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

OlyBLOG is for businesses across Canada, especially in Vancouver / Whistler and throughout B.C. We also hope companies in Alberta and United States (i.e. Washington, Oregon, Idaho, Montana and California) will find OlyBLOG interesting and informative.






AMERICANS DOING BUSINESS IN CANADA
Seattle & Portland Explore Olympic Opportunities

Preparation for the Games:

What it Means to do Business in Canada - as seen through the eyes of our American neighbors in the Pacific Northwest.

Lane Powell, Attorneys & Counselors, founded over 125 years ago and with over 170 attorneys throughout Washington, Oregon, Alaska and London, England, in partnership with the;

* Consulate General of Canada,
* Associate General Contractors of Washington and
* Associated General Contractors, Oregon-Columbia Chapter

CO-HOSTED and SPONSORED two Olympic-related seminars in Seattle and Portland on November 1 and 2, 2005 respectively.

Kudos to moderating attorney Diane Butler, and organizers Katie Hays and Stacy Jensen from Lane Powell for their outstanding efforts. Both seminar dates were well organized and hosted. In fact organizations in Canada could take a lesson from Lane Powell and their co-hosts regarding how to put on an event that isn't simply a money grab trading off of the word "Olympic." Even if I had paid $70 (like I have for other events in Vancouver) the volume of information presented would have been well worth the time and money. I actually came away learning something, plus I had an armful of reference material to keep me going for months.

In Vancouver / Whistler any seminar with the word Olympic in it commands a high-ticket price and attracts a large crowd. The Seattle and Portland events were not only free; they also provided an impressive "take-away" package that included enough information for an attendee to "incorporate and launch" a new international business. The events were hosted in top-notch city centre hotels (Sheraton in Seattle and the Hilton in Portland), and both were well stocked with food and drinks, plus a networking reception avec libations and hor'dourves for everyone. Did I mention everything was free -- drinks included.

If you missed this event you missed one of the most interesting business information sessions in the entire northwest region regarding the Olympics. Also, if you read OlyBLOG.com regularly you know that I attend most Olympic-related functions in Vancouver / Whistler and that I report on the important ones. The Seattle event was definitely one of the winners. Portland was well organized and presented too, but unfortunately it wasn't as well attended even though they have just as much opportunity as Canadian companies outside of Vancouver. (Plus, Americans driving to and from the Games can be enticed to drop into Portland if the city promotes itself properly.)

I always look at both sides of the gold medal, and when you flip this one over there are a few things that could have been addressed differently.

For example, both events were described in Lane Powell advertising as;

". . . what it means to do business in Canada, as compared to doing business in the United States. Attendees can expect to learn and gain insight to the following:

Business opportunities for the Vancouver 2010 Olympics in Canada

Real estate development and construction
Licensing and distribution of goods and services
Key differences in cross-border legal issues between the United States and Canada

Business formation and tax implications
Protection of intellectual property
Employment and immigration issues
Labor and union issues
Sustainability and environmental issues"

For the most part speakers covered everything promised above, but regarding the first heading, "Business opportunities for the Vancouver 2010 Olympics in Canada" it was a little thin. At the very least this topic could have been topped up to increase the heart rate and get attendees in the right frame of mind before they were reminded of the taxation challenges peculiar to Canada. In all fairness to Lane Powell, Brian Krieger from the 2010 Commerce Centre was there to pump up the room in Seattle (not Portland though), but if you have ever sat through one of Krieger's presentations you know he doesn't serve up meat and potatoes information. He rarely explains in detail what specific opportunities are available in Olympic regions. It's designed more for spectators and not business owners - a bit too much hyperbole and light on relevant facts.

It is interesting to note too that some of the seminar panelists didn't exactly cozy up to VANOC. They weren't impressed with how seminar organizers were treated when they wanted to use the Olympic rings on the brochures to help promote the seminars. In one sense it is surprising considering that the seminars were co-hosted by the Canadian Consulate, which is a sector of Canadian government, and an Olympic partner. But not so surprising if you know how VANOC and the IOC monopolize Olympic Spirit. The most vocal speakers asked if there were VANOC reps in the seminar rooms before they began their presentations. They wanted to speak freely, but were a bit cautious until they learned that no one from the VANOC organization was present. As I said above, you missed a good seminar.

My partner, Judy Cardinal and I attended both cities. We split up to cover every presentation and then compared notes between both days. We also made it a point to speak with as many attendees as possible before and after each session to get a feel for their expectations, and in almost every instance they indicated that they would have liked to hear more about opportunities and not just the mechanics of cross border management, taxation and operations even though it was billed as the central theme of each seminar. Many of the people we spoke with had experience dealing with companies in Canada and also with the Canadian government regarding taxes, duties, etc. Needless to say they weren't impressed with their tax experience, in fact one company found it so laborious and expensive to post bonds for heavy machinery that they rarely do cross-border business any more. They shared with us that they were hoping to hear from the panel that these regulations would be relaxed a bit to accommodate the Olympics. Instead, what we heard was that it was going to be business as usual.

Before I go further I should explain that Lane Powell attorneys shared each podium with legal experts from prestigious Canadian law firms in Vancouver and Ottawa. Lane Powell attorneys would introduce a subject and briefly address the American perspective and then turn the podium over to Canadian lawyers who would illuminate in greater detail (sometimes too great) the Canadian issues. The information traded was mostly legalese and it was dispensed as it is written in Canadian law books. Overall the information wasn't as much Olympic-related as it was pure Canadian law fact.

Regarding the "business as usual tax regulations" comment I mentioned above, I explained to a number of American business people who expressed frustration with the Canadian business tax system, that in almost every region, when panic starts to set in and it looks like the region hosting the Olympic event is struggling to meet deadlines, quite often the host country will temporarily enact legislation to make it easier to manage internal and cross-border trade. Smart countries will do it well before they run into roadblocks. This is very important to know because the window is narrow and it will slam shut as soon as the need passes or Games are over. For example, it is no secret that we will have to import skilled trades people from outside of Canada if we want to build Olympic facilities on time. Currently, Canadian immigration regulations make it difficult to move some types of skilled workers cross-border without special consideration. It is not a coincidence that Olympic organizations partner with all levels of government. It makes it easier to change rules midstream when necessary. "When necessary" is usually dictated by impossible-to-meet deadlines that are falling behind. Always keep in mind that the Games start on schedule regardless of whether all the players are ready. The show must go on. Most countries will change laws to avoid being embarrassed on the international stage.

Considering that I heard a number of Canadians state during their presentations that B.C. is booming and that the epicentre of economic strength is shifting from central Canada to the west, and they implied that B.C. won't need help from Toronto, it made me wonder what B.C. was going to do at the eleventh hour when overruns made it impossible to raise the curtain on time for the Olympic Opening Ceremonies. If B.C. isn't looking to Toronto for help then Calgary is the next obvious choice. That's not a bad option considering the incredible gas and oil wealth in Alberta, but I want to be there when the construction industry speakers who were making jokes at Toronto's expense have to get on their knees in 2009 looking for private money in Ontario and federal money in Ottawa.

B.C. by the way, was regarded as a "have-not" province until surprise, surprise, we won the Olympic Bid. Property values have always been higher than most of Canada, but immediately upon winning the Bid our real estate prices smashed through the roof and public confidence soared. It is amazing what winning a Bid will do for a region, although it is also surprising how tenaciously politicians claim it has nothing to do with the Olympics and everything to do with how well they manage the region. More telling though is that if B.C. isn't looking to Toronto for help where will Vancouver / Whistler find capital to keep things on track, especially considering that cement and steel prices are soaring higher than Vancouver's Olympic frenzied real estate.

According to some Canadian construction lawyers at the seminar, B.C. and Calgary will have everything covered (although I don't think anyone has officially told Calgary yet). As a result of our independent research we've seen indications that Alberta is interested, but I also have a message for the American companies frustrated with Canadian taxation and cross-border complexity - stay alert. I want the Olympics to be successful, and I am a patriotic Canadian, but I seriously doubt that B.C. can do it without help from the rest of Canada and also the United States Pacific Northwest. In fact we would be foolish to try.

It's been my experience as a special events director that the least informed you are, the more you struggle as the big event approaches. I'm predicting the Canadian government will considerably relax a wide range of cross-border issues. To begin with, in 2004 John Les, the Minister of Economic Development didn't remove 143,000 regulations from the B.C. books for nothing. He characterized it simply as cleaning house, but in many Olympic regions old regulations are excised so it is easier to write and enact new laws as quickly as possible when needed. Some of those new regulations will inevitably deal with cross-border trade issues and many of them will be temporary. If there was ever a reason to establish a relationship with good trade and tax lawyers on either side of the border it is now. They are the only group capable of keeping up with the revolving door of regulations that will make it possible to responsibly manage cross-border trade as it relates to the Olympics. Surely I can't be the only person in the Northwest who knows this, but apparently I am because I never heard even a blush of it during any of the seminars. Then again lawyers are infamous for not speculating.

I would also implore Americans in the Pacific Northwest to talk to their congress and convince them to work diligently towards more amicable trade relations over our borders. Canadians will meet you half way. It is in everyone's interest on both sides of the border to make 2010 work. Many people don't realize it because they still regard the Olympics the way they did when they were kids, but the Games have not only shifted from being sports centric to a profit centric enterprise, they are also primarily controlled economically by the United States. International sport competition takes a back seat to selling television advertising. When NBC wants Olympic sporting events to be aired during prime time in America, sporting events are time shifted and broadcast when advertisers know they will reach the largest sector of the American television viewing public.

It was absolutely foolish for the IOC to let Greece fall into a $12 billion deficit over the Games, and it is even more irresponsible to sit by as Italy threatens to economically implode in Turin in February of 2006. Considering that the United States controls a major portion of the Olympic market, I am also surprised that Americans haven't managed international issues more aggressively. After all, it will be American shareholders who will lose the most when it eventually becomes difficult to sell the Games because countries are fearful of having Standard & Poor's devalue their debt-rating outlook like they did in Greece shortly after the 2004 Summer Games.

Here's an overview of how Olympic funds have been divvied up in the recent past. In 2004 Olympic TOP sponsorship revenue was more than $700 million. First, the proceeds were split right down the middle, fifty/fifty. Half of it ended up with the Games organizing committees where it was divided approximately two-thirds to the Summer Games, and one-third to the Winter Games. The National Olympic Committees (NOCs are the organizations that manage each country's seat, i.e. COC - Canadian Olympic Committee) received about eighty percent of the other half and the IOC ended up with the remaining twenty percent.

Regarding the NOC shares, half went to the United States Olympic Committee (USOC). This should give you an idea of how important and powerful the United States market is regarding the Olympics. All the other NOCs shared the other fifty percent. Their shares were based on their respective importance in the market.

The IOC literally feels that anything they toss to smaller NOCs is found money and that they should not complain. The IOC also has little regard for the reality that the Olympics makes it very difficult and consequently expensive for SMBs to operate in their own region. Sydney was so incensed with their situation they decided to create independent sponsorships with Australian companies. It was a bold move, and one the IOC criticized extensively as "ambush marketing." Ambush or survival -- it depends on the side of the fence you're on. I like to refer to it as "momentum marketing."

According to WADA (World Anti-Doping Agency) president and IOC executive Dick Pound, in the 80's a wide chasm formed between the IOC, NOCs and local Olympic committees. All parties still feel they are getting a raw deal. The IOC feels that NOCs and local Olympic committees have little regard for the traditional spirit of the Games and the NOCs and local Olympic committees feel they should share in more revenue often believing they can negotiate more lucrative deals independently. Unfortunately a large part of the blame lies with the IOC. Is it any wonder NOCs and local Olympic committees feel this way? The IOC continuously mismanaged affairs and in doing so lost credibility. They are constantly vigilant about local Olympic committees undermining international contracts negotiated with TOP sponsors and long ago stopped considering their "partners" as partners. In some respects it has turned into a free-for-all. Fortunately the chaos is forcing much needed change regarding how the Games are managed. It is why national and cross-border trade is so important regarding 2010.

* We invested two years and a six-figure budget researching Olympic organization relationships with sponsors, contractors, suppliers, partners, etc. The results surprised us too -- mouseover below





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