Category: News

Bonjour! 2024 Summer Olympics Begin in Paris, Peacock Looks to Rebound

By: Brent Shockley, Principal


Bonjour! 2024 Summer Olympics Begin In Paris, Peacock Looks To Rebound

The 2024 Summer Olympic games officially begin today and run through Sunday, August 11th.  The opening ceremony will feature over 10,000 athletes aboard over 90 boats floating down the Seine River in Paris at 7:30pm local time and 1:30pm Eastern US time.  A few sports, such as football (soccer in the US), got an early start to their opening rounds on Wednesday, July 24th. 

A study by Oxford University found that nearly every Olympics since 1960 has gone over budget, by an average of 172%. The cost of the 2024 Paris games is expected to be approximately $10 billion, roughly 25% over its original budget.  However, this cost is well below recent Olympics.

Bonjour! 2024 Summer Olympics Begin In Paris, Peacock Looks To Rebound

The difference is largely due to event specific construction.  Unlike many host cities, 90% of the venues in the Paris Olympics are pre-existing.  The major capital expenditures include $1.6 billion for the Olympic Village, $190 million for the aquatics center, and $150 million for gymnastics and badminton. Los Angeles is utilizing a similar strategy to limit spending, along with private funding, to meet its ambitious budget of $6.8 billion for the 2028 Summer Games. 

The 2024 Olympic Games will be broadcast in the U.S. on NBC, its Peacock streaming service, and Telemundo. In 2014, NBC Universal signed an extension with the International Olympic Committee (IOC) to broadcast six Olympic games from 2021 through 2032 for $7.75 billion. NBC executives hope the 2024 Olympic games reverse the decline in Peacock subscriptions, despite recent price increases of $20 for annual plans and $2 for monthly plans. 

Peacock subscribers increased from 4 million in mid-2021 to 33.5 million during the first quarter of 2024.  However, in the second quarter of 2024, Peacock experienced its first quarterly decline losing 500,000 subscribers.  Peacock will stream weekly college football games as part of the Big Ten Conference’s new media package this fall.  In addition to Big Ten games, six Notre Dame football home games will stream on Peacock simultaneously with the linear NBC national broadcast.  Peacock will be the exclusive outlet for Notre Dame’s home game with Louisville on September 28th.  The controversial move by the NFL to grant Peacock exclusivity to a playoff game last January (featuring eventual Super Bowl champion Kansas City Chiefs) angered many football (and Taylor Swift) fans but resulted in an average of 23 million viewers, the largest live streaming event in the U.S. Peacock also has the exclusive rights to Green Bay Packers vs. the Philadelphia Eagles in Brazil on Friday, September 6th.  With these strategic additions to its streaming lineup, Peacock aims to regain momentum and attract a broader audience in the competitive streaming market.

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PRESS RELEASE: U.S. Court of Federal Claims Concurs with ValueScope Expert’s Opinion in Russian Recovery Fund

Southlake, Texas, August 19, 2015:

In a decision for the United States, the U.S. Court of Federal Claims disallowed tax losses claimed by an affiliate of the Russian Recovery Fund in an unusual and complex tax shelter case.

Facts
The primary actors in the case are three hedge funds:

Tiger Management affiliated funds (“Tiger”) – an independent third party
Russian Recovery Fund (the “RRF”) – the plaintiff
FFIP – the taxpayer and a hedge fund affiliated with the RRF

In 1999, Tiger contributed more than 3.0 billion rubles of Russian debt instruments to the RRF as an in-kind contribution for RRF shares. Although the fair market value of the contribution approximated $15 million, Tiger’s tax basis in the contributed assets exceeded $230 million. Two weeks later, Tiger sold its RRF shares to FFIP for $14.1 million.

The high-level economics of the tax case are illustrated below:

Unlike other tax shelter cases, the RRF case was significantly more complex because the contributed securities generated significant economic returns and had economic substance. Debt typically contributed to Distressed Asset Debt (“DAD”) tax shams involves high basis debt instruments on which little or no value is ever recovered.

The Court’s Opinion
Through the facts of the case and the testimony of its expert witnesses, the U.S. Department of Justice (“DOJ”) demonstrated that Tiger’s in-kind contribution was a disguised sale. They also demonstrated that the RRF’s fund manager was aware that Tiger was a seller of Russian debt rather than an intentional investor in RRF, as the Taxpayer claimed.

The Court found the expert opinions of Chris Lucas, ValueScope Director, to be helpful, citing his testimony 16 times in its opinion, including:
“[Mr. Lucas’] primary opinion was that RRF was structured more as a tax shelter than as a legitimate hedge fund.”

The Court agreed with Mr. Lucas’ expert testimony:

“…that the losses claimed by RRF ($223 million in total) are so disproportionate to its investment in Tiger assets (roughly $14 million) as to be unreasonable. We found Mr. Lucas to be a persuasive and knowledgeable witness.” (page 22)

Mr. Lucas helped the Court appreciate the unreasonableness of the economics claimed by the Taxpayer based on its argument that it had made an at-risk investment in Russian debt. The Court saw through this, however, and realized that FFIP was attempting to earn a large, riskless profit from the US government with significant potential economic upside.

The Court reviewed the facts and concurred with Mr. Lucas’ testimony:

“Our conclusion that Tiger was never a real partner in RRF is arguably sufficient by itself to undo the loss carryover. We would not recognize the transaction as anything other than a sale because that is what Tiger intended it to be. However, there is a massive amount of circumstantial evidence that the RRF was aware early on that Tiger had no real interest in becoming a partner, and was a willing participant at some point in facilitating the transfer of assets through the sham partnership.” (page 35)

About ValueScope, Inc.
ValueScope, Inc. is one of the nation’s foremost experts in complex federal tax matters.  ValueScope’s Principals and Directors are called upon to testify regularly in U.S. Tax Court and Federal District Courts.  Its team includes experienced valuation experts, management consultants, Chartered Financial Analysts, Certified Public Accountants, PhD’s, statisticians and creative and strategic thinkers.* ValueScope develops sophisticated financial and econometric analyses to support our clients’ needs for litigation support, financial reporting, tax reporting, management consulting, transaction advisory, and other needs.

*ValueScope is not a licensed CPA firm.