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Regional Business News
regarding the 2010 Olympics
in British Columbia, Canada

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"Leverage Olympic Momentum"
click to purchase the book

Published June 2006

HIDDEN OLYMPIC COSTS
IDENTIFY - AVOID - FIX ...
If you have to pay for it,
shouldn't you benefit too?

It costs more to live in, and do business in an Olympic region. Prices rose rapidly during the first three years of Olympic frenzy. Everything ramped up; including property values, taxes, staples and supplies. On top of that we had to deal with exploding world prices for cement, copper and gas, and a too strong dollar.

On the upside we have low interest rates, a good job market, and people are happy and confident.

The challenge is that you see all this Olympic activity around you, but you probably don't understand what is happening. There are too many loose ends, and already way too much controversy. If you expect to leverage Olympic momentum you have to learn to manage all the carnies, animals, and clowns that come with the 5 ring circus.

If you recognize Olympic issues before they arrive you will have more time to plan how you're going to either leverage, or minimize them.

Unfortunately, in most Olympic regions, the tail often wags the dog. Your job is to reverse this role.

Most people want so badly to make the experience good for Olympic organizations they ignore what makes it good for them. The reality is that we are the Olympics, and you, are included. If it's not good for you, it's a failure for our community. It might already seem like costs are out of control, and that it's too late to do anything about it, but it is not. All you need is a little new information.

The info we share here is not only unique, but you're learning about it before the Games hit town, and that in itself gives you an advantage. Most people in past Olympic regions figure it out only after the Games are long gone and a big tax bill lands in the mailbox. The more you know the better you will be able to make the Games work for you and your community. Even if you don't have anything to sell to Olympic organizations, there is still abundant opportunity.

The challenge is that Olympic organizations work hard to make themselves the centre of attention, and as you've seen at the last three Olympic events in Salt Lake City, Athens and Turin, they also racked up respective deficits of $1.2 billion, $12 billion, and "still counting."

Hidden costs are hard to identify, but the community has to learn to manage them if they expect to succeed over the long run. The old Olympic business model hasn't worked for a couple of decades. Calgary did all right in '88, but probably not as good as you might think. They negotiated a good television deal, which got them off to a strong start. And the only reason Sydney did as well as they did in 2000 was because the Aussie COMMUNITY put their own spin on it and managed the IOC very aggressively. Quite unlike anything Vancouver / Whistler is currently doing.

It is only the very rare region that benefits economically and the successes are spaced quite far apart. Olympic challenges broadside most regions, and by the time you realize what happened, it's too late. Vancouver / Whistler must adpot a more global perspective in order to leverage 2010 to its full potential. It is impossible for community business associations, for example the chamber of commerce, and also for "watchdog" groups to have any effect without the support of everyone in the community. However, make sure you know who to align with, and who will work to protect your community and company.

The first hidden cost wake-up call for Vancouver / Whistler arrived on June 12, 2006. Mike Greer, a highway rock scaler and blaster was unfortunately killed in a construction accident while working on a new Olympic road in the Callaghan Valley. Our most sincere condolences go out to Mr. Greer's family, friends and colleagues.

I hesitate to tie his memory to this issue, but if it wasn't for Mr. Greer's untimely passing, we would still not have a clue our taxes are picking up the tab for what is clearly an Olympic expense. As you'll see below, it is only the tip of the iceberg, and it makes me wonder what else VANOC CEO, John Furlong is slipping by unnoticed. I trust that mainstream news media, with their big budget teams, are working hard to uncover other incongruities.

** This article was published October 19, 2006, and on September 22, 2007, The Vancouver Sun reported it was possible hardcore drugs were involved respective of Mr. Greer.

Olympic events like ski jumping and biathlon will take place at the Whistler Nordic Centre (which is being built specifically for the 2010 Olympics in the Callaghan Valley). VANOC revealed after the accident that the brand new road Mr. Greer was working on, that only services the Nordic Centre, is for some convoluted reason not considered by VANOC to be an Olympic project, and therefore not an Olympic expense. Local news media barely challenged this ridiculous notion even though a month pervious we heard ad nauseum about the Eagleridge Bluff protest, which by the way, was another hidden expense -- protest police and gear are paid for by you.

You might not realize it, but protests create mega advertising opportunities for mainstream news media, which means they have great incentive to promote protests, as opposed to investigate an issue like the Nordic road where they only invest time and money sourcing information.

What would you rather do, make it or spend it? Me too.

After the Nordic Centre road debacle you now know exactly what people are talking about when they criticize VANOC's lack of transparency. It is only one small example of an Olympic organization deferring costs to taxpayers without their knowledge.

Unfortunately, if you don't do something to change the way Olympic organizations do business you will have to pay for a very long list of hidden costs over the next decade -- and probably a lot longer. Even more unfortunate, over the course of time local news media will try to outdo each other and consequently become part of the problem, not the solution. One seasoned local media pro, whom I can't name, but who plays a highly visible role in Vancouver, recently told me news media feel no responsibility to protect our community. I believe it, especially considering some newspapers will eventually become Olympic sponsors. [The Vancouver Sun and Globe & Mail newspapers announced their paid affiliations with the 2010 Olympics over a year later in 2007 and 2008 respectively]

News media with sponsor interests use "journalistic integrity" to back a thinly veiled position of unbiased intent, but I have to ask, where was their community loyalty when they worked hand in hand with developers and realtors to convince the naive that obscenely inflated house and condo prices (as a result of Olympic gouging frenzy) are good for the community?

Unfortunately, journalistic integrity in Olympic regions often goes to the highest bidder.

Newspapers become Olympic sponsors just like Visa or RBC, and when they do, they are pressuried to sign legally binding agreements stating they cannot take action detrimental to Olympic organizations, including reporting news that hurts the Olympic image. Makes sense to me. If you're going to partner with someone and be privy to their strategies and secrets, it really wouldn't be appropriate to expose your partner if you saw them do something wrong. Would it?

A couple of local media pros criticized OlyBLOG.com when we brought to light that their news companies put Olympic interests in front of the community's interests.

We think our community should come first, then Canada, then Olympic sponsors. If the BIG guys make a profit off the Games, then small and midsize companies should also benefit proportionately. It doesn't seem like a lot to ask. What happened recently in SLC, Athens and Turin is not acceptable.

After the accident in Whistler almost two weeks ago I fully expected local media to do a feature about "hidden Olympic costs," but nothing of any consequence showed up in media in the last ten days so I pulled a few appropriate "hidden cost" excerpts from my new book, Leverage Olympic Momentum. It will give you an idea of what you will likely have to deal with and pay for regarding 2010. The following examples occurred in other Olympic regions and there is no indication or reason to believe it will not happen in Vancouver / Whistler. In fact, as you now know, it already has, right under your nose.


Own the Podium ... or own your home and business?

Hmm. Think about that as you read this;

page 65- LeverageOlympicMomentum.com ...
The latest reports in 2006 bumped the Salt Lake City deficit up to $1.2 billion (up from $400 million originally reported by the government). The reality is that taxpayers pick up the overrun. It rarely becomes public knowledge because politicians and Olympic organizers know how to bury overrun costs. As you will see in your region (GVRD), there will be many arguments, protests, and court battles to try and decide exactly what an Olympic cost is, and what taxpayers should pay for directly. It is your job to separate your reality from their dream. (si1;cbc1)

page 214- LeverageOlympicMomentum.com ...
Security companies soon grasp they can often realize a higher net by contracting privately to businesses and homeowners rather than pursuing Olympic contracts. Consequently, it puts added pressure on local police to pick up the slack. Increased police involvement means costs go up. It's common for highly trained, armed police officers to be assigned duties more suitable for a theatre usher. In Sydney, 4,875 police officers were hired at $174 million. Five hundred police alone were stationed at the athlete's village. Four thousand five hundred private security officers were hired along with 230 trained canines. Three thousand five hundred casual security staff was also recruited from fire departments, lifeguard associations, and state emergency agencies. Background checks had to be performed well in advance of anyone being considered for security positions, whether paid or volunteer. All aircraft were prevented from flying anywhere near the Olympic perimeter. It was primarily established to prevent terrorist attack, but it was also to prevent ambush marketing, which meant taxpayers paid sponsors to protect Olympic monopolies - another hidden cost. (hjl33)



Ground Contamination False Creek - published March 2006

page 228- LeverageOlympicMomentum.com ...
Here is what we do know regarding ground contamination in Vancouver as of early April 2006; the soil where the Olympic Village is to be built has been extensively tested. According to Jody Andrews, Project Manager for the Southeast False Creek project, they drilled hundreds of core samples throughout the site. The samples revealed a wide variety of contaminants spread in a variety of areas on the property, like hydrocarbons (derivative of petroleum), waste from a smelter, by-products from a wood mill, and other miscellaneous industrial waste. The contamination reaches down in some places to a depth of nine meters, almost three stories deep. The land was used industrially from the early 1800's, so you can image what has been dumped there over the last 100 years before environmental regulations were in place, plus from unscrupulous companies that made midnight runs to the deserted property in order to illegally empty their tanker trucks of poisons like lead, arsenic, or who knows what else. It happens every night in all big cities and this area is an easy target. Over the last 100 years there have been "sawmills, foundries, shipbuilding, metalworking, salt distribution, warehousing, and a municipal public works yard" on the land at different times. In order to build out the Olympic Village area, approximately fifty acres, nine meters deep has to be excavated, and either treated onsite, or hauled to another location for safe disposal. Would you want to live on this land? In Sydney when they undertook a similar soil remediation task in the Homebush Bay Olympic site area, costs escalated out of control, plus, it created untold health problems for people living and working in the vicinity. Digging up fifty acres of contaminated soil three stories deep puts an incredible amount of dust in the air. Plus, the property borders the Pacific Ocean, which means not only is there an impact to air quality, but to water too. Residents in the Homebush Bay area complained of increased asthma, bronchitis and skin rashes, plus there was evidence of chromosomal damage. Health care costs increased proportionately, which meant another hidden cost. The city did not take the concerns of residents seriously until international media started reporting the information. Andrews freely admitted we would not know what lies in the ground until the entire site is excavated. Quite literally, it is anybody's guess what it will cost to make the site safe for residents. This particular piece of land also has a very unique microclimate, which contributes to the dispersal of air contaminants. Prevailing winds in the summer are from the west, off the ocean. During the day as the air over the land heats up it rises and the cooler ocean air moves in to displace it. When this happens the contaminants in the air are pushed up and into the valley. In the evening the cycle is reversed, but to a considerably lesser extent. Basically, the microclimate sets up an ebb and flow system that will spread the contaminated dust among millions of residents. Homebush Bay had a very similar challenge. During a public forum, when I asked Andrews if he knew about Homebush Bay, he looked puzzled and said, "No. Never heard of it." (cv1;cf1)

[Jody Andrews resigned in January of 2009 during a period of intense pressure regarding financial controversy respective of the Athlete's Village.]

page 238- LeverageOlympicMomentum.com ...
Olympic organizations partner with universities for a number of reasons, and another reason is for access to a volunteer workforce that is at least eighteen years old. University students are hard and trustworthy workers. Sun Tzu's old, "Keep your friends close and your enemies closer" tome is exactly what Olympic organizations do. They know university students are independent thinkers, but they also know they need them to work within their system. What better way to keep them on your side then by offering Olympic curriculums on their campuses? It is a brilliant strategy because not only does it create an educated workforce with built in Olympic ideals, but also the students pay for the education and then act as volunteers. It is a perfect closed loop system. Plus, by keeping the students under their wing they reduce the likelihood of critical debate regarding Olympic culture. (hjl82)

Forcing university students to comply through a written agreement is almost impossible, but suckling them creates a relationship that borders on maternal.

University administrators enter into agreements with Olympic organizations on a number of levels that include "education, training, sponsorship support, value in kind, workforce, facility and equipment leasing, rental space," etc. Universities also create relationships with media by supplying trained students to do research for background material for accredited journalists during the Games. Students also develop and manage internet outlets throughout Olympic facilities where spectators can send messages to athletes. Students usually work as volunteers, but in some instances are paid a token salary. In many cases they also earn credits. (hjl83)

There is no doubt some university students will benefit from the relationship, but the tradeoff is that the entire university is muzzled in the process. It will however present an opportunity for some SMBs. Obviously, not all students will enroll in Olympic study courses, and the large numbers that don't will have relationships with their peers who have enrolled. This relationship can support a transfer of Olympic knowledge invaluable to independent contractors. Knowing how the system is set up and managed internally will give shrewd SMBs a jump on the competition. Universities pride themselves on offering free and open debate on all matters, but when Olympic culture is introduced the freedom to explore and expound openly upon certain trains of thought is impeded. Some students find it unconscionable, especially when they realize the university will place undue stress on their education by putting Olympic needs over the needs of the student body. It doesn't take long to sink in when costs escalate and students are evicted from dorms or forced to cram a three-month semester into eight weeks, etc. A university can generate revenue in the million-dollar plus range as a result of leasing rooms and sport facilities to Olympic organizations. Students often take a back seat. Olympic organizations not only directly sway students they also influence media through professors. By doing so they legitimize their position. What better way to get the media to believe than to hear it from a respected academic? (hjl84)

Every hour university administrators and academics spend managing Olympic projects taxpayers pay for, which, as you probably guessed, is hidden and not included in budgets. SMBs will always be caught in the middle due to the inherent nature of the Olympic business model, which primarily represents big business interest. When SMBs create a new Olympic business model, invariably they will promote some form of critical discourse in order to demonstrate that small and midsize businesses have a place at the table too. And also inevitably Olympic organizations will launch a campaign to undermine the SMB's position. Olympic organizations cannot allow anyone outside of their circle a toehold. If they do thousands more waiting in line will move up an inch. Monopolizing and controlling the market is critical to their success. Olympic organizations have a long list of strategies to turn the public against anyone who criticizes or threatens their revenue flow. They work slowly and methodically in collusion with select local media to make the public feel that even legitimate criticism regarding doping athletes, cheating judges or bribery scandals are off limits for anyone outside of their realm to deal with or even discuss. Olympic organizations work to turn criticism of their operations around to make it look like it is criticism against all athletes and even the country. They target the less educated and most gullible and position criticism to sound like treason. Sponsor newspapers play an import role in the manipulation.

page 241- LeverageOlympicMomentum.com ...
In some Olympic regions the social impact is so great that many governments do not have the resources even after the Olympics leave town to make up for the shortfall. It knocks communities into a slump that can easily last ten years, if not more. Hidden costs are always a challenge. Olympic organizations and their partnering governments concoct complex strategies to defer and divert costs so taxpayers and SMBs have no idea how to differentiate between an Olympic expense, and legitimate costs to operate a community. Olympic budgets often only include "direct costs," but not "indirect revenues." In other words, they take more than they promised and return less than they generate. What else is new? The difference is that too many people don't expect Olympic organizations to operate like this. They hold them up to higher standards, and by the time SMBs and taxpayers figure it out it is too late. The Olympic spectacle simply moves on to another region. As you have seen throughout this book, Olympic organizations expect SMBs and taxpayers to put their businesses and lives on hold while sponsors reap huge multi-billion dollar benefits. During the 2000 Games in Sydney the Olympic organizing committee brought in 3,500 buses from across the country to work the Games routes, but they had little if any regard for the communities forced to live for almost five weeks without their transportation systems. It affected everyone around the country including the disabled. VANOC is considering using 'mini-buses,' which make up a large part of municipalities' handicap fleets. When it comes time to tally up the expenses, the cost of removing the buses from current transportation infrastructure usually isn't included. Communities end up paying for it themselves. (hjl62)

Unbelievably, in Salt Lake City the same thing happened again, except this time it was even worse. SLC was so poorly managed they couldn't source enough buses and at the eleventh hour scrapped plans to bus fans across the Wasatch Mountains between SLC and Park City. Instead they had people drive personal cars, which means they had to clear cut forest to provide last minute parking lots. There is tremendous potential in this area for smart entrepreneurs.

Page 242- LeverageOlympicMomentum.com ...
Here's another example of a hidden cost. Government workers are often assigned Olympic related work and are awarded a bonus for their efforts. Again, it is pitched as an "once-in-a-lifetime" opportunity. Most people don't realize taxpayers cover the cost of government workers who work the Olympics while sponsor organizations make huge profits. Instead of spending time on government matters they log time and use government supplies for Olympic projects. The rationale is twisted, but in the past, governments tried to justify the expense by saying government offices close down during the Olympics anyway, so civil employees have to do something. Government staffing for a summer Games could approach $2 million, so it's quite substantial and would not be included in the cost analysis. These numbers refer only to municipal governments. At a federal level the hidden contribution could easily be in the neighborhood of $500 million - all unreported as an Olympic expense, which means taxpayers cover it directly. Many governments also try to convince their workers to take holidays or a leave of absence during the Games, preferably a leave because then they don't have to pay wages. It also takes pressure off the transportation system. More and more governments set up civil employees to work from home during the Games. It means investing in hardware, connections, and training that is also a hidden cost. It is virtually impossible to travel during the Olympics and companies that can't afford to close down have little choice but to make arrangements for their staff to telecommute. Unfortunately it is not a solution for companies that are primarily blue collar and hire manual laborers. It only works for knowledge-based companies. Universities and many schools also close down for the duration. Parents had to fend for themselves if they needed day care. Costs like this are also hidden. (hjl69)

page 244- LeverageOlympicMomentum.com ...
In Sydney they were far below recruitment levels (7,000 short a few months before the Games) and looked to the welfare system to boost numbers. Consequently, welfare recipients were 'forced' to search out Olympic-related jobs or they would have their payments cut. They were ordered to devote at least fifty percent of their time looking for Olympic work. Basically, it was free labour that was also never included in the Olympic cost analysis and became a hidden cost paid for by taxpayers. I've mentioned repeatedly that one of the reasons Olympic organizations partner with governments is because it makes it easier to change rules and regulations midstream. Workforce recruitment is one of those areas. There is sometimes a penalty if welfare workers go home to a region with elevated unemployment numbers, but in Olympic regions that rule is often suspended in order to attract workers. However, as soon as the Games are over the workers have to leave and go back where they came from. Many do not have the financial means to do so and it causes tremendous hardship on their families. Governments occasionally foot-the-bill for the move, but again it is not reported as a cost. It is hidden. Ironically though, suppliers wanted workers who already had jobs and were motivated. They wanted good workers with good records and did not want people they deemed to have an attitude problem. Consequently, many welfare recipients are not hired. (hjl72)

page 245- LeverageOlympicMomentum.com ...
In Sydney, rural fire service volunteers were given free board during their duties, but they were expected to pay almost twenty dollars for breakfast. Olympic organizations have also looked to the government, their partners, to offer last minute incentives. For example, in past Olympics for every day a civic employee volunteered for an Olympic project they were awarded the same amount of days off - another hidden cost picked up by taxpayers. (hjl74)

page 249- LeverageOlympicMomentum.com ...
Everyone in an Olympic region gets in the ticket-selling game including students, parents and the school system, whether they want to or not. The public school system in most countries is already stressed, and adding a heavier workload severely impacts their primary mandate, which is to improve the educational experience for children. Olympic organizations don't see it that way. They see the public school system as an organized association with a captive audience. It's one thing for universities to get involved, but at the public school level it causes a myriad of problems that aren't easily resolved. To begin with, students in the public school system are younger and cannot take on the more complex administration workload that a university student can assume, which means it is passed on to teachers and parents. (Taxes pay for teacher's wages, which is a "hidden cost") Students can however be counted on to do the grunt work. Inviting the Olympic enterprise into the school system also opens the doors for corporations like McDonalds and Coca-Cola. In Sydney, Olympic education kits sponsored by Coca-Cola and IBM were distributed to schools as early as 1995. It was a sophisticated branding project to get students tuned into Olympic ideology and subsequently introduce them to Olympic commercialism. The programs were presented using an educational sub-text, but in reality provided a direct channel to impart the associated brands into the young budding psyche. School documents were branded with corporate logos, and students did literacy and numeric tests with Olympic themes. When interviewed by media one young student thought there should be a "test to see how much McDonald's you could eat in an hour." The imprinting plan worked incredibly well. Visa also got in the game and presented an "Olympics of the Imagination" program. The idea was to have kids create art that symbolized what the Olympic motto, "faster, higher, stronger" represents. The contest was featured in a regular Herald (newspaper) insert called "Olympic Insight." Teachers managed the competition in the classroom and as Lenskyj pointed out, through default became "Visa and Olympic volunteers." Art contests were also promoted that attracted 54,000 entries. In order to enter, students had to give up their copyright and agree to let Olympic organizations use the artwork for free to promote the Games. The artwork was reproduced on t-shirts, mugs, pins, ties, etc. It generates considerable revenue that is channeled to poorer Olympic countries. VANOC used a similar contest to entice artists to design their logo (Ilanaaq the Inukshuk), except in Vancouver artists had to actually pay a fee upfront to enter the contest. (hjl80)

page 265- LeverageOlympicMomentum.com ...
Vancouver/Whistler already announced $110 million in overrun costs in early 2006. The challenge for SMBs and residents is to carefully screen what Olympic organizations claim as being either an Olympic or a community expense. They often convince taxpayers to pick up the tab directly for something that is solely an Olympic cost. Sponsor shareholders have tremendous influence in this regard, not directly, but indirectly through the company's board of directors. There is great incentive to pass the bill on to the community. Even though taxes pay for it the accolades go to the sponsor when the world sees what an incredible job has been done with 'sponsor' money. No one around the world has a clue that local taxpayers subsidized it. Sometimes even taxpayers don't know. "Double-dipping" is a common strategy used to find more funds. A frequent ploy is to agree to use an old structure for an Olympic venue. Olympic organizations agree to rebuild and fix it up, but what they don't say is that they expect the municipality to pick up costs for things the community will benefit from in the future. In other words Olympic organizations will upgrade the building in only areas they want to use for sport competition, or as a backdrop for television, or that provide an operational value like freight elevators, parking, etc, but when it comes to spiffing the place up in public washrooms or concession areas, that has to be paid for by taxpayers. Every time this happens out come the protest signs. Each time taxpayers protest, renovations and construction slow down and sometimes stop. Each time it does the whole schedule gets pushed back. When schedules get pushed back costs increase because third party suppliers get held up. When they get held up their costs increase. It sets off a chain of events that trickles all the way down the line. Suppliers, possibly you, who are at the end of the line, end up having any small profit they thought they might generate disappear. Once SMBs sign Olympic contracts they are locked in. Contracts are almost exclusively based on a fixed delivery price with no contingencies to renegotiate. Don't even think of bailing either because if you do, Olympic organizations can easily turn it around to make the public think you unfairly backed out and left them high and dry. And remember, sponsors often supply 'value in kind' products and services in house, but they often only provide the products and services they know they can deliver at a reasonable cost. When they sub-contract to an outside company, possibly yours, watch for signs that they are only looking for a third party to provide a product or service that will be extremely hard if not impossible to deliver profitably. If you doubt this happens try to negotiate a contract with an escalation clause to cover circumstances beyond your control. If you're successful, you'll be one of the few to do so. I'd like to hear from you if it happens, but unfortunately you'll be prevented from telling us about it due to the stringent confidentiality agreement you were forced to sign when you bid for the project. (hjl95;tw48)



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