OlyBLOG - strategies to help small & midsize businesses (SMBs) profitably leverage Olympic momentum
OlyBLOG HOME

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.






#1 Industry to Profit
from the Olympics

The IOC's Best Kept Secret - CHECKBOOK JOURNALISM

Some companies make a fortune off the Games. And they do it repeatedly in almost all Olympic regions. They make billions of dollars right under your nose and you probably don't even know it. Unfortunately, you should, because they often do it at your expense.

When the Bid is won everyone is excited about the wealth the Olympics brings to a region. Politicians and boosters go on ad nauseum about how good it is for the community. Everyone starts salivating over the prospect of cashing in on his or her own little pot of gold. In some respects it is true, but for most small and midsize businesses, unless they are proactive and innovative, all they see are higher costs of doing business, increased rents, taxes, and expensive confusion.

The #1 industry that collectively makes billions off the Games is media (next to sports-related and construction companies of course). Anything media-related is a veritable gold mine, especially if it is mainstream news media like newspapers or television. In fact, the absolute #1 media company to make a fortune off the Games in Vancouver will be foreign-owned NBC television. They sold advertising during the 2004 Games in Athens to over 4,000,000,000 viewers. That's a lot of zeroes. Thanks to NBC, 4 BILLION people regularly connect the Olympics with companies like McDonald's and Visa.

You're probably thinking, 8 billion eyeballs? I thought Greece had an Olympic debt of $12 billion dollars? How could an entire country go into grievous debt, while one company alone stuffs their pockets to overflowing? It happens because gullible citizens and SMBs let it happen. You do it because they lead you to believe that you are going to share in the booty. News Flash! They are not going to share anything with you - ever, unless you literally force them to do so. Life is a negotiation, not a free lunch. The Olympics is the government, and by their own admission, they are very tough negotiators. Frugal does not begin to describe their attitude. If you expect to profit, you must be innovative.

The #2 news media company to reap huge rewards will be CTV - they won the television broadcast sponsorship and a license to print dough as a result of agreements with NBC and VANOC.

The #3 company in the media industry to make a killing is your trusted local newspaper, or in some cases, plural, as in, newspapers. (We still don't know, July 06, which newspaper it will be.) Locally, and by far, local newspapers have much to gain. The surprising part of this little union is that not only do they make a killing at the expense of the community; they surreptitiously get in bed with Olympic organizations to do it. Some are doing it already.

Olympic organizations like VANOC literally need to partner with at least one local newspaper in order to manage their event efficiently. So far they have not devised any other way to do it. I offer a viable solution in my book, but it is so forward-thinking that it might be years before a local Olympic organizing committee (like VANOC) is brave or progressive enough to even consider it. Remember, Olympic organizations continuously operate on the brink of confusion, and it is often all they can do to keep their head above water, let alone develop a new lifesaving device.

Based on past history of other Olympic regions, and public responses to significant overrun challenges that Vancouver/Whistler is already experiencing, it looks like VANOC is approaching an operational state where decisions are influenced by panic. It doesn't help that the "so-called experts" (blind leading the blind) in Turin recently stated in a post-news conference that VANOC has seriously underestimated what it will cost to build Olympic facilities. Unfortunately, Olympic VIPs in Turin do not know any more about what happened to them today, than they did while they were immersed in their self imposed chaos. Taking their advice after the fact is an exercise in futility. You may recall that only two months before their Games they threatened bankruptcy, and that if the Italian government wouldn't bail them out, they would shut down the event. Previous to that, the Turin Games CEO threatened to quit if he didn't get more cooperation. It's not a good idea to take advice from IOC puppets guilty of holding their community up for ransom.

If you want to know how to host, or not host, a special event, watch as it is being "advanced (built)." Patriotic and commercial pride prevents people in Olympic regions from sharing after the fact what "really" went wrong. Instead they concoct a cluster of platitudes to cover their sins of greed or incompetence. Have you ever known an executive or politician, or even your boss, to take responsibility for, or fully explain the mistakes they made? What makes you think that anyone in their right mind, especially if they still have a career or legacy to protect, will tell you what "they" did wrong on an Olympic global stage? Give me a break. If you also think it will happen in front of television cameras you need a course in psychology. Liability issues alone are cause enough for them to point fingers and hide the real reasons their Games went into economic overtime.

All those who are prepared to commit career suicide, please take one step forward. That's what I thought. One of the main hooks Olympic organizations use to lure high ranking executives to work for them is the promise that it will advance their careers and look good on their resumes. They use the exact same "once-in-a-lifetime opportunity" tactics to attract volunteers. Do you think VANOC CEO John Furlong is going to travel to a foreign country after 2010 and admit how he dropped the ball in Vancouver, especially when his partners already accuse him of being secretive and inept, or especially if he is embroiled in lawsuits? Why doesn't he explain his mistakes now before more damage is done and avoid all the "explaining" later? Some local Olympic organizing committees do a great job for the Games and for the community, but they do it by challenging the IOC at every single turn and from the outset, not by pandering to them. Sydney, Australia for example told the IOC they didn't like the deal negotiated on their behalf with courier UPS so they rejected it and hired a local company to service their needs. The IOC went nuts when this happened. Do you think Australians cared? They were more concerned about protecting their community than they were about selling out to the IOC.


Here's a short excerpt from my new book
regarding the Aussies and the IOC;

Some members of the Sydney Summer Games in 2000 had the right idea. They knew exactly where their loyalties lay. Some of them wanted the Games to be a success for everyone, not just the big box corporate sponsors. The country in general, much to the consternation of 'official' Olympic organizations, worked hard to protect the interest of not only the region surrounding Sydney, but of the entire country. And hurray for them, unfortunately, or fortunately, it depends on how you look at it - they did it at the expense of the IOC. Independent Aussie business organizations wrote their own rules. The Aussies actually licensed a sponsorship to one of their local courier companies [TNT} and pushed UPS, who had an agreement with IOC to be an official TOP (The Olympic Program) sponsor, right out of the picture. In effect the Aussies said to the IOC, run your Games anyway you want, but if it doesn't benefit our community in the manner we feel is fair we will make new rules. And they did. In effect, Australia and their local shipping company TNT worked hand in hand to put the IOC on notice. The short-term result was that the IOC lost a valuable international sponsor in UPS and they were unable to find a company to take their place for 2004. On the upside, the long-term message Australia sent to the world was 'you don't have to be bullied by the IOC.' If you treat them more like a friendly adversary you can still produce an extremely successful Games for the world, your region, and your country … and politics be damned. (dp23) end of excerpt

VANOC should have assigned a small high-ranking executive group to shadow the Italians 24/7 from the moment the 2010 Bid was won. You will never convince anyone who has professional event management experience (me included with almost twenty years of global experience) that anything of "real" value can be learned directly from the people who screwed it up. To begin with, as I mentioned above, what the hell is their incentive to sabotage an already wobbly reputation? You might pick up a few interesting figures, but they won't tell you why it went wrong, only where it went wrong. Keep in mind too that "ALL" Olympic organizations like VANOC sign extremely stringent confidentiality agreements that prevent them from sharing information deemed detrimental to Olympic spirit.

Post-Game press conferences are primarily thinly veiled charades to appease public perception. It makes it look like valuable "legacy" information is being traded, when in fact the only information being shared is already in the public domain - if you choose to look. If you doubt this for even a moment, how can you explain that almost three years ago I unearthed information for my book that describes in great detail what is transpiring in Vancouver today before it happens? I didn't have to travel to Italy to know that transportation and construction overrun costs will be a challenge, or to know exactly "why" they failed in other Olympic regions. In fact I devote a whole chapter to the trials and tribulations of managing transportation. I didn't need an Italian or a Greek executive who recently screwed it up to tell me what went wrong. I, and anyone who has read my book already know what the problem is. The challenge is changing the system to prevent it from happening again. The IOC, through the Italians, are trying to convince us, as are executives at VANOC and our local media, that the problems they experienced, or the challenges Vancouver is currently going through, are unique to each respective region. They are not unique. It is history repeating itself primarily because the business model is flawed, and it is the only way the IOC can protect its enterprise. Unfortunately, while the IOC protects itself, local communities suffer. If the Italians wanted to share anything with us, they should be telling us how they mismanaged their relationship with the IOC and how they negatively impacted their community in the process. Tell us something we can use. Unfortunately, they can't, because they signed a confidentiality agreement preventing them from doing so. The best they can do is speak in generalities.

It also doesn't help in Vancouver that local mainstream news media are still not asking the hard questions and demanding straight answers from VANOC executives, or when journalists do buck the trend and report truthfully, they are fired. No kidding. It recently happened at a CanWest newspaper, the Times Colonist, in Victoria (They also own the Vancouver Sun). On July 5, 2006, columnist Vivian Smith was fired, allegedly due to complaints from local tourism operators. She wrote a story that honestly painted a picture of tourist hotspots in Victoria, and according to a story in TheTyee.ca, she was fired because she complained tourist attractions were poorly run and overpriced. When she was fired, another columnist, Lynne van Luven, and a freelance feature writer quit in protest. If independent internet journalist Sean Holman hadn't interviewed the PR director at Butchart Gardens, and then reported the story on his website, PublicEyeOnline.com, this story might have never come to light with the impact it did. Similar scenarios play out in Vancouver too. Journalists do their job and editors censor their work if it doesn't fit the needs of their advertisers. Olympic organizations are basically just another advertiser, a big one mind you, but the dynamic and transfer of revenue are the same.

Mainstream media cannot continue to let VANOC off the hook. If Vancouver news media companies cannot provide experienced and aggressive investigative journalists, ones who can stand up to their editors, then I suggest that we import journalists from other parts of Canada, like Calgary, Montreal, or (mock) horror upon horror, Toronto. The challenge here though is that no journalist in his or her right mind would want to move to a city where the price of an average home is $600,000, which means that until the market levels-out relative to wages, or the bubble bursts (which is more likely), Vancouver journalists are relatively safe -- as long as you don't count the recent implosion and demise of CityTV's newsroom.

Vancouver/Whistler not only needs investigative journalists with a more sophisticated world-view and global experience, but also writers with the ethical fortitude to defend their position. The first step in fixing a problem is recognizing you have a problem. Unfortunately, in insular Vancouver, we still have our collective heads buried in the sand on Kits Beach. The people making the most noise about Vancouver being "the most livable city" are the politicians who take credit for building our sheltered little Oz. However, according to well-respected international news magazine "The Economist," we suck. If you listen to local media you would never know it. The UK-based magazine, on July 8, 2006, told the whole world about our homeless, drug, and political problems. Local media who responded to the article, not surprisingly, failed to report that "The Economist" has been reporting this information for many years. All you have to do is go to their website and search "Vancouver." They claim we've been sucking for a long time. How is it possible our "professional" local news media missed it for so long? Maybe they were too busy collecting fat checks from developers who were focused on buying advertising space in newspaper real estate sections - advertising space that helped to artificially inflate property values. Some of you argue that local news media are stupid, but I disagree. For the most part, they're pretty slick -- at least the editors and owners seem to be.

Here are a couple of questions local investigative journalists have to ask of, and demand appropriate answers from, VANOC CEO, John Furlong. "Mr. Furlong, when you were asked by local media if your budget was sufficient you stated that we are in a different position than Turin, and that our budget cannot be compared because we already have many Olympic facilities built, i.e., GM or BC Places. You inferred it was an apples-to-oranges scenario.

Fair answer Mr. Furlong, and a nice political-style dodge, however, our community wants to know if we will be on the hook to upgrade any of the sport facilities we already have in our community. For example, when the seats were replaced in 2005 at the Coliseum, was it "entirely" an Olympic expense, and will further upgrades to the Coliseum be covered by Olympic or taxpayer money? Or, what will happen to the rag-tag roof at BC Place? It might hold water, but from the inside it looks like a country quilt. At the eleventh hour, will VANOC decide that something has to be done about the patchwork mess they call a ceiling, and in an effort to present ourselves in shining glory to the world, will the community have to foot the bill to make it look respectable? After all, if one of the reasons we are holding the Games is to attract foreign capital investment, wouldn't it be hard to convince movers and shakers from around the world that we are capable of world class standards if, during an Olympic medal presentation spectators happen to look up, maybe as a result of the indoor fireworks? Every time I go to BC Place I cannot help but look up at the ceiling and wonder if it is going to cave in. Even though it may be structurally sound, it looks horrible. Is this any way to introduce the world to the most livable city on the planet? Perception is nine tenths of the law in the Olympic promotion business.

If more local media professionals had researched properly they would know which questions to ask. If you read this blog regularly you will know that my argument with some local news media is that they shouldn't be learning as they go. They should already know more than you do if they expect to ask pertinent questions and demand proper answers.

Considering that local news media companies are going to make a fortune off the Games on the back of the community, they should at least invest in their future. Media should come to the table fully prepared, but unfortunately, as you can see they only have a superficial understanding. (Either that or they know exactly what they are doing and are only going through the paces to make it look like they are fairly challenging the issues or representing the community. If the latter is the case, it smacks of "checkbook journalism," which means media are being bought. Noam Chomsky coined the term "necessary illusion" to describe what happens when news media only pretend to fairly represent both sides of the story.) The following excerpt from my book is based on occurrences in recent previous Olympic regions. However, our local media make it sound like the problem I relate (below) is unique to Vancouver/Whistler. It is not. It happens everywhere and it appalls me that local news media do not seem to know about it.


Here's the excerpt from my new book,
"Leverage Olympic Momentum."

       Every Olympic region goes through it. SMBs (small and midsize business owners) will find themselves at city hall meetings in increasing frequency as the Games approach. It starts slowly a few years out and then peaks the year before the big event. The more mismanaged the local Olympic organizing committee, the higher the incidence of protesting. Even in well-managed regions there will be many issues that will be argued in court or on the streets. Olympic organizations will push as hard as possible with little regard for how they impact the community. They become focused on their mandate and have a hard time seeing the community's perspective. It's not uncommon for Olympic organizations to low-ball plans to get local residents online and then over the course of time increase the cost of building Olympic related facilities. There are literally hundreds of examples, but one that is exceptional is the Ryde Aquatic Leisure Center in Sydney (Australia). The swimming pool complex started out with an estimate of $7 million (to retrofit it) and by the time it was finished costs had escalated to $24 million in less than two years. Not only did the cost more than triple, residents did not have access to pool facilities for the entire two years while the old facility was being rebuilt. The Richmond Oval will present very similar cost controversies. Building on (virtual) quicksand beside the river will drive costs through the roof, and if the complex can only be used as a speed skating oval for ten years before the ice pad starts to shift, where is the legacy? Last minute changes can be devastating for a community. It is examples like this that draw out thousands of local protestors. Unfortunately, most of the time it is too late. Protesting is an after-the-fact response that rarely works. [Eagleridge is a perfect example] (vs12;hjl93)
      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 (like Visa or HBC) 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)

(end of excerpt)

It's bad enough that in July of 2006 local mainstream media are still not asking hard questions and "demanding" clear answers. Keep in mind that "some" local news media already sold the region out over the last couple of years by working closely with developers and realtors to convince the foolhardy that obscenely escalating property values were beyond anyone's control. Some local news media played a direct hand in convincing the public to gobble up properties at hugely inflated Olympic frenzy prices. It's a little late for them to step forward now and pretend that their mandate is to "improve the quality of our lives." What a load of crap. As you read in past posts here, an influential senior local media member admitted in confidence to me that journalists have no mandate to protect the community, which bolstered my contention that their mandate is primarily to make a profit. No big deal. I get it. We all do. It would be a noble argument by them except that all local mainstream news media make a fortune off the Games. They can't have it both ways, at least not in this era of blogs and electronic newsletters. Basically, you are either with the community, or against us. Which is it? Don't tell us. Prove it through your actions.

Every time media let VANOC off the hook, issues get swept under the rug. On July 15, 2006, in a Vancouver Sun front-page story, investigative journalist Jeff Lee wrote that VANOC was "stunned" when Cesare Vaciago, CEO TOROC (Turin) claimed that VANOC's budget was "risky" and "too small." Overall, Lee's coverage was pretty good, but when I read the responses from Furlong and Dave Cobb all I could do was shake me head. Lee wrote that Dave Cobb, VANOC VP of Marketing, said, "VANOC had no intention of asking for more money." Well Hell's Bells. Even an idiot knows that "having no intention" means, "we don't 'intend' to ask the community for more money down the road, but if we have to, we will." I was expecting Lee to reveal it for the political sidestep it was, but he didn't.

Jeff Lee is expecting too much of Sun readers. I think he might be mistaking his rag for the Globe and Mail. He forgets most people are dummies when it comes to Olympic shenanigans. It sounds to me like he's expecting everyone to read between the lines. Sorry Jeff, but you're going to have to either explain it to us in a manner we all understand, or push VANOC harder for clarity. Personally, I prefer a more aggressive "Vivian Smith-style" approach. Or something along the lines of Rosa Marchitelli from the CBC when she cornered Furlong a couple of years ago and didn't let him squirm away so easily when she asked if Vancouver/Whistler would suffer under the same overrun issues that Athens recently experienced. She was polite, but forceful, and because Furlong did not answer in a forthright manner, she kept him backed into the ropes and pounded him until every viewer knew without a doubt that Furlong was being evasive. It was so well executed I was embarrassed for Furlong.

Our community took a big hit recently when CityTV lost its 6 & 11pm newsroom in Vancouver. I'd pay good money to watch ex-CityTV watchdog Leigh Morrow (now with Global), kick VANOC ass around the room like she did to errant landlords preying on the welfare poor. We don't need powder puffs. We need heavyweights like Leigh, Smith and Global's Ted Chernecki to keep newspapers honest.

If life was only so simple, unfortunately, many people don't realize that the Vancouver Sun, and the Global News Network (Morrow's and Chernecki's employer) are both owned by CanWest, which creates a bit of a delicate situation. Can they really effectively challenge and argue with each other - or will they pull punches if the Sun becomes an official Olympic puppet, err, I mean sponsor? It was a sad day when we lost CityTV news. Thankfully we still have the CBC, and also people like Vivian Smith back on the job. A person of her ethical fortitude should be assigned to cover the ramp up to 2010 for The Sun, but don't hold your breathe.

Considering that Bell GlobeMedia just bought CHUM(CityTV), and that Bell GlobeMedia owns the CTV Network (the official 2010 television broadcaster), and they also own the Globe and Mail newspaper, I'm rethinking that the Vancouver Sun might no longer be my absolute favorite pick to become VANOC's official newspaper sponsor for 2010.

I originally dismissed the Globe and Mail as a potential sponsor because I found it hard to believe, and for the most part still do, that they would lower their standards to meet Olympic obligations. It was improbable that they would jeopardize their sterling reputation, but now that they are second cousins to the official television broadcaster (CTV), maybe it could happen (but I doubt it). Maybe the Sun now has new and more serious competition. It could get interesting, but if I were VANOC, I would still lean towards the Sun because it will create backroom infighting across the local news industry and goad them all to continuously one-up each other in their race to cover the Games. Can you imagine what will happen if the Sun (or their sister publication the Province) becomes the official newspaper sponsor and they get access to Olympic information before other news companies like the Globe and Mail? It will provoke an all out news war and keep the Olympic agenda on the front page of every newspaper in Canada. How do I know? It happened a few years ago in another Olympic region (Sydney). (Read my book for the gory details.)

Regardless of who becomes the official 2010 newspaper sponsor (in Salt Lake City 2002 it was the SLC Tribune), it's an outdated practice that often causes irreparable harm to the community. In this era of newspapers struggling to survive, I can't imagine why any news companies would want to be placed in this precarious position, except maybe out of economic desperation. When you consider they will have to deal with alternative news and information sources like the PublicEyeOnline.com and Tyee.ca or OlyBLOG.com, and many others that will slowly pop up in the next year or so, why take the chance? "Never let your short-term greed get in the way of your long-term greed." (Apparently this phrase was coined by Dick le Van, a Toronto Bay Street investor, but no one seems to know for sure - if you do please let me know.)

Olympic regions need a better mousetrap, which I describe plans for in great detail in my book. Maybe the time is right for VANOC to rely more heavily on the internet in their effort to conscript and manage the volunteer network. It would remove local newspapers from the conflict-of-interest quagmire and let them go back to becoming more of an unbiased news source, and not an underground mouthpiece for the IOC.

One can only dream - or blog.

As I always say, if you're going to dream, dream big. Therefore, in conjunction with our thousands of regular readers, our newsletter will also now be going out to news media professionals and business associations around the world in countries that are interested in bidding for future Olympic Games in their respective regions. We think it is important that they know what they are getting in to. By watching us, they will be better able to avoid our mistakes and actually make the Games a more positive event for everyone in their community. It will also save Furlong the embarrassment of having to travel the world in 2011 telling everyone how VANOC dropped the ball here.

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





Have a comment?

Interested in booking
a speaking engagement?

Want to advertise on OlyBLOG?

»»CLICK HERE««

Want to learn more about the challenges that small and midsize businesses face? Click Leverage Olympic Momentum