Richmond Olympic Oval exits opaque sport sim biz - for now

The Richmond Olympic Oval Corporation has dissolved its subsidiary company, VROX Sport Simulation, which designed and built sport simulators for its interactive museum.

The Oval, a subsidiary itself of the City of Richmond, ended the partnership last November, according to its 2017 financial statement which was presented to council this month.

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The Oval, whose CEO, George Duncan, is also the city’s manager, owned a 50 per cent share of VROX, which was also directed, in part, by Duncan and several other high-ranking city and Oval executives. VROX was also owned, in part, by a private, small business: VRX Advanced Simulators. After a three year partnership, the Oval had bought five simulators and transferred about $1.4 million to VROX, according to a report to council in March 2017.

These specialty simulators are intended to draw visitors to the Richmond Olympic Experience (ROX) museum. 

City spokesperson Ted Townsend said VROX was dissolved because the Oval executive had reached its goal of gaining experience in building such simulators (including sit-ski, bobsleigh and kayak) and is now in a position to use its expertise to contract out any future purchases or repairs.

Initially, “what we were finding is we couldn’t get (simulators) at an acceptable, competitive rate in the marketplace,” said Townsend.

Now, “there is no ongoing need. Staff know companies it can work with to develop new ones. We know what the challenges are,” said Townsend.

At dissolution, the Oval and VRX split about $73,000 worth of assets.

For some time, the company intended to sell new simulators. In 2016, Oval/VROX staff went to China to market their products to Chinese Olympic officials, hoping to create a revenue stream. To do so, Duncan visited China on his personal time, said Townsend while ROX program manager Jason Kita was in charge of marketing.

While Oval staff had some contractual obligations to VROX, such as marketing, VROX compensated the Oval for any additional time spent on the company.

Transparency of the corporate structure was questioned by Richmond residents, including the Richmond Taxpayers’ Alliance, following a November 2016 Richmond News report on VROX.

In March 2017, Duncan acknowledged, in a report to council, the fact that VROX, as a semi-private company, was not subject to the Freedom of Information and Privacy Act. 

“VROX being designed as a private company and therefore not being subject to the same transparency and public reporting regulations as (the Oval) or the City is an unintended consequence of establishing VROX that neither (the Oval) or City Staff had anticipated,” noted Duncan.

The report stated Oval staff would contemplate dissolving the partnership or reaching a new agreement that would be more transparent. 

ROX is an International Olympic Committee-sanctioned Olympic museum that is expected to provide a revenue stream for the Oval. Following an initial $10 million investment, it has $3.9 million of deferred revenue, including the additional $1.4 million of hotel tax revenue used to purchase additional assets in 2017 for a renovation.

“I think we’ve been pleased with the process. Starting a new attraction is an evolving, growing situation. Response from the public is it’s been a great, quality experience,” said Townsend.

The Oval brings in significant numbers of sporting events (45 in 2017) that add to the city’s hotel tax revenue, noted Townsend.

Last year, the city spent $3.4 million on the Oval, $1.2 million of which went to a surplus account (for the likes of repairs) that now sits at $16.1 million (including $9.1 million of capital assets).

While council’s liaison to the Oval, Mayor Malcolm Brodie, deferred specific questions about VROX to staff, he said he is satisfied with the Oval’s financial situation — likening it to a large community centre. He said he is also satisfied with the reporting of Oval activities to council.

“I think we’re always informed as to what’s going on at least in a general sense,” he said.

Three reports on city management structures were released at a council meeting on March 17, 2017

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