsorship revenue in 2010 with a major increase in TV rights money to generate $1.6 billion in revenue around the Vancouver Games. It received $247.9 million in sponsorship revenue (projected US$537 million) from The Olympic Partner (TOP) program, which offers sponsors like Coca-Cola and Visa global rights to use the five-ring Olympic logo.
Job creation: created more than 45,000 jobs directly and indirectly.
Investment in sport: Investment in sport of $110 million paid off with a record haul of 26 gold medals (target was 35 medals).
Tourism: Almost 650,000 visitors arrived in B.C. in February 2010, with 242,000 visitors from Canada, 324,000 from the United States and 83,000 visitors from other countries. Tourism revenue increased by $226 million during the Olympic period from 2003 to 2010.
Direct investment in BC market: B.C. venue construction and other third-party investments injected $1.26 billion into the economy and. Games-related procurement contracts worth $1.1 billion went to B.C.-based companies during the lead-up period to the Games and during the Games themselves.
Debt reduction: While debt has increased related to financing for the Olympic Village construction, the construction of the entire project has been completed. As of May 2011, 544 units out of a total 856 market units had been sold or rented out. The debt of Vancouver city is decreasing gradually. Within one year from December, 2009 to December, 2010 debt has declined to 98% from 107%.
Vancouver city’s liquidity: The city’s liquidity has also improved. Cash and investments have since increased to C$617 million at December 31, 2010 from C$501 million at December 31, 2009.
Local business: Local businesses on Granville Island and Main may not have benefited from the surge, but, money was made elsewhere by restaurants, by The Hudson Bay Company, and by other large retail chains.
Housing and hotel: Hotel business was at its peak. Hotels were booked for year. Some city dwellers move to other place. By renting their houses. House rent went up to 3% to 7% depending on area.

Conclusion
It is unquestionable that hosting an Olympic is very profitable for host city in many ways. It brings positive effect on the host city in anyway. Whether it makes financial profit or not it helps the economy in the long run. Vancouver has been successful to establish their city’s brand to the world. They sure will try to sustain a good brand image of their city in the upcoming year to ensure new business investment and attract tourist.

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