2010 Olympics may well be connected by string and tin cans

Nortel a warning for Vanoc to be wary: expert   'There's reason to be nervous,' professor says   By Bruce Constantineau, Vancouver SunJanuary 15, 2009 9:01 AM     Story Photos ( 1 )

    Nortel chief executive Mike Zafirovski says seeking creditor protection is 'imperative'. Photograph by: Indranil Mukherjee, Getty Images

Financially strapped Nortel Networks may well end up honouring its 2010 Olympic sponsorship deal, but the company's plight should make Vanoc officials wary of other Games sponsorship arrangements.

That was the assessment from Sauder School of Business professor James Brander after Nortel sought court protection Wednesday from creditors in the U.S. and Canada.

"Nobody knows how many more sponsors will go into bankruptcy and how much wiggle room there is on their 2010 commitments," Brander said. "But there is not a lot of extra money going around now, and there's reason to be nervous."

Nortel is an official supplier to the 2010 Olympic Games, with a mandate to supply communications equipment for a network to be created by Bell Canada.

Vanoc said Nortel has reaffirmed its commitment to its 2010 sponsorship -- worth from $3 million to $15 million -- and noted most of Nortel's equipment will be delivered by May.

Anywhere from 10 to 15 Nortel workers are expected in Vancouver to help with the communications network during the Games.

Nortel is also a Tier One sponsor for the 2012 Summer Olympics in London, with a $73-million deal to provide infrastructure for British Telecom's communications network for those Games.

Other Vanoc sponsors struggling with the slowing economy include automaker General Motors and mining giant Teck Cominco. Brander said it's encouraging that all sponsors have maintained their commitments and none has pulled out of a sponsorship deal so far.

"But obviously you have to be concerned about the future because by all accounts, 2009 is not going to be a good year," he said.

Brander said all previous business decisions have to be reconsidered when a struggling company like Nortel goes to court for protection from creditors.

"If the money to be spent on the Olympics looks like a good marketing expenditure, then they'll still do it," he said.

"I think there's probably a good chance they'll go ahead with it but going to bankruptcy court essentially gives them a chance to remake that decision."

2010 Games telecommunications provider Bell Canada plans to use Nortel equipment to create a network that securely converges all voice, video and data communications.

Vanoc chief information officer Ward Chapin said Nortel has been an "exceptional" partner with a strong commitment to the Olympic movement.

"As a partner, they have kept us informed every step of the way," Chapin said in a statement.

bconstantineau@vancouversun.com

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