Sochi Wins 2014 Winter Olympics, Beating Pyeongchang, Salzburg

By James Brooke

July 4 (Bloomberg) -- Sochi, the Russian Black Sea resort where
President Vladimir Putin has a vacation home, will host the 2014
Winter Olympics after beating Austria's Salzburg and South Korea's
Pyeongchang in a vote by International Olympic Committee members.

Sochi defeated Pyeongchang after Salzburg was eliminated in the first
round of voting today in Guatemala City. It was, according to news
services Aroundtherings.com and Gamesbids.com, one of the closest
bidding contests in Olympic history.

The games give the Kremlin a chance to showcase the country's economic
rebound since the collapse of communism in 1991. Last year's opening
ceremony at the Turin Games in Italy was the world's third-most
watched television program. China is promoting the 2008 Summer
Olympics as a chance to place Beijing in the world spotlight.

For Russians, the country's first chance to stage the winter showpiece
represents the nation's recognition as a skiing, skating and sledding
powerhouse. Athletes competing under the Russian, Unified Team or
Soviet flags have won 293 medals in 50 years of winter Olympics.

``The excitement, grace and beauty of winter sport are part of the
Russian soul,'' Sports Minister Vyacheslav Fetisov, a two- time
Olympic champion and member of the Hockey Hall of Fame, said before
the vote. ``Winter sport and the Olympic spirit are part of our
heritage.''

In February, President Putin traveled to Sochi and unveiled an
eight-year, $12 billion program to build skating rinks in the city and
alpine venues in the nearby mountain resort of Krasnaya Polana.
Officials say these will give a permanent boost to tourism, create
Russia's first world-class ski center and provide winter training
facilities for Olympic athletes.

Following the collapse of the Soviet Union, Russia lost access to ski
areas in Georgia and Moldova.

Boycott Bitterness

The Sochi games may also ease lingering bitterness in the nation over
the only other Olympics on Russian soil, the 1980 Summer Games in
Moscow. About 50 nations joined an American-led boycott over the
Soviet Union's 1979 invasion of Afghanistan. For some, holding the
games in Sochi is a sign of Russia's acceptance in the international
fold after its isolation for much of the 20th-century.

``The Olympics as a symbol are as important as Russia getting into the
WTO,'' said Andrew B. Somers, president of the American Chamber of
Commerce in Russia. ``It sends a powerful message that Russia is now
part of the world community.''

President Putin wants Russia, the last major economy still outside the
World Trade Organization, to join the Geneva-based trade body before
he steps down at the end of his second term, in May 2008.

Presidential Lobbying

On July 2, Putin flew from a meeting with President George W. Bush to
Guatemala, where he met with a succession of IOC members. His lobbying
campaign mirrored the efforts two years ago of then- U.K. Prime
Minister Tony Blair who helped London secure the 2012 Summer Games.

Russia's cluster concept is similar to Canada's winning proposal for
the 2010 Winter Games. The ice events will be held at indoor rinks in
Vancouver, a Pacific Coast city that sees little snow. The skiing will
take place at Whistler, a Rocky Mountain area that's a 90-minute drive
from Vancouver.

From Sochi, it takes about 45 minutes to drive to Krasnaya Polana, a
village framed by the 6,000-foot peaks of the Caucasus Mountains. A
total of $1.1 billion is going into four ski resorts there.

With seven gondolas planned for the area, Krasnaya Polana represents
the largest concentration of ski industry investment in the world,
said Paul Mathews, president of Ecosign Mountain Resorts Planners
Ltd., a Whistler, Canada-based company designing one of the resorts,
Rosa Khutor.

Private Investment

Vladimir Potanin, owner of OAO GMK Norilsk Nickel, is plowing $262
million into Rosa Khutor, building three gondolas, 20 trails and five
restaurants. State-controlled OAO Gazprom is investing $375 million in
Psekhako Ridge, where Putin skied before television cameras in February.

On the coast, aluminum mogul Oleg Deripaska plans to spend $2 billion
on the international airport and Olympic village in Sochi.

Although Putin is to step down next year, private investors plan to
continue to develop Krasnaya Polana as Russia's premier ski destination.

``This is not a presidential project,'' Potanin said in an interview
in Sochi in February. ``It will go on under the next president, the
next president and the next president.''