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SECRETS - Auditor General Report Deciphered


It's hasta la vista time baby, and one thing is assured, if you still think you can just hunker down and ride out 2010, or foolishly hope it will all go away, you will get vaporized. Tax and rent increases alone could sink you, not to mention the challenges of increased regulations and the general complexity of doing business in an Olympic region.

I hate to be the bearer of bad news, but if you think it was bad last year, wait until tomorrow. Hidden costs and your frustration will only increase with time, and if you want to make it through 2010 in good shape you have to proactively plan to manage your involvement today, and turn lemons into lemonade. Throughout all this overrun cost confusion, never ever forget that sponsors like Bell, HBC, RBC, and Rona are doing just fine. It is you who will pay for it, not them, and they will benefit economically at your expense. The secret is in knowing how to optimally position yourself to leverage and capitalize on the energy and excitement.

For those who stayed in the loop here with me - congratulations, you hedged your bet, and "You'll be back," which is more than some media and political insiders are predicting about the shaky future of VANOC CEO, John Furlong.

B.C.'s tenacious "Terminator," Carol James, is on the hunt, and eager to zap Furlong, but don't count him out quite yet. Granted, greed and ignorance fuel his already-wavering cult-like following, but James doesn't have enough support from the community, which she needs if she wants him out. There is a valuable lesson to be learned from the Eagleridge fiasco regarding what happens if you don't get the community behind you before you make your move.

Hedging your bet is an important consideration in an Olympic region, and as evidenced by the recent auditor general report, VANOC did not hedge theirs. As a result they lost one hundred and fifty million taxpayer dollars over the last few years because they did not protect money entrusted to them from wildly fluctuating money markets. Quite literally, Furlong and his team vaporized your money. Maybe instead of firing him, The Terminator should lobby to have the loss come out of VANOC salaries. Fine them. Make them accountable just like executives of other public companies.

To put a finer point on it, I'd like to know ... whatever happened to passing along legacy information that the IOC so frequently and proudly boasts? It's not really a surprise to anyone that VANOC frittered away $150 million tax dollars through poor financial management. And we don't need a poll to tell us that organizations like VANOC are mismanaged. It's a foregone conclusion that has occured so regularly in other Olympic regions that it has evolved to become part of the IOC business model. Here's a short excerpt from my book, "Leverage Olympic Momentum" to illustrate;

The IOC has a history of mismanaging money. For example, [Dick] Pound described that when they [IOC] were given a check for $25 million as a deposit on the $33 million from the Los Angeles television rights, they didn't deposit it for almost three weeks and lost more than $100,000 in interest. Stories like this give you a good idea of what you're dealing with regarding professionalism. The IOC can afford to squander $100,000 in interest, but they go crazy when businesses in a host city try to claim their fair share. I can think of a dozen struggling athletes or community sports centres that could have put the $100,000 to good use. (dp41) . . . end of excerpt

The above happened in the 80's, and as expected, Olympic organizations have learned little, and still have no regard for taxpayers or amateur athletes. Just imagine what our young Olympic hopefuls could do with $150 million. With that kind of money they could be a big step closer to "owning the podium."

I have a project for official Olympic reporter Jeff Lee at the Vancouver Sun. Get out there and ask Canadian amateur athletes and their coaches what they would do with $150 million. I'm curious. Instead of your tag team partners at Global TV wasting time doing a poll in an effort to unfairly influence unaware taxpayers and future volunteers, run a poll that will actually help people understand the reality of our situation. You can't fix it if you don't know it's broke. Reinforcing innocent ignorance is irresponsible, and it harms the community. Taxpayers don't need to know that the vast uninformed population thinks it is OK for VANOC to waste tax dollars. Uninformed people say stupid things when being polled. SMBs need to know how the ramifications of overspending and mismanagement affect them. Funny how we haven't seen Global TV run a poll asking educated business owners what they think. (Hint: it doesn't support their parent company's agenda.)

Personally, I'm pro-Olympic and I love the sporting aspect, but I know some of you aren't as keen as I. The reality though is that the Games are coming, and whether you like it or not you will pay for it.

My signature question has always been;

"If you have to pay for it, shouldn't you benefit too?"

The good news is that in one respect VANOC is ahead of schedule - as in, the 2010 dream is imploding in slow motion before your eyes a year earlier than it traditionally occurs in other regions.

Based on information we collected regarding these other Olympic regions, I predicted this implosion would happen in late 2007. (Technically, and just between you and me, it's the first prediction I missed. Who knew VANOC couldn't even meet the standards of their global peers. These guys will go to any length to make me look bad. lol)

The silver lining of this early disintegration is that small and midsize business will have a better chance to take action to protect their livelihoods. You will still have to scramble like a crazy person at the last minute, but now you have more time to react than your counterparts did in other countries. Unfortunately, you are now also under more economic pressure than businesses were in Athens, Turin or SLC. $2.5 billion and a wasted $150 million 3.5 years out will do that to you.

I've been advising you what to look for regarding Furlong and his team for the last couple of years, and those of you who paid attention are now in a better position to help your companies stem the rising tide. Furlong, like most managers in his position, is way over his head, and the water is rising faster than he and his crack team of experts can bail. It's Katrina all over. Help is too little, and too late. Realistically though, it's not completely Furlong's fault. The IOC business model simply does not support an equitably, and economically sustainable Games. Unless Furlong gets creative and emulates what happened at the Sydney 2000 Games, 2010 will never be a financial success for our host region using the outdated IOC model. You cannot polish a turd. Well you can, but it still stinks. Instead, it is necessary to make major changes in order to mitigate frailty built into the system. Unfortunately, Furlong seriously struggles in this respect, and it grows more obvious every day that Dick Pound was justified in saying that Furlong does not posses sufficient global sophistication to manage 2010 effectively for our community.

Here's the really bad news . . .

It is only going to get worse before it gets worse.

Yes, it will get worse as time moves towards 2010. Another domino has fallen, and if you've read my description of an Olympic domino affect you know this is not good, and that most host regions never recover.

Plans for the 2010 Games are imploding due to mismanagement. You've witnessed it from day one. When Furlong and his posse rode into Dodge a couple of years ago the first thing they wanted to do was clean up the town, so they went after small companies in an effort to hang' em high in the streets. Unfortunately, their plan was ill conceived, and instead of resolving issues, they made them worse. Take the Olympia restaurant on Denman for instance. VANOC challenged co-owner Mosi Alvand to a gunfight at high noon in the middle of the street. Mosi outdrew and winged 'em. Furlong limped back to the ranch with non-life threatening shoulder wounds. (disclosure - my company helped Mosi defend against the attacks, but it's too bad "Carol The Terminator" wasn't also in his corner. Hopefully today she thinks differently.)

Was this any way for VANOC to handle a delicate community issue? Was it prudent to ride in with guns blazing? Apparently not, because Furlong grossly misjudged the loyalty that people in our community have for each other. This type of loyalty is a byproduct of being a have-not province and having to stick together to survive. Furlong is of the elite set so he would not recognize or predict the tenacity. People quickly realized what was happening and vowed to not let 2010 steam roll over anyone.

It was Furlong's first mini implosion and he never recovered. To this day the issue with the Olympia restaurant and others is not resolved. Furlong still gallops by occasionally shooting pistols in the air, while Mosi, his partners and their families live under constant threat in a city also reeling under a skyrocketing cost of doing business. Ahh, Olympic Spirit at its finest. It makes me embarrassed to love the sporting segment of the spectacle as much as I do.

In one mismanaged salvo Furlong established himself as an amateur who has no idea how to resolve issues through compromise. Instead he chose grandiose bashing and intimidation IOC-style, which unfortunately is part of the business model. If it wasn't they wouldn't keep doing it.

Furlong's next fiasco was to drag out the negotiations of a cooperative agreement with local construction trade unions. It was only a couple of months ago that a deal was finally struck. If you recall, a couple of "years" ago I cautioned that if VANOC did not resolve this issue immediately that the empire would begin to crumble. Well they didn't and it is. In 2004, Olympic executives from Australia came to town to warn us about construction timelines. They spoke to a packed house hosted by the Vancouver Board of Trade. At the end of the presentation during question period I asked Andrew Gilkes, Chief Executive of Australasian Access, and a key player responsible for managing Sydney's Olympic program, how important it was that VANOC quickly come to an agreement with the construction sector. He emphatically stated to the large crowd, "It's critical. If you don't do it within a few months of winning the bid you are doomed to fail." This legacy information coming from an Olympic region reputed to have hosted the most successful Games in modern history. Unfortunately, during this period Furlong was still hyping his "Own The Podium" mantra, and probably not paying much attention to the reality of his responsibilities to our community.

Furlong's next chronological catastrophe was to fumble the very first supplier agreement that VANOC negotiated. If you recall, VANOC failed to execute an agreement with a supplier from Michigan. As a result, the installation of new seats at the PNE Coliseum had to be halted - TWICE. Once because the city issued a "stop work order" when they realized that not having a signed contract left our city at risk if something went wrong, and then a second unbelievable time when VANOC failed to pay the supplier, so the supplier stopped work. This was, I remind you, the very first contract VANOC had entered into with a supplier. A telling tome to be sure of what was to come. Delays like this cost taxpayers dearly.

The results unfortunately are now staring our community in the face.

The predictions I made regarding how VANOC manages, or more appropriately mismanages, as our auditor general concurred, are coming true faster than I can keep track. The projection recently tabled by the AG to produce the Games in 2010 has been redefined, and to the average person who has not been paying attention, it looks like it escalated from $600 million, to $2.5 billion. If you've been following this blog and have read my book the latter number is not a surprise. Granted, none of us could predict exactly what that number would be, but some of us knew for a very long time that it wasn't anywhere near $600 million. Don't let silly polls paid for by Global TV (sister company to the Vancouver Sun) or anyone convince you that overruns are not an issue. The average person on the street doesn't have a clue about economics or how Olympic organizations operate, and including their opinion in the mix is a smokescreen to fool the general populace, and small and midsize business owners. VANOC and local media know that if they expect to keep volunteers hyped up it is critical to shield them from the truth. The business and reporting method the IOC uses is flawed respective of traditional standards, but unfortunately it is exactly how the IOC and their Olympic partners play the game.

Have you noticed how cool they all are in the face of the AG's report? None of this is a surprise to them, only to the uninformed, and unfortunately to some local news media. However, not all media are naïve. It was only last month that BC Business magazine printed my view describing why the current Olympic business model is outdated and why it cannot possibly work (July 2006 issue. You can find a link to it at the end of this article.)

Your concern should not be "how" much, but "who" pays. How much is irrelevant, because we all know that our government will not allow Canada to be embarrassed, and they will spend whatever it takes to make 2010 work. It happens like this in all Olympic regions. It's not news. Reporting it at this late date is a smokescreen.

"Who" pays is the big issue here. And the formula is very simple.

If costs are deemed an Olympic expense there is tremendous obligation on the part of the Feds to pick up the tab for reasons mentioned in the paragraph above. Regardless of his current position, not even Stephen Harper could be stupid enough to embarrass our country on a global stage. If it happens on his watch it is tantamount to career suicide. It won't happen, never has, never will and you can take that to the bank. Politicians have egos bigger than anyone, except maybe Tom Cruise.

If it is deemed an Olympic expense then all of Canada will share in the costs. However, if it is not defined as an Olympic expense then the responsibility is shouldered back on to the province, and horror upon horrors, also to the suppliers contracted to build the infrastructure. P3 has a number of complexities regarding the Olympics that engineering and construction firms have never experienced before. Companies that supply products and services to Olympic organizations often do not realize until it is way too late that they are on the hook when the Games are mismanaged. They put too much faith in "perceived" reputation of Olympic organizations, and don't execute due diligence based on history.

If you recall, in December of 2005 I lambasted "Carol Tyra Taylor Banks Lewinski," our minister of finance, when she implied that B.C. was doing so well economically that we could go it alone. I even challenged her to give Olympic sponsorship money back to companies from central Canada, like Bell, so the BOOMING WEST could truly go it alone. I challenged her to put her/our money where her ruby red lips are. Taylor implied that B.C. was so strong, and plans were going so well that B.C. could charge forward without support from the rest of Canada, and with only Alberta at our side. Please Carol, rise up on those six inch heels and tell us again, considering that the costs in the eyes of the public have risen from $600 million to $2.5 billion, and in light of the information I just shared regarding who pays for what, can you still afford to kick Canada to the street? Can you really be that vacuous?

I have a real solution. SMBs will love it, and if Olympic organizations and all their partners can suspend their greed for a moment, they will grow to love it too. Actually, they can love it or leave it, because when the community hears my solution, Olympic organizations will have no choice.

My solution is based on community involvement and ensures that our entire community shares in the profits, and not just absorbs the costs. My solution takes back control of the streets. My solution will ensure that Bell, RBC, HBC, Rona, Petro Canada, and the rest of the Olympic sponsors will not be the only ones making a profit. My solution is based on the premise that the community has access to the world in a manner that grows stronger every day. My solution has been proven by other industries. My solution exploits a loophole in the IOC business model, the part about Vancouver/Whistler not being able to promote the Games until 2008. (Is the IOC kidding and stuck in the 80's? I promote 2010 every day across Canada and around the world since 2004, and as a result I attract almost 3,000 unique views every month to my website - 3 million hits a month! How's that for promotion? What are you doing?)

It will come as a shock to the IOC and Olympic organizations that our community does not need them to promote our Games. And make no mistake; they are "OUR GAMES." The IOC is simply the licensor, and if we the community have to pay for it, they are our Games, and we the community can take control in a similar manner that music fans took control of the recording industry and kicked record companies to the street. We can do it the same way Sydney did, but to a greater degree.

Our community has access to the world through the internet. In a heartbeat we can easily reach the communities and news networks of every city in the world, and in doing so take it upon ourselves to promote and manage the message, and take back our community. Don't listen to Olympic organizations when they tell you to sit back and wait, and that they are the only ones capable of handling such a complex task. Hogwash. They're bluffing. They make their own complexity that you don't have to be part of. If a thirteen year old can bring the music industry to its knees, just think of what your sophisticated, organized company can do. You are not a sitting duck. Quit acting like one.

If Carol Taylor still thinks we can do this on our own without help from all of Canada and its people, she's inhaling bus fumes. It's way too late for Furlong to tour across the country selling Olympic Spirit in places like Saskatoon. If he were smart he would have done it two years ago before the public's perception of costs ballooned. At this point all that Canadians see are federal taxes rising over something Vancouver and Whistler will be the primary beneficiaries. Can you blame them? The model is flawed.

The only way to make this work is for the community to rally together at a grassroots level. As you can see from the AG report, you cannot afford to rely on anything coming from VANOC, our governments, or Olympic sponsors like Bell, Rona, or the RBC. Write your own rules.

Ladies and gentlemen, it's only 2006, but already, you are on your own. VANOC certainly does not have time for you while they run from "Carol The Terminator." You have to fend for yourself.

The solutions we propose are proven, and effective, plus they are simple and affordable.

Contact us to learn more . . .




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