The North American financial crisis took another plunge with Nortel Networks announcing bankruptcy but the name will still be prominent as a sponsor of the 2010 Winter Olympics in Vancouver.
The company filed for bankruptcy protection from creditors, deciding to stay in operation as a smaller entity. The Canadian Government immediately promised C$30 million in short-term financing for Nortel, which employs 32,000 people, mainly in Ottawa.
The company being a third-tier sponsor is not providing any cash to the Games. It has a comparatively small role as a provider of gear to carry all the voice, video and data traffic for the Games that are estimated at $15-million.
Nortel retains full rights to use the Olympic brand to promote its name and will have preferential access to tickets for major events and hotel rooms.
Nortel became the official sponsor for the Vancouver event in 2007 and a year later committed itself to the 2012 Summer Games in London. A “tier-one” sponsorship promise is estimated at $71-million in network equipment and cash for the London Games.
The company’s involvement is mainly due to Bell Canada’s lead sponsorship of Vancouver’s Winter Games. The $200-million deal with Bell includes Nortel as the main equipment supplier which is designing and running the network for the Vancouver event.
Ward Chapin, chief information officer for VANOC said Nortel reaffirmed its commitment to the 2010 sponsorship on Jan 14.
“Much of Nortel’s commitments to the Games have been delivered and will be in place by May,” he said.
The 2010 Olympic sponsorship has been shaky in times of current financial turmoil. Like Nortel automobile company GM has received a $3 billion bailout from the federal government but declared its firm commitment to sponsor, which includes providing vehicles to VANOC.
Mining company Teck Cominco, the provider of metal for the Olympic medals announced sold off assets and announced layoffs recently but did not back out of the sponsorship.
VANOC says none of the 2010 sponsors have indicated they will unable to fulfill their deals for the Games. Organizers are looking at their budget regardless with a revised budget expected next week.