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Nine Months before Olympics, Province Saw Big 'Shortfall'

Report cited 'not complete' budgeting, 'unforeseen costs' that led to $188 million taxpayers' bailout.

By Bob Mackin, 14 Nov 2011, TheTyee.ca

Gordon Campbell in Olympics gear

Former premier Gordon Campbell: Flaws in financial planning flagged well before Games.

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A VANOC deficit was forecast nine months before the 2010 Winter Olympics, according to provincial government documents obtained via Freedom of Information.

The 2010 Winter Games Working Risk Register listed a post-Games loss as a "high risk."

"Budget shortfall estimated in June 2009," said the spreadsheet inventory of government-wide Olympic and Paralympic risks. "1. Actual costs are higher than estimated; 2. Unforeseen costs are significant; 3. Costs included in budget were not complete; 4. Revenue estimates for remaining outstanding revenue items were overstated; 5. Project contingency is fully utilized before Games end; 6. Unforeseen costs associated with Cypress venue."

It said there was no "agreement/framework" to resolve a post-Games deficit between VANOC and its partners. The consequences to the province included a significant revenue risk, unpaid suppliers trying to recoup money owed, and a negative Olympic legacy.

"Any new contribution agreement for VANOC should include additional financial monitoring conditions and should require VANOC to notify Province of any significant challenges going forward," said the report. "Although Province is not responsible for a deficit, as a Games Partner, should be aware of any deficit as soon as possible and assist in developing mitigations."

According to its commitments to the International Olympic Committee, however, the B.C. government was responsible for any deficit because it was the ultimate guarantor of the Games.

The IOC pledged $22 million in August 2009 because it failed to deliver two more global sponsors. When VANOC revealed its post-Games financial report on Dec. 17, 2010, it claimed a balanced budget after $188.78 million in operations revenue from the federal and B.C. governments.

When the business plan was unveiled in May 2007, VANOC CEO John Furlong said no taxpayer funds would be used for operations.

320 risks identified

The government-wide report ranked risks to ministries, agencies, departments and Crown corporations, from the attorney general to Vancouver Coastal Health. Anticipated risks, consequences and mitigation strategies were updated in the summer and fall of 2009 and just before the Games in January 2010. By Games time, there were 320 risks: 192 deemed low probability, 107 medium, 22 high and none extreme.

Several entries in the report were censored under one or more loopholes of the FOI Act: cabinet confidences, policy advice or recommendations, harm to law enforcement and harm to public body finances. Therefore it is impossible to know whether the government was ready for an El Niño winter wiping out snow, an athlete death or ticket scam.

Snow was trucked in from near Manning Provincial Park to Cypress Mountain, Georgian luger Nodar Kumaritashvili died on opening day and Latvian criminals used stolen credit card numbers to buy $2 million worth of tickets. The incidents impacted VANOC, public finances and the province's reputation.

Power outages, train derailments, protesters, terrorists and the H1N1 flu were among the government's documented worries. The ambulance paramedics' union's struggle with the BC Ambulance Service was an extreme risk, until the BC Liberal majority imposed a contract in November 2009.

The government was worried conditions in the Downtown Eastside would spark protests that would attract critical local, national and media attention. Part of the mitigation strategy was BC Housing's Downtown Eastside Connect storefront public relations office at Woodward's.

Community Living BC anticipated staff and clients in the Sea-to-Sky corridor would suffer from emergency medical response delays because of transportation and security tie-ups.

Various arms of the government, including ICBC, were worried that "hosting business stakeholders at Games are judged by media to be inappropriate" or there would be "lack of accommodation for dignitaries."

Olympics prep cut into casino profits

The BC Teachers' Federation was blamed for putting the Vancouver 2010 Education Program in jeopardy.

"The BCTF have voiced their lack of support for the Olympics because of money not going to education," the report said. "BCTF has stated again, recently, that they will not boycott nor formally support the 2010 Games."

The biggest revelation was that BC Lottery Corporation's sponsorship of the Games was not paying off, particularly at Edgewater Casino, the nearest gambling hall to BC Place Stadium and Rogers Arena. Edgewater was behind security and transportation barriers for several months.

"New impacts have been identified for the Edgewater Casino," said the report. "Revenue impacts starting in Oct. 09 instead of Jan. 10; City revenues will also be impacted based on municipal share of slot gaming revenue (HLT). Other potential impacts include staff layoffs. Fiscal plans have taken impact of the games into account in areas other than Edgewater's increased impact identified above."

During the Olympic quarter from January to March 2010, the City of Vancouver received $1,246,959.06 in host municipality royalties from Edgewater, down $485,137.90 from the same quarter in 2009.

Edgewater is owned by Paragon Gaming, whose Canadian board includes VANOC director and prominent Liberal bagman T. Richard Turner. Paragon president Scott Menke revealed that the provisional lease of land next to BC Place to build a new Edgewater was signed before the Games' Feb. 12, 2010 opening ceremony.

'We had no business'

During the Games, the casino was so empty that city manager Penny Ballem intervened to stop Edgewater from laying off 200 workers.

"We had no business," Menke said. "We decided as a company to take the high road, keep all of our employees employed. We worked with the union (CAW) and had extra days off."

BCLC CEO Michael Graydon said in early 2011 that the Games cost $5 million to $10 million in lost revenue. Edgewater suffered because "parking is very important to a casino customer, they started to find other places to go."

VANOC banned BCLC from offering SportsAction hockey betting during the Olympics. Gamblers stayed home or went to the Games and didn't buy as many lottery tickets.

VANOC also convinced BCLC to take hockey off the SportsAction menu at Games time.

"People are very routine in their lottery habits, they'll go in the morning and buy their coffee, newspaper and 6/49 tickets," he said. "When you get out of those routines, people's purchasing habits change."

Reports sponsored by City of Vancouver, the B.C. and federal governments all painted a rosy picture about Olympic economic benefits, but failed to consider how host city residents change their spending habits during a mega-event or vacate the area because of transportation and security inconveniences.

[Tags: Politics, 2010 Olympics.] [Tyee]

Bob Mackin is a veteran reporter who covered the Beijing and Vancouver Olympics, and is a regular contributor to The Tyee. Find his previous Tyee pieces here.

25 Comments:

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  • DPL

    27 weeks ago

    The circus was run by clowns,

    The circus was run by clowns, and we of course paid for their poor planning

  • Grumpy

    27 weeks ago

    Ya...........but...............

    It was a great party wasn't it, like all the politicians had free seats to all the events and Canada won the gold medal in hockey.

    No place like BC - eh?

    So by the way, how many schools and hospitals will be closed to pay for the Evergreen line?

    Can I ask a question? Wasn't the Olympics held in Greece supposed to cure all their financial ills?

  • happy

    27 weeks ago

    Well Mr Grump

    (you really meant the Canada Line I assume?)

    Just speaking personally in my little town of Sechelt there is a major hospital expansion underway

    http://www.journalofcommerce.com/article/id39001

    and then theres Childrens Hospital

    http://www.bcchf.ca/main/?newsReleases&139

    so....

  • morechatter

    27 weeks ago

    Well lets hope

    The Evergreen isn't as unreliable as the Canadian Line which isn't up to the job as those in Metro Vancouver look to other ways to get around as the train can't get off the ground.
    Greece had put all their Euro in the Olympic basket and we know how that all turned out.
    The Olympics a money maker or a money taker as BC Liberals shake up young children to make ends meet.

  • morechatter

    27 weeks ago

    Warehousing kids

    The glory rag gives itself credit for helping kids get a bite to eat in school but where was the Vancouver Sun before things got this bad for children in Vancouver?
    Sucking in all that revenue the BC Liberals spent your way I bet along with corporations with their big tax breaks.
    And when these kids aren't in school they can what suck in the air?
    Inner-city students need food, clothing, pleads teacher
    Admiral Seymour teacher’s heartfelt letter raises alarm about plight of children

    Read more: http://www.vancouversun.com/business/Inner+city+students+need+food+clothing+pleads+teacher/5456950/story.html#ixzz1dhgB5tKq

  • Grumpy

    27 weeks ago

    I see the PAB's are hard at work

    I was merely pointing out that government mega-projects, such as the Millennium & Canada Line (and soon the Evergreen Line); the Olympics; the new retractable roof on the marshmallow and so on, come at a price. That price is the closure of schools and hospitals in Metro Vancouver and the rest of the province.

    The Olympics was nothing more than a massive athletic orgasm combined with our (screw you) style of Canadian nationalism that is so popular with major federal political parties including the Conservatives and the Liberals (and soon the NDP).

    Many have been caught in the Olympic rhetoric, but four or fine times more will face the consequences of profligate government spending on questionable projects that mainly benefit the elites in this province.

    It is a very strange coincidence indeed that for every metro line built in Vancouver, schools and hospitals close in the rest of the province.

  • Dan the socialist

    27 weeks ago

    and then theres Childrens

    and then theres Childrens Hospital

    http://www.bcchf.ca/main/?newsReleases&139

    so....

    =====

    Sounds like from your link Children's Hospital is raising all the money themselves...it does not say what the the government (tax payer) is paying towards it or the UBC and Womens Hospital...But of course like most hospitals they will have to have lottery's since government would rather reduce taxes for corporations...

  • eight

    27 weeks ago

    Where was the cheque?

    I notice in the link to the Children's addition that (as usual) Her Christiness showed up for the photo op having had nothing to do with the project, and bearing no cheque. Looks like the fundraising was done by others.

    Also, the $26.5 million the Province announced in 2009 for St. Mary's isn't even as much as the BCLiberals paid to settle the uranium mine debacle to keep from being embarrassed after ordering a public servant to break the law.

  • Bucketbrigade

    27 weeks ago

    Happy days in Sechelt

    The Sunshinecoast through fundraising bought their own MIR machine, ...

    No staff at St.Mary`s hospital to run it.

    Happy..St. Mary`s hospital is a fucking disgrace, no staff, understaffed, no money for staff,staff shortages,more staff needed, dire staff shortages, incredible staff shortages leading to.

    Increased use of ambulances driving to Lions Gate hospital, no staff in any departments, no staff to run a free MIR machine..

    BC Liberals have built Some new facilities but there is never any money to staff them...

    Go there Happy, go to emergency and just ask!!!!!

    No janitors, no nurses, no fucking doctors, no specialists, no fucking employees.

    Wake up Happy, glad your friends got jobs banging nails, time to come back to earth!

  • MacKenna

    27 weeks ago

    Gordon Campbell's legacy, ripping off and abusing taxpayers

    The Olympics is always a waste of money. Doesn't matter where it is held in the world, it eats money. Would any community that has hosted the Olympics ever choose to rehost it? No. Once the painful lesson is learned, it's good riddance. It would take several generations of forgetting the corruption, grift and incompetence of the Olympic committee to persuade citizens it is a good idea. Many BC citizens suspected in advance the Olympic circus would not benefit BC and in the end they were largely right. As for the transportation developments, the Canada Line is grossly inadequate to handle the growing population that depends on it and such infrastructure was long overdue anyway. It is absurd that Vancouver lacks an interconnecting, viable, rapid transportation system. As anyone who has lived in New York, Toronto and Montreal can attest, Vancouver's public transportation system is laughable. It isn't worth the money we are forced to pay for it.

  • happy

    27 weeks ago

    my exciteable friend from Garden Bay

    You need to slow down. Sechelt doesn't have a MRI machine for starters, so the rest of your post is more of the same.
    Post links to back up your heresay. I DON'T accept powellriverpersuader as a source any more than I would National Enquirer.
    (I spent a week in there a while ago and am still here today, somehow I survived in the absence of any staff!)

    Dan, the total cost is 500 million.

    http://www.canada.com/vancouversun/news/story.html?id=a8e7b7be-d6fe-4702-bc13-0de57119c0d7&k=77165

    "BC Children’s Hospital Foundation is raising $200 million through the Campaign for BC Children, with $150 million going towards the new Children’s Hospital and $50 million towards Child Health BC, a BC Children's Hospital initiative that is building pediatric care capacity throughout the province.

    To date, BC Children's Hospital Foundation has received campaign donations from thousands of British Columbians in over 220 BC communities. The community has now contributed more than $132 million to the Campaign for BC Children. Lead benefactors include Teck Resources Limited, which has pledged $25 million, and the Overwaitea Food Group, which has pledged $20 million to Child Health BC."

    http://www.bcchf.ca/main/?newsReleases&139

  • OldSmuggler

    27 weeks ago

    Olympics

    The Olympics clowns have gone and some have stayed behind with a new idea for us all...
    http://www.youtube.com/watch?v=jF_yLodI1CQ

  • Christophe

    27 weeks ago

    Gordon Campbell is, and always was, a cheap shyster

    The wonder is that he ever got elected. Three times. He did some good things, but the 2010 Winter Olympics was not one of them.

    There is nothing quite like a Man With A Dream, but when a guy like John Furlong dreams, it is often someone else's nightmare.

    The real cost of all the misguided planning was the death on the luge track. The designers made the track far too fast; many athletes protested and the men's luge course was never used in competition. Now what happens to all that steel and stuff?

    On balance, the 2010 Winter Olympics makes Glen Clark's FastCats look cheap by comparison. Why oh why are the people of British Columbia so stupid? We keep electing these duds over and over again and they keep feeding us pigswill and calling it Vichyssoise.

    None of these fiascos can alter the sad fact that we still pump raw sewage into the ocean. Rather than another circus, please eradicate the sewage plume.

    Meanwhile the last edition of W5 dealt with police brutality in BC. Thank the stars someone is noticing all the deaths and beatings. It is getting embarassing to admit that one lives in theis province.

  • Bucketbrigade

    27 weeks ago

    I meant a cat-scan

    I meant a cat-scan machine..No fucking staff to operate it...That`s the reason we have no MIR..No staff...

    St. Marys is a sick joke Happy.

    [OFFENSIVE COMMENT REMOVED. -MODERATOR.]

  • freewilly

    27 weeks ago

    toilets

    A city should be judged on its ability to provide public restroom facilities to the masses. The lowermainland is woefully deficient in this regard.

    Everytime vancouver has a party, wether its expo 86 or the olympics toilets are absent in the debate.
    still there are no facilities at at any of the skytrain stations. how many public toilets have been built during all these endeavors?
    we need hospitals, schools etc.... but for whatever reason our political parties forget about the necessities of life and commuting maybe 3+ hours a day.

  • happy

    27 weeks ago

    It's MRI, not MIR

    No links? I thought not. On the other hand...

    http://www.smgh.ca/innerpage.aspx?x=9oP5kv2uuQyf%2FXnxt7Nmi2ovKIMbPnAxxGsboJUC2CfLWMwHfaKsaMsiL%2BU49fKX

    (I wouldn't any more of your time TRYING to insult me. I'm an arrogant prick and it just rolls off my back. Cheers!)

  • eight

    27 weeks ago

    Ontario??

    Happy, why are you posting a link to St. Mary's Hospital in Ontario....?

  • Christophe

    27 weeks ago

    Freewilly: so THAT was the reason for the Stanley Cup riots?

    It had nothing to do with alcohol; those fans were just looking for a pissoir to piscine. It makes all kinds of sense to me.

    The Olympics were the ultimate piscine though; so much money was piscined down la toilette it make me merde myself. Ou est le papier?

  • Wake Up

    27 weeks ago

    Cheap Shot

    "Canadian board includes VANOC director and prominent Liberal bagman T. Richard Turner."

    What is a bagman? Wikipedia says it's a person designated to collect money in a protection racket...

    Is it necessary to use this term in an article where the facts actually speak for themselves?

    While I am supportive of the gist of this article, that term kind of cheapens the information.

  • Henry Dorsett Case

    27 weeks ago

    Ontario??

    yep - have a look at the contact page:

    http://www.smgh.ca/innerpage.aspx?x=sfWkEJNKMmLoE3A9Txw45nyAzyKWnjbWl1tnApxfqHY%2fyS%2bNgNqu85AZGpwsa%2fW3

    They must have budgeted a fair amount for the PAB's in order to still have them lying full time about the Olympics.

    @Wake up: terms like bagman bother me as well - they are weak and equivocating. When theft takes place - it needs to be called theft.

  • happy

    27 weeks ago

    Good catch eight

    Must of clicked wrong link. Sloppy. I'll fix that in the morning,can't right now I'm on a phone

    I can only wish I was PAB Case with a rich public pension. Would have retired years ago

  • For a better world

    27 weeks ago

    Happy, are they totally altruistic?

    If Teck Resources pledged $25 million to the BC Children's Hospital Foundation,they would be entitled to $11 million in Federal and Provincial tax credits. Overwaitea's pledge of $20 million to Child Health BC would entitle them to tax credits of $9 million.

    This means that these organizations are not as altruistic as they try to convey. I also suspect that there are tax exemptions opportunities for their entire proposed pledges.

    http://www.cra-arc.gc.ca/chrts-gvng/dnrs/svngs/clmng1b2-eng.html

  • pwlg

    27 weeks ago

    Scandal, scandal, scandal

    Then we get the highly praised John Furlong who declared on radio talk shows and tv stations that VANOC would need no additional funding from governments for operations than the $600 million they received at the start of the construction for the travelling country club, the IOC's Olympics.

    Less than 1 year into construction and VANOC (John Furlong), like a potato starved refugee, was cap in hand wanting more money. But even that $100 million wasn't enough. We now find out there was more.

    At the end of the circus act, Furlong declared a balanced budget but the only way he got a balanced budget was with our generous "donation". Furlong declared at the beginning that there would be a profit! Well this is one Olympics the IOC, their boosters and media toadies can't use to brag about how the Games make a profit.

    Expect more creative bookkeeping in the future. London 2012 original budget was $4.3 billion (I can hear the laughter from readers) and in 2009 that figure had gone up a whopping 370% to $16.6 billion. The bills haven't all come in yet and I wonder given the European Union financial meltdown whether London will be sucked down into the financial abyss. Chalk one up for the economic hit men!

    By the way Grumpy, liked your line "...government spending on questionable projects that mainly benefit the elites in this province..."

    In White Rock they opened up one new floor of the hospital and then proceeded to close down another floor. No net gain even though the population of the area has increased 400% since the hospital was built.

    The Peach Arch Hospital Foundation raised funds for the MRI there but like other hospitals they do not have sufficient funds to utilize its diagnostic abilities for the need. Recently it was reported that the Peace Arch Hospital Foundation's Home Lottery lost money. Is this a sign of people just being tapped out?

    As well, community emergency health needs, ie ambulance service, has not kept up with population growths in certain parts of the province. Instead of the BC government adding more paramedics and ambulances the government has downloaded their responsibility to local governments through their fire departments. Now do you want a person attending your medical emergency at home, on the highway or elsewhere, with only 7 days training as a 1st responder or would you prefer a paramedic with several years experience?

    Its a crying shame. They give the banks a $100 million a year tax break in the province. Then ask school districts and hospitals to meet unrealistic budget constraints.

    These are the folks that are supposed to be business savvy. We deserve better.

  • chinook

    27 weeks ago

    TYEE: Bailout of Whistler-Blackcomb/Fortress Debt Too??

    I heard a rumor that Whistler Blackcomb/Fortress was going to go into receivership just prior to the Olympics, then were going to auction the ski hills off to the highest bidder during the Olympics - does anyone at the Tyee know if the province ended up bailing out the ski hill as well? The whole receivership thing got awfully quiet......

  • Christophe

    27 weeks ago

    John Furlong is a tea-totaller. Imagine how much worse...

    the Winter Olympics could have been if he was a drunk? Not to insult John Furollong or anything but he has expensive-enough habits without adding liquor to the list.

    I actually respect Mr. Furlong for his straight-and-narrow approach to the games. He was a regular rod-and-staff during some very trying times and he earned public respect. I just hope he retires soon, before the province is completely broke is all.

    The legacy of the 2010 games is this; drive through Whistler and for miles and miles you will see young women jogging and biking down endless roads. The town sure got a facelift.