With public-private partnerships galore, the 2010 Games may be the best example of how to deliver the world’s greatest sporting event on budget.
Vancouver’s GM Place held an expectant air on the morning of July 2, 2003. Canadian Olympic medallists including snowboarder Ross Rebagliati, downhill skier Nancy Greene, rower Silken Laumann, and wrestler Daniel Igali waited with thousands for the announcement granting the host city for the 2010 Olympic and Paralympic Winter Games.
They watched in anticipation as International Olympic Committee president Jacques Rogge, live via satellite from Prague, Czech Republic, opened an envelope. He said one word: Vancouver. An ear-splitting roar went up from the crowd, the Olympians grinned from ear to ear as Vancouver began its road to hosting the Games.
Hosting an Olympics in Canada is not without its risks. Venues would need to be built, contracts signed, agreements put in place, and then there is the cost. Canada’s first attempt at hosting the Games was the 1976 Summer Games in Montreal. The legacy of those Games goes beyond the stellar performance of Romanian gymnast and triple gold medallist Nadia Comaneci.
The massive cost overruns to construct Olympic Stadium — the multi-use venue constructed for the Games — were paid by the taxpayer. The “Big O” was supposed to cost $134 million, the final construction bill was $770 million, and final cost to taxpayers was $1.47 billion. The final payment was not made until December 2006, more than 30 years after the Games.
Despite such a history in Canada, British Columbia Premier Gordon Campbell assured the province he’s confident the Games will be delivered on time and on budget. In B.C., building infrastructure on time and on budget means public-private partnerships — P3s. The province is so renowned for the agreements that the Canadian Council for Public-Private Partnerships recently named Campbell its Champion of the Year. The award recognizes his “success in renewing [B.C.]’s infrastructure and meeting the challenges of growth and the demands created by the Olympics, in part, by embracing public-private partnerships.”
Helping to gain the Olympics and set out a blueprint for the delivery of the venues and agreements is the Vancouver organizing committee, known as VANOC. A bid book was developed through the work of a team including lawyers who had to have public- and private-sector agreements and commitments in place for the IOC to scrutinize and see if B.C. had the massive amount of co-operation needed to host the Games.
At the forefront of the operation is VANOC chief legal officer Dorothy Byrne, who was also the general counsel for the bid corporation, and is now just one year away from seeing her and Vancouver’s Olympic dream realized. “I have to pinch myself, to appreciate that I’ve been involved. I’m so lucky to be involved in such a wonderful opportunity. With each day, you’re as interested as the next person to know what you’re going to be dealing with. It makes it very exciting to know you’re working toward a certain date that’s not movable. We are all committed to working on this project. It is something we all strongly believe will make a positive contribution to the country.”
Between the bid and the podium is the merging of thousands of agreements and the coming together of government and private sector. VANOC winces at the concept of the Games as a public-private partnership, but many observers, even some involved, say it may be the biggest P3 of them all. The CCPPP defines P3s as “a co-operative venture between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks, and rewards.”
In a P3 there is straight contracting out as an alternative to traditionally delivered public services, while at the other end, there are publicly administered arrangements within a framework that allow for private finance, design, building, operation, and possibly temporary ownership of an asset. At the end of the day, and in the case at hand, it’s work that hopes to ensure everything is in place to protect the taxpayer from any residual costs once the Olympics are over.
Things began to evolve fast once the Games were awarded. Byrne says while the operating budget of $1.6 billion comes from the private sector — much of it through the IOC as part of broadcasting and international sponsorship revenues — the capital budget comes from the federal and provincial governments. Some $580 million was earmarked for construction work, all of which is nearly complete. The responsibilities for the work are set out in the multi-party agreement signed Nov. 14, 2002.
Charles Drouin, Department of Canadian Heritage, says the 2002 multi-party agreement as part of the bid phase was an Olympic first, one spearheaded by government lawyers. “Among the best practices learned from the Australians and their experience with Sydney 2000 is that there are great advantages to signing foundational agreements in the international bid phase. This creates certainty and assists in the speed of moving through the transition phase after a successful Games award by the International Olympic Committee. There are also tactical advantages. Negotiations must be concluded in accordance with specific deadlines and agreement might be more easily reached during this period where hosting remains a hypothetical question.”
The IOC did not require such an agreement in the bid phase, but it has been subsequently convinced of the utility it provides to Games partners and organizers. Drouin adds that Canada’s constitutional geography created some legal challenges for counsel working on the agreement.
“The host city and the national Olympic committee of the host nation are obliged to sign with the International Olympic Committee the host city contract. There are certain challenges associated with this practice for a federation like Canada, from a jurisdictional perspective. There are commitments referred to in the host city contract falling under federal and provincial jurisdiction, but these levels of government are not signatories to the host city contract.
“The Multi-Party Agreement addresses this issue, and includes the Government of Canada’s commitment to assist the organizing committee for the Games in the planning, financing, and staging of the Games.” Meaning a partnership with other federal departments as well.
The Department of Justice lawyer who advised the 2010 Federal Secretariat of the Department of Canadian Heritage during this period was a key member of the federal management team. “(They) performed valuable service in ensuring that the Multi-Party Agreement provided the required foundation for shared understanding and collaborative efforts among the parties. It remains a useful source document to this day in guiding the organization of the Games.”
For Byrne, with such agreements in place, she continued to build a legal team to ensure a seamless event with all eventualities and potential liabilities covered. “They are for the most part generalists. They’re young, energetic, creative, smart lawyers. We are a very contract-driven organization. They’ll be drawing up thousands of them before we’re done. We’re interested in lawyers who had a good corporate background.”
However, the lawyers don’t work solo. “They’re part of the functional teams within VANOC. It’s one of the characteristics we look for in lawyers. How you function in a team environment.”
At the start of the bid process Byrne was the sole in-house lawyer for the group nurturing the dream of a Vancouver Olympics. “I’m the lifer,” she says with a laugh, adding a number of Vancouver law firms such as Blake Cassels & Graydon LLP, Borden Ladner Gervais LLP, Miller Thomson LLP, Lawson Lundell LLP, Fasken Martineau DuMoulin LLP, Farris Vaughan Wills & Murphy LLP, and Davis & Co. LLP did pro bono work as they worked to develop contracts in the bid process as far back as 2000. One of the first was Charles Hotel, team member since the bid process.
“We had to get started on construction and the sale of sponsorships long before we had a legal team,” Byrne says. A saving grace here, notes Byrne, was boilerplate sponsorship agreements provided by the IOC, templates for the work to come based on past best practices. However, the IOC legal team is never far off, she says, “the IOC has to sign off on everything.”
Further, there has also been work for the team to do on agreements between VANOC and major sponsors such as Coca-Cola. “There is an agreement between VANOC and Coca-Cola,” she says. “The primary agreement which drives those agreements is always with the IOC, as are the broadcast agreements.”
Should an agreement fail to bear fruit and a partner go into breach of contract, there’s more legal work ahead. But, Byrne has her fingers crossed. In October 2008 it was reported that Intrawest — venue operators for the Alpine events at Whistler — was facing bankruptcy protection. VANOC says such a scenario would not affect the running of the Games. “You assess that risk. One of the things we do is maintain a full and ongoing risk analysis, one element of which is the purchase of insurance. There is a whole risk management department. They work very closely with the legal team.” VANOC does not discuss insurance details.
In addition to sponsorship, various agreements with owners, who were willing to commit to build or refurbish their venue to the standards required for use during the Games, needed to be drafted. “The negotiations were not so much among lawyers but among parties building the venues,” Byrne says.
The venue agreements had to be negotiated between the bid corporation and the venue owners before the IOC came calling to evaluate the bid in 2003. Some, like the Vancouver curling venue and athletes’ villages in Vancouver and Whistler were the responsibilities of those host cities.
The City of Richmond also was negotiated with for the building of the speed-skating oval after a deal with Burnaby’s Simon Fraser University fell through. Others, such as the hockey arenas at the University of B.C. and the Pacific Coliseum, which will host figure skating, needed upgrade agreements. “We had to show we had commitment from the venue owners.”
With venues being built and sponsorships being signed, there has to be a way to get the spectators to and from events. TransLink operates the transit systems in the greater Vancouver area. Spokeswoman Carol Evans says agreements had to be reached to provide enough buses, trains, and seabuses to move people at Games’ time without overt disruption to residents.
The $1.9-billion Canada Line rapid transit project also involves a private sector partner, InTransitBC, which was selected through a bid process. The Canada Line is essential as it provides a 19-kilometre, north-south link between the downtown Vancouver Waterfront station and the Vancouver International Airport.
InTransitBC is a joint venture company owned by SNC-Lavalin, the B.C. Investment Management Corp., and the Caisse de Depot et Placements du Quebec. The company is contracted to design, build, partially finance, operate, and maintain the Canada Line for 35 years.
Canada Line Rapid Transit Inc., an independently governed, wholly owned subsidiary of TransLink, is responsible for overseeing the procurement, design, construction, and implementing the line. Evans says TransLink considers the Canada Line a P3. Even the naming of a station, though, presents work for counsel. The use of ‘Olympic Village’ as a station name is subject to an acceptable license agreement being concluded between VANOC and TransLink, and is contingent on IOC approval. The P3 community, though, is recognizing the value of such work in projects such as the 2010 Games.
Professor Tom Ross of the University of British Columbia’s Sauder School of Business agrees there are a number of P3s that are part of the overall Olympic project. The Government of Canada, the Province of British Columbia, Greater Vancouver Transportation Authority (TransLink), the Vancouver Airport Authority, and the City of Vancouver are funding the Canada Line. Yet the Games themselves are not a P3 — in the traditional sense. “What it looks like is a load of private sector contracts to create a project. The government is driving the ship, but there’s a lot of private sector fuel being spent.”
Colin McIver, Fraser Milner Casgrain LLP in Vancouver, has done work for VANOC negotiating agreements for venues on government-owned land. These venues include the Whistler Sliding and Nordic centres, the Cypress Mountain venues for snowboarding and freestyle skiing, and the Richmond speedskating oval. In developing the agreements, McIver says all of the participants’ best interests must be kept in mind. Venues have to be ready in time, they have to be of international stature to host the Games, and they have to be on budget to have a benefit to the community long after the Games are finished.
“Part of the challenge of these things is to try to balance the various competing interests while still trying to complete the agreements in the spirit of partnership and co-operation looking to the long-term success. So you want to make sure the agreements and the objectives and constraints under which all the entities operate are fair, equitable, and ultimately going to achieve the success of the project.”
For McIver, the Olympics are like a bunch of P3s creating one big partnership. “The Olympics may be the ultimate P3. But I think when you start to take a look at the different elements and start ripping them down, each one of those are almost P3s . . . they all have different interests.”
He says it would be hard to host an Olympics without massive co-operation between the public and private sectors. “It would be almost impossible for private enterprise to put on something like the Olympics. These sorts of venues just become so expensive there’s no reasonable way they could ever make money long term.”
He points to the Richmond oval as an example. VANOC provided some capital layout, the City of Richmond built the oval and made land around it available to developers. That, McIver says, will allow the city long-term benefits from the upfront costs.