March 6, 2009
Woeful economy impacts COC
By ALISON KORN, SUN MEDIA
It's not just my savings and yours that are down these days -- the Canadian Olympic Committee's investment income has tanked, prompting it to freeze wages, delay new hires and trim costs where it can.
Reduced income from its investment funds -- interest earned off the nest egg left over from the 1988 Calgary Olympics -- started to be felt last fall, so CEO Chris Rudge made some tough decisions for 2009.
"It's not a pleasant thing to do, but it's something one does in these circumstances," said Rudge. "We will come out of this fine, as a stronger organization. And I think Canada will be fine."
Rudge spoke candidly on a cell phone as he waited for a meeting in Ottawa this week with Gary Lunn, the minister of state for sport.
"We're basically operating at 80% of our historic cash flow," Rudge said. "We've trimmed to where we felt necessary, done with an eye to a tough two to three years ahead of us, but if things do turn around we will be in a position to move forward again quickly."
The committee's sport programs such as Own The Podium, Rudge stressed, have not been affected by cuts.
The 1988 Calgary Olympics left the COC with approximately $53 million, which, over time, grew to between $110 and $120 million. Now that sum is "down considerably," Rudge said, "like any investment funds, like my own RRSP."
The COC has a rule that it won't take money out of that fund if it dips below a certain level. That's what's now happened, meaning the organization has to make do on about 15% to 20% less money for the next two to three years. The rest of its annual operating budget comes from sponsorships now managed by VANOC, the organizing committee for the 2010 Vancouver Olympics. Rudge is confident that money is safe.
"VANOC has secured the maximum amount of sponsorship money that was targeted in their plans, and we are confident that money will continue to flow," he said.
Rudge spoke calmly about the investment situation but acknowledged, "these things are not without some sense of inner turmoil and emotion. We have to deal with it and hand-wringing doesn't help."
This week the U.S. Olympic committee, which is financed by sponsorships, TV rights money and a reserve fund, announced it would cut up to 15% of staff this year due to the ailing economy.
Chief executive officer Jim Scherr told the Associated Press the decision was more of a pre-emptive move than a reflection on the USOC's less-than-full slate of sponsors. But he conceded the bad economy was too big an issue to ignore.
"It's a factor of the economy," Scherr said. "It's a factor of making sure we're in a position where we can react later" if the economy gets worse.
Here's hoping the Olympic bodies -- as well as us regular investors -- will recover from this downturn.
How ironic. The International Olympic Committee celebrates International Women's Day with nary a mention of women's ski jumping -- the only sport closed to women at the winter Olympics. The IOC has refused to add it to the program for the 2010 Vancouver Olympics despite the fact that Canadian human rights law forbids gender discrimination in federally-funded facilities.
Instead, the IOC trumpets its 2009 Women and Sport Awards by presenting continental trophies to five women for their role in strengthening the participation of women and girls in sport. President Jacques Rogge also highlighted the fact that the 2008 Beijing Olympic Games set a new participation record with 42% of competitors being female.
That's all lovely, but none of this papers over the ski jumping issue, which is only going to become more embarrassing for the IOC as the Vancouver Olympics approach.