LONDON, England (BBC) – London 2012 Olympic organisers have cancelled a sponsorship contract with Canadian company Nortel, leading to a potential £15m funding shortfall. Nortel had been signed up as one of the main sponsors and the Games’ official telecoms provider.

They have been replaced by Cisco Systems but on a less lucrative deal, hence the shortfall.

In a statement London 2012 organisers said that Nortel is “no longer able to maximise the value of its investment”.

Nortel filed for bankruptcy protection at the start of the year and are restructuring their business.

But London 2012 spokesman Adrian Bassett added that the change was “not a big blow”.

He said: “In terms of our overall targets we haven’t taken a big hit.
“The deal with Cisco is very competitive, as they will simply do the work that Nortel was going to do.

“Our sponsorship programme is driven by the market. If the interest is there, we have the option of adding more tier one sponsors.”

“Our overall domestic sponsorship target is about £650m and at the moment we are nudging £500m,” he said.

London 2012 chief executive Paul Deighton said: “We part with Nortel on good terms.

“This is in no way a reflection of their capabilities – this is all about meeting our fixed deadlines.” This is the first sponsor that London 2012 has lost, but not the first time funding issues have been raised.

Last month a shortfall of between £60m and £100m was discovered in the budget, linked to compensation for firms forced to move from the Olympic site in Stratford, east London.

In January it was revealed the credit crunch had forced organisers to use several hundred million pounds of the £2.7bn contingency fund due to a lack of private investment.

The cancellation of the Nortel deal brings the number of main domestic sponsors down to six: Adidas, BP, British Airways, BT, EDF Energy and Lloyds TSB.
Cisco joins Adecco, Cadbury and Deloitte in the second tier of sponsors.