Casino

Movie futures exchanges

Another case of legalised gambling or a sophisticated tool that will help to unlock more financing, manage risk and bring greater transparency to a murky marketplace? No, we’re not debating the merits of derivatives, collaterised debt, short selling and all the other tarnished instruments of economic Armageddon. We’re talking about an entirely new – and no less controversial - trading mechanism concocted by Wall Street: film futures.

To the consternation of Hollywood’s major movie studios as well as the theatre chains that showcase their films, US regulators have given tentative approval to two online trading forums that would give speculators a way to bet on expected box office receipts.

Each proposed exchange would operate in much the same way that futures markets operate to reduce climate risks for commodities. Just as worried sellers of orange juice, corn and pork bellies can lock in prices ahead of time, so film producers could sell contracts on movie projects that looked doomed to bomb at cinemas. Anyone buying those contracts would reap enormous benefits should the film then do better than anticipated.

The official Hollywood line, as voiced by the Motion Picture Association of America, is that open markets based on ticket forecasts would lead to harmful manipulation. However, at least one studio, Lionsgate, disagrees: “We believe a market in domestic box office receipts would substantially widen the number and breadth of financing sources available to the motion picture industry by lowering the risk inherent in such financing,” stated vice-chairman Michael Burns in written testimony. (Burns once devised the Hollywood Stock Exchange, a popular online site that lets you place virtual bets on movie performances.)

But, as always in Hollywood, there may still be a couple of plot twists before Cantor Fitzgerald and Veriana Networks are allowed to trade contracts among retail and institutional investors. Days after receiving a green light from the US Commodity Futures Trading Commission, movie futures found themselves embroiled in the financial regulation fervour now sweeping through Washington. Buried in the latest bill designed to curb the derivative markets is language that would outlaw any form of box office trading. The only other major commodity that has been similarly banned from futures trading is onions, following a national protest in the 1950s by farmers who accused traders at the Chicago Mercantile Exchange of creating absurdly low prices for their crops.

Of course, most investors have always regarded the movie business as a crapshoot anyway, and are perplexed by Hollywood’s tears. One obvious solution is that the City of London, a place crying out for a little stardust right now, could off er a happy ending.

Logistical tool

Onboard nanosatellite tracking

With so much water covering the planet, keeping track of even the largest oil tankers is a surprisingly difficult proposition. Which is why the Australian government was as horrified as the rest of the world when a Chinese coal freighter known as the Shen Neng 1 unexpectedly ran aground on the Great Barrier Reef recently, endangering the delicate ecosystem with leaking oil and dangerous anti-fouling paint.

Beyond the environment hazards, and the dangers of pirates, there is also a very practical reason for monitoring ship traffic. Global trade depends on a vast interlocking supply chain of goods and materials that is highly dependent on the vagaries of weather. A day late can cost millions.

Starting this month, a Canadian-based space-hardware company with offices in Aylesbury, England hopes to plug this information hole for the benefit of both marine authorities and business clients. The solution from Com Dev International, of Cambridge, Ontario, is to tap into the automatic identification system (AIS) transponders that are already on all ships with a gross tonnage of more than 300 tons.

Around 70,000 vessels worldwide already use surface-based AIS systems to broadcast their identity, location, course and speed to other shore-based transmitters within a 50 nautical mile radius. (The shipto- ship range of these very high frequency signals is even shorter at 20 nautical miles). Using a demo “nanosatellite” that was launched in April 2008, Com Dev has shown how that range can be extended to more than 5,000km, enough to span the widest oceans without any changes to onboard equipment or procedures.

Several years of research and development have also led to technology W capable of “de-colliding” the signals received simultaneously from many vessels, resulting, claims Com Dev, in “a high probability of detection”. Put one of these tiny low-orbiting satellites just 600km– 800km above the polar icecap and you can detect AIS signals from anywhere on Earth.

When the AIS market is fully developed it could be worth more than €75m, estimates Peter Mabson, president of ExactEarth, the Com Dev subsidiary in charge of this new frontier business. With that prize in mind, Com Dev is planning to launch three AIS microsatellites in 2011, each weighing no more than 6.5km, at a total cost of around €30m. The ultimate aim is to have six in orbit to compete with its main competitor, Orbcomm of Fort Lee, New Jersey. It is a business not without high risks of its own: Orbcomm has already lost contact with three of its satellites.

Millionaires’ playground

Costa Navarino

One of the minor miracles of Greece is that, even after decades of mass tourism, there are still unspoilt areas of staggering beauty to discover – the advantage of having more than 13,000km of coastline. Even so, it’s surprising that the mainland province of Messinia has managed to remain under the radar for so long, blessed as it is with a lush landscape, pristine beaches and a history that’s rich even by local standards.

But Messinia’s days as a sleepy backwater are finally coming to an end. March saw the opening of the first phase of Costa Navarino, a €1bn high-concept luxury development covering 1,000ha. Centred on Navarino Bay, the site of a famous 19th-century naval battle, the project will eventually span four sites and include five high-end hotels, two golf courses and a 2,000-seater conference centre, as well as a plethora of ultra-exclusive private villas. It sounds like a recipe for a cultural and aesthetic calamity – yet despite its size, Costa Navarino is being billed as the last word in locally and environmentally sensitive development. Of course, every new resort these days touts its green credentials; few, however, go so far as to include a centre for climate change study (the Navarino Environmental Observatory, co-founded with the University of Stockholm).

And the mission statement of project developer Vassilis Constantakopoulos – “to promote Messinia while preserving its natural beauty and heritage” – also looks to be more than just an empty promise. At Navarino Dunes, the Ionian Sea resort that opened in May, two luxury Starwood hotels have been modelled on old Messinian mansions and traditional rural houses, the spa treatments are based on ingredients discovered at the nearby Mycenaean site of Nestor’s Palace, and the children’s centre features classes in Greek mythology and olive-oil production.

The second phase, due to open further down the coast in 2012, will add another pair of high-end hotels, including the first European venture from Asian spa specialists Banyan Tree. Here again discretion will be key, with the properties designed to be invisible from the elegant, French-style town square of neighbouring Pylos and its huge, crumbling Venetian fortress.

Also in the pipeline are a villa complex in the hills above Pylos and a resort on the east side of the Messinian peninsula near the city of Kalamata, both scheduled for sometime after 2020. Hopefully by then there will be more than the current handful of scheduled flights into Kalamata – but for now the new main road across the region should make transfers from Athens more comfortable while cutting the journey time to a manageable two and a half hours.