Issue:  Vol. 48 / No. 3 / 18 January 2018
 

Running on empty

Sports

Outgames dodges bankruptcy, creditors


Cirque du Soleil, performing at Outgames' opening ceremonies, is owed more than $48,000. Photo: Montreal 2006
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What is left of the staff of the Outgames has made moves to avoid bankruptcy and potential lawsuits by seeking legal protection from paying its creditors, according to the Montreal Gazette.

Outgames organizers sidestepped immediate bankruptcy on December 4 by obtaining a 30-day waiting period to come up with a claims-settlement proposal for their creditors.

According to the trustee in the case, Gaetan Laflamme, a chartered accountant from the firm Petrie Raymond LLP, some of Outgames' lenders owed higher amounts are being paid ahead of 219 suppliers and individuals who are owed more than $2 million of unpaid bills and expenses.

While Outgames representatives had initially claimed that the event closed with a surplus of $200,000, a government audit in September revealed quite a different picture of the event, which had an overall budget of $14 million (Canadian).

Details later emerged that despite former CEO Louise Roy's announcement of "profitability" only weeks before and days after the Outgames, the Quebec government audit in September revealed up to $5 million (Canadian) in deficit.

The Outgames, held July 29-August 5, were underwritten by the government of Canada, the government of Quebec, the city of Montreal, Radio-Canada, and Tourisme Montreal. Each organization backed the event with millions of dollars in loans and services.

But Outgames co-chair Marielle Dupere claimed in a November interview with the Gazette that millions in loans had not been provided, and that the deficit would be smaller if the loans were given.

When that didn't happen, Outgames organizers abruptly announced their move to block demands from creditors, who have failed in efforts to contact Outgames representatives. The organization's phone numbers have been disconnected, and their offices closed.

This move leaves hundreds of creditors, including celebrities and sports equipment suppliers, with little hope of payment.

Cirque du Soleil, which performed at Outgames' opening ceremonies, is owed $48,209. The Montreal International Marathon is out $25,902.14, half of its billings.

The largest single private-sector creditor is Marketing Signa Inc. of St. Laurent, which claims $217,872 is owed to the firm.

Additionally, lesbian tennis star Martina Navratilova, who was hired to endorse the Outgames and appear at opening ceremonies and other events, is owed about $20,000, half of her fee.

The deficit is systemic to an apparently haphazard accounting process.

Laflamme told the Gazette that some of the Outgames' 150 employees were asked to charge substantial expenses – including airfare – to their personal credit cards. Some were never reimbursed.

According to court documents published by the Gazette, former CEO Roy had spent $153,462 on a MasterCard in her name. All but $4,493.39 of has already been paid. Requests for comments from Outgames representatives were not returned.

Sports equipment firms and facilities owed thousands of dollars include tennis, rowing, wrestling, martial arts and aquatics companies.

"If we don't get paid, we'll have to sue them," Matthew Robert, co-owner of 22 Dragons, told the Gazette . His company provided dragon boats for the boating competition, and is owed $6,000.

Robert also said that the low attendance was notable. Most dragon boat events draw between 60 and 150 teams. "The Outgames only had seven teams, and they were selling tickets to watch."

Media outlets owed between $5,000-$15,000 in fees and advertising include the Web site www.Outsports.com, Out Marketing (headed by Bay Area Reporter's syndicated Lesbian Notions columnist Libby Post), and Profile Pursuit, which publishes the annual national Pride magazine. Post did not respond to an e-mail seeking comment.

Laflamme told the Gazette that the more than 200 unsecured creditors would be called to a meeting at the end of January to vote on a claims settlement proposal. Outgames' stalling procedure could delay the process for a month or two, but only at his recommendation and with approval from a judge.

Show me the money

Financial accountability was one of the main elements of the contentious contract negotiations in November 2003 between the Federation of Gay Games and Montreal's bidding committee. Despite warnings of a potential financial disaster, Montreal went ahead with its plans.

The committee also formed GLISA (the Gay and Lesbian International Sports Association), which, it claimed, would expand opportunities for LGBT athletics. Among its "four pillars" of goals is "the delivery of the Outgames."

But now GLISA has become more of a hands-off organization, which claims no fiscal responsibility. "We are troubled by the breakdown in the relationship between Montreal 2006 and its funding partner, the Quebec provincial government; however we know in our hearts this in no way will impact the vision we hold," said Rachel Corbett, GLISA's executive director, in a one-page announcement.

In an Xtra Canada interview, GLISA President Catherine Meade called part of the massive deficit "forgivable loans" that would hopefully come through.

Oddly, despite the Montreal event now being mired in controversy and potential lawsuits, when asked to compare the relatively small deficit from the Chicago Gay Games, Meade told Xtra that the "level and quality of events were like night and day," claiming that the Outgames "were more professional."

"It wasn't like we were renting someone else's rink," she told Xtra. "During the Outgames, it was our rink. Yes, $1.4 million is a lot of money, but the games were delivered on an unprecedented scale."

That scale now includes the highest deficit in LGBT sports history, and a potential record number of lawsuits.

Comments from the Federation of Gay Games stressed the fiscal responsibility that had become a breaking point between the groups three years ago.

"Years ago, the FGG took a position regarding the importance of fiscal responsibility in connection with the Gay Games," said newly elected FGG co-President Sion O'Conner. "Through partnership with the Chicago Gay Games organizers, we made a remarkable turnaround in that regard for Gay Games VII."

The Chicago event, organized in less than two years, after Montreal appropriated the Gay Games concept to create the Outgames, ended with a $200,000 deficit, most of which co-Vice Chair Kevin Boyer said would be paid for through late donations, grants, and merchandise sales, by its April 2007 final report.

What effect will this have in the long run? What "legacy" will the Outgames have, with orders for its commemorative book canceled, and its Web site shut down?

The second Outgames, scheduled for 2009 in Copenhagen, has two employees, both of whom work for Copenhagen's tourism board. There are no sport directors, nor any sports venues booked. A one-page press statement released last month by project manager Tommy Kristoffersen claimed more than $3 million in investments already provided by the city of Copenhagen. Kristoffersen did not reply to numerous requests for comment, even while he was in San Francisco for a tourism convention.

With this announcement ill timed as news of Outgames' imminent bankruptcy was announced, it calls into question whether there is any future for the Outgames, other than in court.

A smaller, seven-sport event scheduled for April 2007 in Calgary includes a small arts festival and human rights events. GLISA's Corbett claimed the event is going "full steam ahead."

Other ambitious events co-sponsored by GLISA include an Asian Pacific Games in 2008. But representatives for that and other events, including Anton Valev, GLISA's European director, did not respond to repeated requests for information.

Will any of these events take place, now that the reputation of the Outgames is mired in financial disaster? "GLISA, while not fiscally responsible for Montreal's decisions or debts, is consulting with Montreal's organizing committee to develop a positive resolution," said Thomas Kevin Dolan, GLISA co-president. How they plan to accomplish that has not been made clear.

Who would believe anyone carrying the Outgames "brand" would pay their bills, when hundreds of creditors have been left without a cent, or with only partial payments?

"We regret the damage that has been done to the collective reputation of the global LGBT sports and cultural community by the Outgames budgetary deficit," said the FGG's O'Conner, "particularly the losses suffered by unpaid creditors who partner in any such venture in good faith. History shows a host organizing committee needs to be accountable and responsible in its decisions to an experienced independent outside party that can temper overly optimistic and enthusiastic projections with prudent, realistic advice. This is especially true in financial matters."

FGG restructures

As the Outgames' finances seem to crumble, last month the Federation of Gay Games completed a multi-year project of board restructuring as a highlight of its 2006 annual meeting, held November 26-30 at the University Claude Bernard Lyon-Villeurbanne in Lyon, France.

The board restructuring is expected to improve the FGG's operating ability by more closely resembling a nonprofit organization model. The new structure consists of a 19-member board of directors and a general assembly comprised of LGBT sports and culture organizations.

"This week we completed the latest step in our transformation from a board of 50 voting directors to a smaller working board and a larger, easier-to-join assembly," said O'Connor.

"The assembly enables us to welcome greater numbers to participate directly in the work of the federation. We look forward to welcoming sports clubs, culture groups, city teams, and sports organizations from around the world to the Federation of Gay Games. We continue to embrace the principles of 'participation, inclusion, and personal best' and are committed to being increasingly inclusive and visible to cross new frontiers for LGBT sport and culture."

Chicago sent six representatives of Gay Games VII to report results from this past July's events and to premiere their DVD of Gay Games VII highlights. Cologne's Gay Games VIII organizing committee reported its plans for 2010.

Both groups received an enthusiastic welcome. San Francisco, the birthplace of the Gay Games, will host next year's annual meeting to celebrate the Gay Games' 25th anniversary.

Local board members who were newly elected or re-elected include Charles King, secretary; Alan Lessik, treasurer; Doug Litwin, officer of marketing; Roger Brigham, officer of communications; and Gene Dermody, officer of technology. (Brigham is a freelance reporter for the Bay Area Reporter.)

The meeting in Lyon marked the first time the FGG gathered in France. FGG board members reported their progress at a December 2 Team San Francisco meeting held at Eureka Valley Recreational Center. Team SF seeks new board members as well. For information, visit www.teamsf.org.

Read more columns at www.sportscomplex.org.






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