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YOUR MONEY

Russia Hosting Most Expensive Olympics Of All Time; Private Security Firm Hired To Protect Shaun White And His Teammates In Sochi; American Wins Gold Medal in Snow Boarding; Snowboarder Shaun White Profiled; Olympic Advertisers Face Criticism As Russia Cracks Down On Gay Activism; The Call For Preschool For Everyone

Aired February 8, 2014 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CHRISTINE ROMANS, CNN HOST: Russia is hosting the most expensive Olympics of all time. Ready or not, let the games begin.

I'm Christine Romans. This is YOUR MONEY.

More than 6,000 athletes from 85 countries are in Sochi, but one high- flying legend, Shaun White, has brought a snowboard and a business empire.

(BEGIN VIDEOTAPE)

ROMANS: Red, White and gold, with a lot more green and a lot less hair. Shaun White seemed destined for anything but the winter Olympics superstar he's become. He grew up in sunny southern California and suffered from a heart defect, two open heart surgeries as a small child. By age six, White started snowboarding. By age seven, he was sponsored. At 13, he went pro, at the same time, building a professional skateboarding career. White became an X Games legend, the first athlete to win gold at both the summer and winter X Games in two different sports, and the world has already witnessed White winning gold not once but twice.

UNIDENTIFIED MALE: That was that defining moment of, like, when he did it.

ROMANS: Now he hopes to shatter records with his third consecutive winter Olympic gold. An innovator on and off the slope, White maintains close creative control over his own products and ad campaigns. Shaun White Enterprises includes a line of boys' clothes at target, a collection of snowboards and gear at Burton, a partnership with Go Pro, sponsorship deals with Oakley, Stride gum, and more.

SHAUN WHITE, SNOWBOARDER: Plus, they're totally practical.

ROMANS: But the former "flying tomato" is not afraid to say, no, when a brand doesn't match his style.

WHITE: Heinz did call. Like, nah.

ROMANS: There's the deal to create snowboarding and skateboarding video games and he's appeared in numerous films and documentaries, including the recent "Russia Calling" which his company produced and sold to NBC.

WHITE: I just get fired up. I have to do this trick that they do.

ROMANS: Now the gold medalist is taking on the music world. His band, Bad Things, has a deal with Warner Brothers. White is an advocate for several charities, including St. Jude's Children's Hospital helping kids with health problems like he had, and the "flying tomato" donated that famous hair to Locks of Love.

WHITE: Bye-bye.

ROMANS: Snowboarder, entrepreneur, musician, philanthropist, he's hoping the business of being Shaun White is once again gold.

(END VIDEOTAPE)

ROMANS: Shaun White and his teammates are already competing in Sochi. Those events are among the most watched back here in the U.S., and that means some may see Shaun White and his team as high-profile targets. The U.S. ski and snowboard association has hired a private security firm to protect them all. Zain Asher joins me now with that story.

ZAIN ASHER, CNN CORRESPONDENT: That's exactly right. They're called Global Rescue. They provided medical and security service, not just for athletes but for corporate clients, individuals as well. The idea, if you're traveling to a part of the world you consider to be dangerous, this is the firm you hire if you think you might need help evacuating. I traveled to Boston to take a look at their command center. Take a listen.

(BEGIN VIDEOTAPE)

ASHER: War zones, natural disasters, remote rescue operations.

DAN RICHARDS, CEO, GLOBAL RESCUE: We're used to these types of environments where there are threats and you're not quite sure where the threat might come from.

ASHER: Meet the man who will be watching the Olympics more closely than most, and not for the athletics. Dan Richards runs Global Rescue, a private security firm that will provide additional security for the U.S. ski and snowboarding team in Sochi.

RICHARDS: When it comes to information and intelligence we actually have our own teams of intel analysts located in our praise centers here in the United States and some of our other global locations, and they're constantly feeding us information.

ASHER: Global Rescue has had people in the ground gathering intelligence in Sochi for months. They include former Navy SEALs and Army rangers trained and dispatched from this command center in Boston.

SCOTT HUME, GLOBAL RESCUE: The strength of our guys on the ground is for them to be able to see multiple options simultaneously and immediately understand what the spectrum of capability they bring. How do you get everything together? How do you communicate? What are your options?

ASHER: The U.S. ski and snowboarding team will compete here at the ski resort in Sochi, an area with sparse, narrow roads and rugged terrain.

So does that make evacuating the U.S. ski team from an area particularly challenging?

RICHARDS: Anytime you have a limitation on entry and egress points, it definitely presents a level of challenge.

ASHER: But how much can a private security firm really do in the convenient of an attack?

LOU PALUMBO, DIRECTOR, ELITE INTELLIGENCE AND PROTECTION GROUP: In our city, for example, if we have an incident, the first thing they're going to do close bridges and tunnels. The same will happen over there. They're going to lock it down. No private security firm is going walk in and suddenly have them abandon their procedures.

ASHER: Global Rescue admits that while the Russians are in charge, their value lies in providing an extra layer of protection, especially when the athletes are traveling to and fro the games.

PALUMBO: If you're on the outside, you're pretty much on your own. And that's unfortunately the reality of the situation.

ASHER: But Richards points out there is a silver lining.

RICHARDS: This terror threat to the games, which should represent the world coming together from the athletic competition is actually bringing us together in ways we might not have expected. We're being forced to come together and unite to try and confront this threat in a united way, which is interesting.

(END VIDEOTAPE)

ASHER: All right. So that prices are relatively reasonable. For an individual who needs medical help, security help, to are one year charge $700. I think the question is, can a private security firm really provide the protection that they need? Obviously in terms of intelligence, they don't necessary have the capacity to wiretap. They wouldn't disclose what weapons they carry. I don't know.

ROMANS: What an interesting look, a look you won't see others do inside the games. Thank you so much for that, Zain.

The winter game, figure skating, skiing, curling, but this year a new convenient -- sponsor bashing. Russia's controversial crackdown on its gay community has been highly criticized, and the world's most recognizable brands, are they regretting their $100 million decisions?

(COMMERCIAL BREAK) ROMANS: Coca-Cola, McDonald's, Visa, some of the world's biggest companies, biggest brands. They're used to capturing advertising gold, but their new Olympic ad campaigns have been looking at sad as the Albanian Alpine skiing team. Olympic advertisers facing criticism as Russia cracks down on gay and lesbian activists. McDonald's was among the first to feel the Internet's wrath, social media wrath. The company created a social media campaign called "Cheers to Sochi." The company tweeted, "We're kicking off a way to send your well-wishes to any Olympian today. Are you ready to send your #cheers to Sochi?"

The Internet responded with, jeers from McDonald's, hijacking this campaign. LGBT activists tweeted, "Hey at McDonald's, you're sending #cheers to Sochi while goons wearing Olympic uniforms assault LGBT people." In a statement, "McDonald's says we believe the Olympic Games should be open to all free of discrimination, and that applies to spectators, officials, media, and athletes." A traditional corporate response innocence a very untraditional world. The backlash for those advertisers didn't come cheap. Companies like McDonald's and Coke pay around $100 million to become sponsors before they pay for their own marketing campaign.

Brian Stelter is CNN's senior media correspondent. He's the host of "Reliable Source." John Berman is my co-host on CNN's "EARLY START." Brian shouldn't these companies have seen this coming? They pay all this money to have their image exactly as they want it seen, and social media says, no, no, we don't see your image that way and are going to hold you accountable?

BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: I was hearing that. It's hard to be a company these days, isn't it? We shouldn't feel too bad for them, but, yes, I think they should have seen it coming, and I wonder if they did but took this risk anyway, because there is an element of all press being good press to this, and they are in the conversation whether they like it or not.

ROMANS: I think they don't know how to handle social media. For many years they have been able to do ad buying, hire high-placed PR firms.

STELTER: It's pretty easy, 30-second spots.

ROMANS: And think they control the conversation. For the first time ever, John Berman, companies don't necessarily control the covers.

JOHN BERMAN, CNN ANCHOR: This is the safest bet they made in the world. Betting on the Olympic is Mary Lou Retton on Wheaties. You always like the Olympics, they're always fun and feel-good, except this time they're not. There's this combustible combination of factors which has made this a troubled Olympic Games.

ROMANS: Let's talk about those, because one of the biggest factors is the country, Russia, right, and its stance again LGBT activists in the country. Look at this poll. We have a favorable rating of Russia now about 41 percent from Americans, 55 percent unfavorable. How does all this play into that?

BERMAN: I think it plays directly into that. There's a troubled image of the games, partially because of the gay rights issues, partially because of the fact Sochi doesn't seem ready for the games, partly because of what reporters there are tweeting back, again, on social media here.

ROMANS: Tweeting!

BERMAN: Hash tag, Sochi problems, it's one of the funniest things.

STELTER: Tracking all the problems there. I think companies, you know, they are seizing this opportunity in some ways. Look at Google, changing the home page to have an LGBT themed graphic for the Olympics. There are opportunities for companies to stand on the right side of history here and I think they're taking advantage of that in some cases.

BERMAN: If something's going to happen, the McDonald's and Cokes of the world that have been slow to respond to social media, they need to get ready now, today, because over the next few weeks something will happen at these games in the realm of the gay rights issue where they will have to respond. Some athlete will make a statement, wear something, and they're going to have to say something.

ROMANS: Guys, nice to see you. Thanks.

STELTER: Thank you.

ROMANS: Coming up next --

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Last year I asked this Congress to help states make high quality pre-k available to every four-year-old. As a parent as well as a president I repeat that request tonight.

(END VIDEO CLIP)

ROMANS: Universal pre-k, Nicholas Kristof from the "New York Times" joins me next on the call for preschool for everyone.

(COMMERCIAL BREAK)

ROMANS: The country with the best workforce and the best infrastructure will lead the 21st century. But if education is key to training tomorrow's workforce, how early should we start? The United States lags other industrialized nations when it comes to the share of four-year-olds in preschool. We rank 28th of 38 industrialized nations. Two years in a row President Obama has called on Congress to help states make high-quality preschool available for all children.

(BEGIN VIDEO CLIP)

OBAMA: Research shows one that of the best investments we can make in a child's life is high-quality early education.

(APPLAUSE) (END VIDEO CLIP)

ROMANS: Green tie, right there. That's John Boehner, the Republican House speaker, applauding that line about education, preschool education for everyone. Could there be an opening for bipartisan action to make a what we call here crawl through 12 the new K-12 starting before the child is five-years-old? Nicholas Kristof is a columnist for the "New York Times." Nick, the single biggest thing the U.S. can do to address poverty and reduce inequality of opportunity, you say, is to broaden early education. I mean, for the first time in a long time I'm hearing across the country this call for getting kids into school earlier, high quality preschool for everybody.

NICHOLAS KRISTOF, COLUMNIST, "THE NEW YORK TIMES": That's right. This is one of those rare issues that Republicans and Democrats actually seem to agree on. And 84 percent of Democrats want more early education, 70 percent of Republicans do. So it's not clear there is going to be a consensus within Congress. But within the general public, this is something people have embraced, and there are in fact a number of Republican states like Oklahoma that have been leading the way, because it's not an ideological issue. It works. If you try to figure how to create greater opportunity, how to reduced gaps, this is something that actually does it.

ROMANS: So the question is here, who pays for it? What does it look like? Do states have different programs than, like, a federal mandate? And is it only poor families you focus on, or do you do you make this available to everybody? It's the details, of course, that are the real political problem.

KRISTOF: That's right. And, you know, as you suggest, I think the evidence is that you get far more bang for the buck if you focus on the poorest kids and the most at-risk kids. But to try to build popular support one has to offer it for everybody and that makes it a little less cost effective. But I do think that the evidence is overwhelming that one of the reasons why a lot of our anti-poverty and education interventions haven't been more successful is that essentially we start them too late.

ROMANS: The Heckman equation, the economist from Chicago, it's an investment's in in your column. We can invest in preschool today at about $8,000 per child per year or in juvenile detention tomorrow around $90,000 per child per year. It's pretty simple and should appeal to maybe a fiscally conservative kind of worldview. Do you think can see this now as investment and not of expansion of the nanny state?

KRISTOF: I hope so. And I think that indeed it would be done in that would give states a great deal of ability to craft their own local standards, this kind of thing. And, of course, it's not just about preschool as such, in the sense of getting more four-year-olds. It's really about providing support for parents very early on if they wanted it. Things like literacy programs, you know, encouraging parents to read to their kids, very early. This is a kind of a solid middle-class tradition, but it's less of a custom in homes of at-risk kids who need it the most. ROMANS: Nick Kristof, "New York Times," nice to see you, thank you.

As much of the country struggles to dig out from yet another major snowstorm this week, another one, farmers in California are praying for rain. The historic drought in the west will mean higher food prices across the country. I'm going to tell you how high prices will go, next.

(COMMERCIAL BREAK)

ROMANS: Water, we drink it, we wash with it, and we use it to grow our food. In California, it's running out. The historic drought in the west now felt in grocery stores around the country. On the left, that's what California is supposed to look like, that's one year ago. On the right, that's how it looks today. That's right, two-thirds of the state is classified as being in extreme or exceptional drought. These are the most serious categories. If it continues, it will be the worst drought in 130 years.

This will hurt you even if you don't live in California. Why? California's 80,000 farms produce nearly half of U.S.-grown fruits, nuts, and vegetables, more than any other state in the country. And some of those things that you put in your grocery cart, you can't get anywhere else. And 90 percent of the nation's supply of almonds, pasticcios, walnuts, artichokes, dates, fins, raisin, olives, and pomegranates come from California, many of them water intensive, and water is in short supply.

And it's not just greens. Wine, beef, dairy, could all face price pressures, price increases. So how high could prices go? A vegetable crop specialist at U.C. Riverside told us this drought could hike produce prices 10 percent over the next few months. And lawmakers are preparing emergency relief bills. But what the farmers need now is rain.

No water in California, but everywhere else it seems there is too much snow, heavy snow, and freezing, cold weather. It's affecting much of the country in the last month. Some 30 million passengers faced cancelled and delayed flights in the last month costing flyers $2.5 billion in lost work time and added expenses like hotel rooms and meals. Another victim of the weather, small businesses. CNN's Ted Rowlands has more from Chicago. Ted?

TED ROWLANDS, CNN CORRESPONDENT: Christine, this winter is not only excruciatingly long and uncomfortable, but it is also getting to be very expensive.

(BEGIN VIDEOTAPE)

ROWLANDS: Out of business because of a broken water pipe.

UNIDENTIFIED MALE: Found water just all over the place.

ROWLANDS: It is hard to imagine anyone more upset about this winter than the owner of Rosalle's Italian Cucina in Chicago's Little Italy.

KENNETH MCGILL, CONTRACTOR: He was literally crying when I spoke to him on the phone. He was literally crying.

ROWLANDS: The harsh, unrelenting snow and freezing temperatures forced cities across the country to shell out thousands in overtime play to plow streets, and now many areas are running low on road salt, forcing crews to cut back or pay three times the regular price for the other white stuff now in short supply.

UNIDENTIFIED MALE: Prices have skyrocketed really because of the lack of supply.

ROWLANDS: Several industries are feeling the effects of this winter. Airlines lost an estimated quarter of a billion dollars, according to analysts. Poor auto sales in the Midwest, south, and east are being blamed on the weather, along with some lower retail sales. Even restaurants without broken water pipes are getting hit. At Gyro Mania in Chicago's Greek Town, this owner says his business goes way down during heavy snow or freezing cold.

DEAN MARKELOS, OWNER: I might see about a 40 percent decrease in my carryout sales. We deliver, so I see an increase. Overall about a 25 percent hit.

ROWLANDS: Consumers are also feeling the effects.

JACK GORDON, ASHLAND TIRE AND AUTO: You hit that pothole and the wheel bottoms out and you get a nice dent in the wheel like that.

ROWLANDS: Business at Ashland Tire and Auto in Chicago has never been better.

Good for you guy, but you feel bad for some of the customers?

GORDON: Absolutely, because we're humans, too.

Rosalle's is expected to be closed another month because of water damage. Meanwhile, we all have still at least another month of winter.

(END VIDEOTAPE)

ROWLANDS: And Christine, right now we're in one of the communities running low on that rock salt for the roads. What they're doing is not salting the off-streets. They're salting the main streets, but not these ones. The problem with that, of course, is as the temperatures drop, they become very, very slick. The hope is that this winter will end sooner than later, because it is not only uncomfortable but it is costing a lot of money. Christine?

ROMANS: It sure is. Thanks for that report, Ted.

Planes, trains, automobiles -- no matter how you get to work, school or vacation, the past couple of months have been brutal for travel. So what would you pay to never, never have the weather affect your trip?

(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: I would pay a lot, because I travel all the time. Whatever it would take I would pay it. If there was a monthly payment plan, put me down. Just take it out of my account every month.

UNIDENTIFIED FEMALE: Wow. I would pay quite a lot. Yes. I'd pay $50. I mean, that's -- see, I don't have a car. I rely on public transportation. That's quite a bit, right?

UNIDENTIFIED MALE: I'd pay $100,000 to never have to worry about the weather.

UNIDENTIFIED MALE: Oh, I'm going to -- weather doesn't really bother me. You know? I kind of just deal with it.

UNIDENTIFIED MALE: I would pay 33 percent of whatever I ever had, or would have, 33 percent.

UNIDENTIFIED MALE: Ah I don't think I would. Yes. I think I could deal with it.

UNIDENTIFIED FEMALE: Anything to control the weather. I can't stay too long because e I have class or whatever.

UNIDENTIFIED MALE: This is nothing. Snow used to cover the cars.

(END VIDEOTAPE)

ROMANS: Thanks for joining us this week for YOUR MONEY. Join John Berman and me every weekday morning on "EARLY START." Until then have a great weekend.