February 24th, 2010
01:35 AM GMT
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As if the Olympic games weren't drama enough!  Now we can mix in the potential foreclosure of a world class ski resort.  The irony is almost painful: Whistler Blackcomb on the verge of foreclosure, at the height of its visibility to the world.

Chasing this story is a tough one because the parent company, Intrawest, will not confirm the reports. Financial restructuring negotiations are complex, legal affairs, so traditionally, the parties are obliged not to speak publicly until they have a resolution.  But Intrawest has recently sold some of its other ski resorts including at least one in the United States.

For now, Intrawest will only say that  "serious discussions with Intrawest's lenders are ongoing regarding refinancing and the Company continues to operate business as usual."   That's all well and good, but the company did miss a payment last year on a 1.4 billion dollar loan.  Unconfirmed reports this week suggest that a foreclosure auction could be just days away-- possibly before the games are done.

No one close to the situation expects a resort the size and caliber of Whislter Blackcomb to close down, with or without bankruptcy.    Vancouver's Mayor, Gregor Robertson,  told me in an interview on World Business Today, that "something is going to happen with Whistler."  He won't say, or doesn't know exactly what, but everyone seems to know something disruptive is coming.

The town of Whistler itself has already wrestled with significant tax increases, necessary in part, because of the financial burden of hosting the Olympics.  The Mayor there sent me a statement saying, "discussions with Intrawest lenders are ongoing and while we continue to follow the situation closely, we remain confident in the fact that Whistler Blackcomb is North America's number one ski resort and with over two million visitors a year it's not going anywhere."

In other words, even if the talks fail and the resort is sold, it won't be hard to find a buyer, and the region's largest employer will continue to provide jobs and amazing ski experiences for its visitors.  It's the kind of optimism you might expect from public officials in the midst of such a grand event.

But the dollars and cents of these games may be as much a part of their legacy as the competition itself. Already dubbed "The Recession Games," organizers say sponsorship is down, and revenues have been lost because of cancelled tickets and crazy weather.

When Vancouver bid for the games more than a decade ago, the estimated cost of staging the games was less than a billion dollars.  The actual cost, according to Mayor Robertson, will be "several billion," and some analysts say 8 billion would not be out of the question.

Robertson is confident there will be lasting economic benefits down the road, but admits the immediate price tag is huge.   For years, people will debate the merits and the legacy of the 2010 Olympic games, but for now, the potential foreclosure of their premier venue seems to say it all.

January 7th, 2010
01:52 AM GMT
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It takes years of brilliant business strategy to build a global brand. And love it or hate it, Starbucks is one of the most recognizable coffee products around. So why would the Seattle-based behemoth want to un-brand its powerhouse name, logo and taste?

That's exactly what it's trying, in what some call a brazen attempt at "stealth retail," when a corporate giant tries to sneak a sip of home grown neighborhood familiarity with the consumer never knowing the difference. A Seattle outlet of the Starbucks chain has been rebranded as15th Avenue Coffee and Tea. And there's nothing Café Misto about it. Most certainly, your java and milk in this corner café will be called, quite simply, Café au Lait, as the rest of the un-Starbucked world knows it.

Starbucks sent out its own sleuths to study local coffee shops observing everything from the décor, to the music, to the cups. The company already has opened two of its uniquely named remodeled coffeehouses in Seattle as an experiment that could be extended to more of its 16,000 stores.

Seattle bloggers are frothing at their Frappuccinos over the news. Just a quick sampling below will give you a sense of the local flavor:

"In desperation, Starbuck's is now throwing Hail Mary passes. It's likely going to backfire in a big way."

"Starbucks can do whatever they want to do with their business. If you don't like their stores, go somewhere else, but stop whining!"

"What's wrong with taking fashion tips from the most fashionable girl in school?"

"I hate Starbucks. OMG the most pathetic people go there."

Well, what can you say? In a retail age in which growing numbers of consumers want to know exactly where their carrots come from, what philanthropic causes a CEO supports, and whether child labor was used to pick the cocoa beans in their favorite snack, "stealth retail" could become a lightning rod.

Take the UK's "Innocent" story. A completely non-corporate maker of smoothies and juices recently sold a stake to Coca-Cola, of all companies, for a reportedly sweet-and-substantial 30 million pounds. "Innocent" built its brand as eco-friendly, sporting cute cow-like vans and is just one in a lineup of local success stories to sell to a corporate fat cat. "Innocent" wanted to raise funds to expand in Europe, and of course growing the brand often means giving away the hand. It's business, isn't it?

While different from "stealth retail," the "Innocent's" loss of innocence is another example of how wary consumers need to scratch more than just the surface.

Consumers who are conscious about what they buy can become confused, even outraged when they discover they're not getting quite the thing they thought they were. Or that after years of patronage, a trusted company changes direction, and nobody bothered to let the public know. As a conscious consumer, you might be shocked. You might be appalled. People seem to take this stuff rather personally- as if your long haired peacenik husband came home one night with a buzz cut and a rocket propelled grenade launcher on his shoulder. You might run the other way, but even if you just shrug your shoulders and get on with your evening, chances are, you at the very least- notice!

So what will the consumers' verdict be on this kind of stealth, corporate tactic? Is there anything wrong with taking fashion advice from the most fashionable girl in school? What if her outfit turns out to be a fraud? I honestly don't know, but in today's market, the consumer will most certainly decide.

Join me on World Business Today for an examination of "stealth retail" and other trends.

November 18th, 2009
05:20 AM GMT
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Looking back on this year to early March, you'll find the precise point when the U.S. stock market seemed to find its bottom. The Dow has had a tremendous rally since then, but just about everyone is concerned about what it means.

Dropping commercial real estate values is leading fears of a double-dip recession.
Dropping commercial real estate values is leading fears of a double-dip recession.

Does the recovery lack any real support from economic fundamentals? It is jacked-up on stimulus programs that governments will soon try to unwind– and with what consequences?

Many analysts argue that the consequence will be the dreaded double dip.

As Mark Zandi, chief economist for Moody's Economy.com, told CNN Money this week: "If we do slide back into recession, it will be very difficult to get out."

Some economists are so concerned they want another round of stimulus early next year because the U.S. labor market is still so weak.

About two months ago, I sat down with Steve Palm of "Smart Numbers," a Real Estate analysis company. He feared that so many commercial developments and large housing projects were defaulting it all but assured a double dip sometime in the middle of 2010. It was a dire prediction that stuck with me.

Checking back with him this week, I am sorry to say that the situation from his vantage point is no better. Palm still sees "Way too much stuff coming back to the banks." "This is causing poor liquidity as the banks still cannot lend. The dollar is way too weak too."

Small regional banks continue to go under across the United States. Most of them are going down because of foreclosures on large commercial real estate ventures. Palm sees no end in sight, and fears that if unemployment keeps mounting and housing indicators start falling again, it will be ample evidence of the "W-shaped" trend that analysts say signals an imminent double dip.

The bankruptcy rate further complicates how to gauge this recovery. As unemployment drags on and home values continue to suffer, personal bankruptcies surged 9 percent in October, with a 7 percent jump in business bankruptcies. The American Bankruptcy Institute also expects total bankruptcies in 2009 to reach almost 1.5 million. That's an increase of 30 percent from last year.

Analysts say given all of these factors, the way governments unwind the current stimuli will be key in determining whether the recovery is sustainable, or whether it slides once again. How will we know? CNN Money.com has a great primer on six key indicators to watch if you're concerned as well.

How to protect our own investment portfolios in 2010 is something we should all be discussing. Stay tuned for more on World Business Today.

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November 11th, 2009
09:06 AM GMT
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If you thought that lavish bonuses for the financial industry would be a welcome casualty of the current financial crisis, it is time to think again. The New York-based executive search and compensation consultancy, Options Group, put that notion to rest for us in a new report.

Watch CNN's Ali Velshi explain what underlies the return of big bonuses on Wall Street.

Options Group predicts bonuses at financial firms worldwide will increase by an average 40% this year, just months after many of these firms were teetering on the brink of disaster and begging for bailouts.

The report, released this week, says that managing directors in high-yield credit sales will see the biggest bonuses, along with those in commodity sales units. They’ve apparently had a heck of a year. In fact, it is an incredible turnaround in fortunes which came, of course, thanks to a life raft the size of Manhattan!

Still, how could it have happened so fast: A return so promptly to business and bonuses as usual? Interviewed on Monday’s edition of World Business Today, CNN’s Ali Velshi told me, “It’s unusual given the times we are in. It’s less unusual if you’ve been tracking how this market has been doing. When you look at the money these banks are making, they’ve actually made it on trading…. Buying things cheap and selling them high.”

Velshi also points out that many of the big banks making money now have paid back the taxpayer funds they borrowed, and taxpayers have made a profit on those transactions.

However, seven of the big financial firms doling out bonuses are not off the taxpayer’s hook. Their bonuses will reportedly be less handsome.

Velshi says, “Major profits have been taken at companies that have paid that money back… and they want to be free to pay their people. It’s quite a remarkable situation. You wouldn’t have thought six months ago we’d be talking about bonuses that were bigger than last year.”

Some analysts point out that financial firms will offer more in stock and defer more cash payments because of public pressure, and pressure from regulators to pay tie to long-term results rather than rewarding short term risk. That might placate those who believe excessive rewards for short-term risk helped cause the financial meltdown.

Professor Peter Morici, of the University of Maryland’s Robert H. Smith School of Business, says, “These bonuses show Wall Street is arrogant and insensitive. These bonuses were earned by investing cheap taxpayer funds, and the profits really belong to all Americans. This entire episode is an outrage.”

The U.S. Federal Reserve is planning to review the 28 largest banks to ensure compensation is not rewarding risk; however, global leaders have tried and failed more than once in the past year to agree on what constitutes excessive risk or excessive compensation.

“You only know it,” explained Barack Obama’s pay Czar Kenneth Feinberg a few weeks ago, “Once it’s staring you in the face,” and by then, of course, it’s too late.

So what’s the message here? Let’s just get used to it? The punch bowl is full once again on Wall Street. To paraphrase the much-maligned quotation attributed in London’s Sunday Times to Goldman Sachs chief Lloyd Blankfein, God’s work is being done. Phew!

So let’s just grit our teeth and pretend we haven’t learned a thing in the past year. There’s no need to wonder what’s going on now; no need to worry about what might be laying the groundwork for the next financial crisis. After all, we’ll know it, once we see it.

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