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Penticton taxpayers on the hook for Challenge losses
City taxpayers will be on the hook if the Challenge Penticton triathlon fails to emerge from red ink that’s expected to total $200,000 for the race’s inaugural year.
The city owns the Challenge-brand licence, which it assigned to a non-profit society, so it is ultimately responsible for any debts incurred, confirmed Mayor Garry Litke.
Sources with knowledge of the race’s finances have pegged the 2013 loss at $200,000.
“I won’t confirm or deny that,” said Litke, who claimed some of the society’s records contain “proprietary information.”
Penticton Triathlon Race Society president Paulette Rennie also declined to comment on the expected loss, noting year-end financial statements are still being prepared and such information could give competitors an advantage.
She clarified, however, that the city is only acting as guarantor on a line of credit.
“They’re not cutting us a cheque or anything,” Rennie said.
“They’re not handing us over any money at all.
“All they’re doing is backing us.
“If things went sideways, they would be responsible.”
Rennie would not discuss registration numbers for 2014 because that too could give competitors a leg up, she said, but allowed that the society expects it will take up to five years to make a profit, which would be disbursed to community groups, on what is essentially a new race.
“For us, this year was extreme in the sense that we’re building from the ground up,” she said.
Besides covering startup costs, she said the city agreed, prior to the formation of the society, to allow athletes until July to withdraw from the event and have their full $675 registration fee refunded.
Rennie estimated upwards of 150 racers took advantage for a loss of revenue of about $100,000.
Litke said the city knew the annual triathlon would struggle as it switched brands from Ironman to Challenge after the 2012 event, and will remain patient.
“History has shown that the (Challenge) race in Roth, (Germany), has grown way beyond what the Ironman format could accommodate,” Litke said.
“So we are expecting that same level of success here in Penticton, but we know it is not going to happen in the first or second or third year,” he said.
Besides seeking help to cover its budget shortfall, Challenge Penticton has also asked the city to provide the 2014 race with in-kind donations worth $110,000, about the same amount Ironman Canada received.
According to information supplied by the city, it provided in-kind services of just under $100,000 for the 2013 edition.
The biggest cost was $26,000 for three days’ catering at Penticton Trade and Convention Centre.
The next most expensive item was $12,400 in overtime for RCMP officers to provide traffic control.
In addition, Challenge Penticton has requested a $25,000 cash grant for next year from the Regional District of Okanagan-Similkameen.
The RDOS board, however, agreed to just $12,000 because some directors for outlying areas were concerned they wouldn’t see a return on investment.
Meanwhile, Osoyoos Mayor Stu Wells has suggested Penticton city councillors who serve with him on the RDOS board may be in a conflict of interest if they vote on a budget that includes the $12,000 grant.
He asked RDOS staff last week to seek a legal opinion on the matter.
“I would hate to have a budget go through and then find out it wasn’t, in fact, properly done. That would cause a lot of grief,” said Wells.
His concern stems from a lack of information about where the grant money will go, in particular if it will offset this year’s shortfall.
“They have a signed contract that we can’t see the language of and they won’t share it with us, and I understand that,” said Wells, but “it’s all sort of rather up in the air.”