June 16, 2009 / 10:00 PM / in 8 years

Weak economy a hurdle for 2010 suppliers, sponsors

VANCOUVER, British Columbia (Reuters) - The economic slowdown has proven to be a major hurdle in the race to sign up needed suppliers for next year’s Winter Olympics, organizers said on Tuesday.

<p>A statue of famed English mariner Captain George Vancouver frames the Olympic flag flying outside city hall in Vancouver, British Columbia February 18, 2009. REUTERS/Andy Clark</p>

The recession has already made it difficult to line up sponsors for the 2010 Games in Vancouver, but it has also made it difficult for some companies to bid on supply contacts for jobs such as providing food at local venues.

“In the end, we’re happy with the companies we do have, but in some cases we haven’t had as many to choose from as we might of otherwise hoped for,” said John McLaughlin, chief financial officer of the Vancouver Organizing Committee (VANOC).

All suppliers had to undergo pre-bid screening, but in some cases firms that passed that test later had to drop out because they could not get the bank credit needed to pursue the contract, officials said.

VANOC, which has a C$1.7 billion ($1.5 billion) operating budget, still has to award contracts for about 62 percent of its planned spending for the Olympics, which begin next February in the Pacific Coast city.

Organizers remain confident they will complete all the contracts they need. In some cases they have restructured contract requirements so that smaller local companies could join in the bidding.

The global economic crisis has also made it harder for Vancouver organizers and the International Olympic Committee to sign up sponsors.

The IOC has signed up nine major global sponsors, but that is two short of what had been projected when VANOC’s budget was drawn up, leaving Games organizers with the possibility of a C$30 million revenue shortfall

Although the IOC believes it will be able to sign up the needed sponsors before the Games begin, the two groups have begun discussions on what they will do if they come up short, said Dave Cobb, VANOC’s executive vice-president.

“If there is a shortfall, we’re going to work on ways to make it up,” Cobb said.

Both VANOC and the organizing committee for the 2012 Summer Olympics in London receive a percentage of the revenue from the IOC’s international sponsorship deals.

VANOC has completed nearly all its planned domestic sponsorship arrangements, but the recession has dashed earlier expectations it would exceed its budget target.

One of its major sponsors, General Motors Corp, has sought bankruptcy protection, but VANOC said GM and all other key sponsors were still meeting their financial commitments to the Games.

($1=$1.135 Canadian)

Reporting Allan Dowd; editing by Rob Wilson

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