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05 December 2023

An investment race hard to win

By Allan Dowd and Nicole Mordant

So you are looking ahead to Friday's start of the Vancouver Winter Olympics and you think to yourself: "Hey, how can I make some quick bucks on the stock market from this thing?"

Welcome to the Olympic freestyle investing race. It's a tougher competition than you might think.

The starting gate

On the surface, the race course looks promising.

Vancouver's hotels are filling up, the sport venues are ready and Olympic sponsors are rushing around trying to get the attention of the hundreds of reporters arriving on Canada's Pacific Coast from around the world.

The Olympics are expected to help propel Vancouver to the top of Canada's economic growth podium this year, buffering the impact of the global downturn, which had threatened to punch a hole in the Games' financing plan.

The city expects to enjoy economic growth of 4.5 per cent, with 4.2 per cent for the host province of British Columbia – both well ahead of the 2.9 per cent expected nationally, according to the Conference Board of Canada.


The Vancouver Organising Committee (Vanoc) has listed sponsors, ranging from the likes of national names such as Bombardier Inc, Teck Resources and Canadian Pacific Railway to small fry such as Alda Pharmaceuticals.

There are also International Olympic Committee sponsors such as General Electric and Panasonic.

Sponsors will get publicity during the Games, but does that translate into profit? That's hard to say, according to the author of a government-sponsored study examining the economic impact of the Games.

"There are just too many other factors that would swamp any widespread Olympic effect," said Ed Mansfield, associate partner at PricewaterhouseCoopers.

Being a sponsor is no guarantee you stay in business. Fortunately for Vancouver organisers, onetime telecoms heavyweight Nortel Networks Corp delivered its promised equipment before filing for bankruptcy protection.

"A lot of companies make their Olympic sponsorship decision in part on the basis of enthusiasm for the event rather than on an objective cost-benefit analysis," Mansfield said.

Missed gates

The PricewaterhouseCoopers study found that between 2003 and 2008, as venues were built and new jobs created, the Vancouver Games generated between C$684 million (Dh2.35 billion, $639m) and C$884m in gross domestic product for British Columbia and an additional C$170m for Canada.

But much of the local building was done by privately owned construction firms, and the new venues were all completed last year. Units in the Vancouver athletes village will be sold as high-end condominiums – but by a private developer on land owned by the city.

Unofficial winners

One company that has benefited, albeit unofficially, from the Olympics, and will continue to reap rewards, is SNC-Lavalin, which led the consortium awarded the C$1.6bn contract in 2005 to build the Canada Line extension to the SkyTrain rapid transit system, with a long-term maintenance contract.

Although not officially regarded as an Olympic project, the line from the airport to downtown opened last year to positive reviews and will likely be one of the most utilised installations by Games tourists.

Local ridership is already ahead of projections.

Not only does the SkyTrain project rank as big and material for SNC, the Montreal-based company received a bonus for completing it on time and within budget, said Maxim Sytchev, an analyst at Genuity Capital Markets.

Bombardier has brought one of its trams from Brussels to Vancouver in hopes the small Olympic Line demonstration project will get government funding to become a full-fledged streetcar system.

Robert VanWynsberghe, the lead researcher on the Games at the University of British Columbia, says it's ironic that the Canada Line is not considered part of the official Olympics project and the streetcar just a demonstration.

"Ten years from now, people might be saying: 'Those Olympic games were about transportation'," VanWynsberghe said.

Time to party?

So, if your dreams of taking home gold on the stock market slalom are not looking so good you may want to take a word of advice from a recent study on the spinoff effect the Games have on real estate.

There's none.

Holding an Olympics produces neither a real estate price boom nor a bust for a host city, University of British Columbia researchers found after looking at data from Vancouver and other Olympic cities.

They also had some other sage advice about focusing on the Olympics' bottom line:

"This study suggests that there is not an economic argument that justifies pursuing hosting the Games. We do not feel that economics alone need be the litmus test for hosting the Games. Parties, festivals, and celebrations may not meet an economics test, but they do make life interesting to live," the researcher wrote. (Reuters)


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