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Olympic compensation agreement reached

Whistler-Blackcomb and 2010 Bid Corporation sign preliminary memorandum Whistler-Blackcomb will not get a lump sum payment for hosting the speed alpine events if the 2010 Winter Games are held in the resort.

Whistler-Blackcomb and 2010 Bid Corporation sign preliminary memorandum

Whistler-Blackcomb will not get a lump sum payment for hosting the speed alpine events if the 2010 Winter Games are held in the resort.

Instead Whistler-Blackcomb and the Vancouver 2010 Bid Corporation have agreed in a preliminary memorandum to work out how much rent is owed for the venue locations by looking at revenues for the three winter seasons prior to the 2010 Games.

The compensation will equal the difference between the average of the three previous seasons and the revues for the event year.

It’s likely the compensation will still be in the millions.

"I think it is fairer to all concerned," said Doug Forseth, vice-president of operations for Whistler-Blackcomb.

"You can pick a lump sum and who knows if that is a good lump sum or a bad lump sum.

"The possibility of that kind of arrangement is that either the venue sites will be underpaid, and therefore upset, or very likely they will negotiate for as much as they can possibly get… and the Olympics will probably end up paying too much.

"This is a better agreement as it will be for an appropriate amount which will make some sense at the end of the day rather than someone’s guess several years in advance.

"I think it will stand up to scrutiny. We have been very concerned and very cautious about doing things that would be seen to be appropriate and professional and fair to all concerned."

The ski areas that hosted snowboarding and alpine skiing events during the 2002 Salt Lake Winter Olympics received a lump sum payment of about $27 million US. No details are available about the payments, as the privately owned resorts won’t discuss them.

If the Vancouver bid for the 2010 Games is successful Whistler Mountain will host the downhill, super G, and downhill combined for both men and women. The men’s and women’s slalom, giant slalom, and slalom combined will be held on Blackcomb Mountain. The sliding events – bobsleigh, luge and skeleton – will also be held on Blackcomb Mountain, as will several Paralympic events.

The Nordic events will be in the Callaghan Valley, while freestyle and snowboard events will be at Cypress Bowl in West Vancouver.

The compensation payments to Utah ski areas that hosted Olympic events in 2002 were to cover many of the same challenges Whistler and Blackcomb will face.

For example, studies have shown the skier visits, lessons, and rental of equipment drops significantly in the event year.

A recent survey in Utah showed a 15 per cent drop in 2002.

And venue sites can have significant construction in and around the site prior to the Games, inconveniencing visitors or scaring them off for the whole season.

Often ski runs need significant safety improvements or access upgrades for competitors or the Olympic family.

Retail space and employees also need to be "borrowed" to keep the whole machine running smoothly.

In the case of Whistler-Blackcomb all these things must be taken into consideration when it comes to calculating compensation.

Added to these is the uncertainty surrounding how the event will affect the drive-to market.

If the local market decides not to make the effort to come and ski in the resort over the whole Olympic season everyone in town would be adversely affected.

Forseth said there will be payments made to Whistler-Blackcomb in the years and months leading up to the Games.

At the end of the Games an accounting firm agreed on by both Whistler-Blackcomb and the 2010 organizers will review financial records and the final figure will be settled on.

Forseth believes this plan offers some incentive to both parties to do their best.

"If (2010 organizers) damage our business by taking lots of things and not making good use of them then they will have to pay a greater amount," he said.

"So their incentive is not to ask for more than they really need and our incentive… is for us to make as much out of what we have as we possibly can so we can minimize the payment by 2010."

There have been rumblings of discontent at the idea of compensation being offered to Whistler-Blackcomb, which some argue stands to make millions in the years following the Games thanks to all the publicity during the event.

But Forseth argues the agreement simply compensates the mountain for rental of space needed for the alpine events.

"If you go to a hotel and you want to stay you have to rent the room, and in this case they are using our facilities, as they will GM Place or the Pacific Coliseum," said Forseth.

"All these locations have venue rental agreements."

Bid spokeswoman Michele Penz agreed: "Of course there has been that consideration that, ‘Oh aren’t you just making a successful company wealthier?’

"But that is not the issue. We are just trying to pay rent on the mountain."

Senior officials at Whistler-Blackcomb’s parent company, Intrawest, have also pointed out in the past that the company cannot make up lost revenues due to the Games by building or booking more hotel rooms, as Whistler will have already reached build-out.

"So you can have, quite frankly, all the publicity in the world but if you don’t have accommodation… and in these resort towns, there is a limit to how much development can happen," Joe Houssian, chairman, president and CEO of Intrawest told Dow Jones Business News recently.

"Yes, we’ll get some positive news from it (if Whistler wins) but the question is, can we take advantage of it? If it had been five years ago, it would have been a different story."

During the event there will be no public parking in the resort, only one access point for day skiers and several areas of the mountains will be off limits due to competitions and training.

And on-site preparation is likely to begin a year ahead of the February event.

The Games organizing committee will also be responsible for any ski run alterations made for the Games. That may include replacement of the Orange Chair on Whistler Mountain.

"We will be open for skiing on a good part of the mountain (during the Games)," said Forseth.

"But obviously the venue areas will be closed off, as will the training areas to support those venues."

Lift access will also be limited and all the parking lots will be used for Olympic business.

Blackcomb Base will essentially be closed, with the Wizard off-limits. The Magic Chair will be shared with the Olympic Family, which will have priority loading.

In the village the Excalibur, Fitzsimmons and the Village Gondola will all operate normally.

"That will be the most prominent location for guests to get up the mountains," said Forseth.

"But basically three out of four base areas are off-limits."

Creekside will be closed as will Base II.

Visitors will start to see a change on the mountains in the summer of 2009 as the concrete fittings will be poured and construction of stadiums will begin.

After New Year’s things will start to get blocked off and closed down and that will expand as the Games get closer.

At Creekside the stadium will cause some congestion, as skiers will have to file through a narrow passageway to get around the structure.

According to bid spokeswoman Penz, the money used to pay the compensation will come from the revenues for the Games and will not cost the taxpayer anything.

Councillor Gordon McKeever, who operates Rainbow Retreats Accommodations Inc., said the deal sound fair.

"Intrawest’s request is perfectly reasonable," he said.

"Any business that would be able to strike such a deal would be very reasonable in pursuing it."

McKeever believes the whole resort will benefit if the Games come to Whistler. But, he said, businesses, which may not get a direct benefit, need to focus on what opportunities are out there and prepare.

And the resort needs to help.

"There are certain sectors that are going to be challenged and this is something that we have got to look at and say how can these people be compensated to the point where they are not threatened."

McKeever believes it is important for "fair" deals to be struck, as Whistler does not want a reputation as an international gouger.

Brent Leigh of the Whistler Chamber of Commerce also believes the Games are likely to benefit the resort more than they will hurt it.

But he believes businesses need to educate themselves and prepare.

"There are strategies to avoid those (negative) impacts," said Leigh.

"That is really what we will be trying to do. Make sure there are win, win, win situations around.

"Certainly if we see some gaps that we think are really systemic, that businesses can’t plan around, then we might want to petition the bid committee."

In the 2001-2002 ski season Whistler-Blackcomb had 2.2 million skier visits. A day ticket at peak times costs $69 and a season’s pass bought after mid-October is $1,594.

Intrawest, which owns Whistler-Blackcomb, does not reveal how much money its individual resorts make but earnings in 2002 for the company were $58.6 million US.

Vancouver and Whistler will find out in July if they have won the right to host the 2010 Games.