ANNEX B: FEDERAL HOSTING POLICY

INTRODUCTION

The hosting of international sport events offers Canada the potential to bring direct and significant benefits across a broad range of government priorities and can act as a catalyst for the achievement of other federal objectives. Athletes, coaches, officials and volunteers benefit from preparation programs, competitions, programming and facility legacies. Sport organizations also benefit from increased exposure and influence, and experience increased participation in the sport.

Economic benefits include job creation, particularly in the small and medium-sized business sector, regional development, increased tourism, increased exports, enhanced infrastructure and increased tax revenue.

Social benefits range from unique work experiences including training and youth participation, to volunteer promotion and increased emphasis on fitness and health.

Hosting also offers a forum to celebrate athletic, artistic and cultural excellence and provide Canadians with the opportunity to contribute to the expression of Canadian identity.

NEED FOR A POLICY

The Policy for hosting International Sport Events (Hosting Policy) is a key instrument in the federal governments's overall approach to sport development in Canada. It is designed to work with other government initiatives essential to the vitality of the sport system. Together, these efforts are intended to maximize sport-related benefits as well as those linked to other government priorities.

The Hosting Policy addresses two significant issues. First, the number of events on the hosting calendar continues to increase each year. At the same time, the costs associated with hosting and the period of bidding, planning and preparation leading up to staging an event are increasing. A hosting policy is needed to ensure that the federal government invests in only those events which reap significant sport, economic, social and cultural benefits.

The Federal government has historically provided a significant portion of the funding for the staging of events and has often been the primary funder of the associated legacy, particularly for major games. The financial funding model of the Hosting Policy will ensure closer partnerships between governments, private sector and franchise holders for both the staging and legacies associated with an event.

OBJECTIVES OF THE POLICY

The Hosting Policy is essentially a decision-making framework for determining federal involvement in the hosting of international sport events. The Policy clarifies the federal government's role in hosting and provides a transparent, decision-making tool for the government to assess proposals against strict criteria. The Policy links federal support to only those events which can bring significant net sport, economic, social and cultural benefits to Canadians.

SCOPE OF THE POLICY

The Hosting Policy applies to the hosting of major games (e.g. Olympics, Pan-American Games), strategic focus events (e.g. North American Indigenous Games) and single-sport hosting (e.g. world championships, world cups). The Hosting Policy does not apply to the Canada Games which are governed by a federal/provincial agreement.

TENETS OF THE POLICY

The federal government is interested in supporting the hosting of a reasonable number of international sport events, provided that a number of principles and conditions are met.

PRINCIPLES

Potential to accrue net benefits. The federal government will only support those events that advance national policy objectives; accrue significant net sport economic, social and cultural benefits; and ensure significant legacies. The potential benefits will be identified through the completion of the Assessment Guide (Appendix I) by the franchise holder; and

Fiscal reality. Notwithstanding all assessment criteria being met, the federal government is not obligated to provide funding for an event. Financial support is dependent upon available funding and Cabinet approval (primarily for major games).

CONDITIONS

Proactive partnerships. If federal funds are requested, franchise holders must seek federal support before any bid is made to the international franchise holder;

Provision of legacies. Franchise holders and host societies must invest directly in the associated sport programming legacies. Submissions must contain strategies to ensure continued sport programming and reasonable access to facilities for high performance athletes in perpetuity. Economic, social and cultural legacies related to the provision of services and benefits to the community at large will also be considered.

No deficit guarantees. At no time will the federal government undertake to guarantee deficit funding of an event.

Compliance with federal standards. Federal standards pursuant to the "Official Languages Act" and "the Fair Communication Practices: Treasury Board Manual" must be followed. Host societies must comply with all environmental laws and, federal principles on sustainable development and, where required, conduct environmental assessments in accordance with the Canadian Environmental Assessment Act. They must also follow the Standard Operating Procedures in the Canadian Anti-Doping Program.

Equitable financing. The federal government will limit its contribution to a maximum of 35% of total event costs and will not exceed 50 per cent of the total public sector contribution to the event. Calculations for determining federal financial support will include direct, indirect, and essential services, as well as any contribution towrads legacy. The federal government will not be the sole funder of the sport legacy.

Demonstrable community support. Proposals must indicate that there is sufficient community support for the event; and

Sound management. Organizers must demonstrate that they have the organizational ability and technical capacity to stage a successful event.

APPLICATION PROCEDURES

Applications will only be considered from the following organizations:

1. Canadian Major Games franchise holders recognized by a sanctioning International Federation;
2. National Sport Organizations that meet the eligibility requirements of the Government of Canada's Sport Funding and Accountability Framework or the Funding and Accountability Framework for Athletes with a Disability.

Groups seeking federal government financial support are asked to review the Assessment Guide contained in Appendix I. This guide provides a list of questions to guide groups in preparing their submissions for federal support. The questions contained in the Assessment Guide are based upon the Hosting Policy principles and conditions and should be addressed in all submissions.

Appendix II contains guidelines for conducting an economic evaluation of international sport events. By providing a standardized approach for determining the economic benefits and impacts of hosting an international sport event, the guidelines will help ensure the consistent and fair evaluation of applications for federal funding.

Application letters and background material should be sent to:

The Major Games Unit
Sport Canada
8th Floor, 15 Eddy
Terrasses de la Chaudière
Hull, Québec
K1A 0M5

REVIEW PROCEDURES

Following the receipt of submissions, Sport Canada will conduct an initial screening of each application. The steps in the evaluation process will differ according to the type, scope, cost and benefits associated with the event under consideration. In all cases, Sport Canada will be responsible for the initial assessment of submissions. Applications for major games proposals will then be assessed through a broad inter-departmental process. The extent of support will range according to the submission, type of event and available resources.

Applicatons for events with a strategic focus will generally be assessed through a more limited inter-departmental process. Single-sport applications will be reviewed by the Department of Canadian Heritage. The extent of support will vary according to the submission, type of event and available funds.

For further information, please contact the Major Games Unit, Sport Canada, Telephone: (819) 956-8130

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APPENDIX 1
ASSESSMENT GUIDE

The following list of questions will assist organizations and bid groups in the preparation of their proposals for federal support for the hosting of international sport events.

I. General

All bidding groups are requested, as part of their proposal, to provide a detailed budget outlining anticipated expenditures and revenues from all sources.

II. Sport Development

Sport development includes activities required for the staging of the event and those that will provide a post-event legacy. The involvement of other partners/agencies in the funding and programming of the legacy is a key consideration.

1. General
   1. How will hosting of the event enhance the development of sport in Canada?
   2. Outline the activities that will be undertaken to ensure that adequate doping control procedures are in place during the event.
   
   
2. Officials Preparation
   Outline plans, budget and funding sources for pre-event recruitment and training of officials, and post-event plans to maintain their involvement.
   
   
3. Volunteer Preparation
   Outline plans, budget and funding sources for the recruitment and training of the required number of volunteers to host the event and participate in post-event legacy programs.
4. Pre-Event Test Events
   Outline plans and budget for staging test events for athletes, coaches, officials and volunteers.
   
   
5. Legacy
   1. Facility Access: Identify a strategy, including partners, to ensure reasonable access to facilities (preferred times and rates) for high performance athletes, in perpetuity.
   2. Athlete Preparation: Identify a strategy, including partners, to maximize the sport programming and service benefits to high performance athletes, in perpetuity.
   3. Coaching Education and Employment: Identify a strategy, including partners, to develop and ongoing program for the educations, training and employment of high performance coaches, in perpetuity.
   4. Sport Medicine/Science Program: Identify a strategy, and partners, to provide sport/medicine/science expertise and programming for high performance athletes, in perpetuity.

III. Economic Benefits and Impacts

Economic benefits, usually examined in cost-benefit studies, are an indication of whether there will be a positive return on the investment. Economic impact studies attempt to demonstrate how spending related to the event (e.g. by visitors) circulates through the economy. The federal government is interested in both types of studies, but the two should not be confused not should the results be combines.

Appendix II "Guidelines for Completing Economic Evaluations," will assist organizations and bid groups to understand the requirements for and how to conduct cost-benefit analysis and economic impact assessments.

IV. Social Benefits

The federal government has set objectives and adopted policies and legislation which aim to give full substance and reality to social and human values. The degree to which an event attains, complies and supports these objectives is an important factor in determining federal support.

1. Canadian Identity and Citizenship
   Specify how the event will foster mutual understanding and consensus among Canadians and demonstrate the advantages and benefits of Canadian life and society.
   
   
2. Youth Involvement
   Specify the measures that will be taken to encourage youth participation in planning and staging the event.
   
   
3. Gender Equity
   Provide a policy and plan demonstrating an appropriate gender balanced for all areas related to the event.
   
   
4. Voluntarism
   Describe the plans to recruit volunteers, including selection procedures, training program, number of volunteers required and their function in staging the games and games legacy.
   
   
5. Official Languages
   Indicate what services will be available in the official languages. Will other languages be used?
   
   
6. Employment Equity
   Provide and employment equity plan outlining policies related to the hiring of women, visible minorities, people with disabilities and Aboriginal people (specify targets), and the policies designed to encourage greater participation by these groups.
   
   
7. Multiculturalism
   Outline the activities that will increase awareness and appreciation of Canada as a racially and culturally diverse country.
   
   
8. Aboriginal People
   Outline the activities that will increase awareness and appreciation of the important historical, social and cultural contributions of Canada's Aboriginal peoples.
   
   
9. Persons with Disabilities
   Outline plans to facilitated full access of disables persons to every site. Indicate also the degree to which athletes with disabilities will play a fully integrated role in the event.
   
   
10. Fitness
    Outline plans and/or programs designed to improve the general level of fitness of the population, to provide opportunities for broad-based participation in physical activity, and to contribute to the development of safe, active and healthy communities.
    
    
11. Public Support
    Indicate the level of public support for the event (an independent scientific survey and/or results of public consultations).
    
    
12. Environmental Assessment
    An independent scientific environmental assessment, including potential ecological, physic al and social impacts, is generally required. Depending on the type of event, public hearings must be held to allow the community to express its views.
    
    

V. Cultural Benefits

There are four primary areas of emphasis that the federal government wishes to consider in the assessment of cultural (as distinct from social) benefits of hosting international sport events. These include:

• the level of adherence to federally set standards for communication;
• the level of inclusiveness of linguistic and cultural aspects of the event;
• the level of inclusiveness in arts and heritage activities; and
• the level to which the potential for exposure to Canadian culture is exploited.

1. Standards for Communications
   
   1. Describe the use of the official languages. (Note: federal standards pursuant to the Official Languages Act must be followed).
   2. Describe the depiction of women, visible minorities, persons with disabilities and Aboriginal peoples in communication materials used before, during and after the event. (For guidelines please contact Sport Canada.)
   
   
2. Linguistic and Cultural Aspects
   1. According to the most recent census data, what is the population breakdown of the city and environs for linguistic minorities, Aboriginal peoples, gender and ethnocultural minorities?
   2. What will be the participation of these groups in the organization, staging and post-event activities?
   
   
3. Arts and Heritage Activities
   1. Describe plans for inclusion and participation of individuals from the various cultural organization and implementation of activities before, during and after the event.
   
   
4. Exposure of Canadian Culture
   1. What is the potential for the exposure of Canadian culture to tourists and media before, during and after the event?
   2. What specific activities are planned to capitalize on this potential tourism and media exposure before, during and after the event?
   3. What type of co-operation and co-ordination will be arranged between stakeholders in the cultural, tourism and media sectors?
   
   

APPENDIX II
GUIDELINES FOR COMPLETING ECONOMIC EVALUATIONS – ECONOMIC BENEFITS

I. Introduction

Economic benefits are the measurement, in economic terms, of well-being resulting from an activity. Economic benefits are usually estimated using a cost-benefit analysis, which compares the costs of the activity directly to the benefits produced by it. Non-quantifiable benefits are also considered when the measurable benefits (e.g. direct revenues) are not sufficient, by themselves, to justify the costs of the event. The non-quantifiable benefits may be enough, in the subjective judgement of decisionmakers, to tip the balance in favour of bearing the costs.

The federal government requires a cost-benefit analysis to judge whether the financial support requested is justified in terms of the benefits which will accrue to Canada as a result.

II. Overview of Cost-Benefit Analysis

A cost-benefit analysis examines all the costs which must be borne to host an event. This means those costs specified in the detailed budget outlining anticipated expenditures, as called for by the Policy, and the hidden or indirect costs (e.g. infrastructure that must be built by the local community).

It also examines all the benefits, quantifiable or not, derived from the event. This includes the direct benefits that will accrue to organizers (e.g., revenues from admission, television rights, corporate sponsorships, concession fees, licencing fees, etc., details of which are also required by the Policy), as well as the sport development, social and cultural benefits.

The cost-benefit analysis ends with a comparison of the cost to the benefits, which enables decision-makers to determine an appropriate level of subsidy.

III. Major Steps in a Cost-Benefit Analysis

1. Identify and measure all the costs which must be undertaken to host the event

   This step ensures that all costs are considered. Any costs that are going to be written off against the projected revenues should be included, as well as any indirect costs borne by third parties (e.g. municipalities) which constitute hidden parties (e.g., municipalities) which constitute hidden subsidies. Costs to be considered can include:

   1. development, presentation and promotion of the proposal
   2. planning the event
   3. operation of the event
   4. investment in direct infrastructure (e.g., facilities for the games) and indirect infrastructure (e.g., roadways, increased sewage facilities). Costs for related private investments (e.g. hotels) should not be included, since those costs are note being written off against projected event revenues, but rather will be written off against revenues of their own.
   5. post-event cost (e.g., to readapt facilities, to dismantle facilities)

   Costs may be reduced by the net value of capital assets which will remain in use after the event. This residual value should not simply be the nominal or book value used for accounting purposes, but should reflect the true utility or market value of the assets.

2. Identify the sources and amounts of funding

   This step determines how the benefits should be attributed to the various sources of funding, or contributors. The basic categories of funders include private investors, corporate sponsors and different levels of government, including those which provide infrastructure development or "in-kind" contributions.

3. Identify, document, and measure (to the extent possible) the benefits

   This step ensures that all relevant benefits are taken into account.

   1. Direct Benefits

      The first benefit to be taken into account is direct revenue from admissions, television rights, corporate sponsorships, concession fees, licencing logos and use of names, etc. This revenue will help defray costs and will reduce the need for subsidies from government. A comparison of direct revenue and costs will show clearly the shortfall that must be offset with subsidies and other benefits.

      Direct revenue from admissions is estimated from visitor projections (see Overview of Economic Impact Assessment, Step Three). Other direct revenues will be estimated based on expectations from negotiations between the bid group and the various sources of revenue (e.g., television networks, corporate sponsors, private entrepreneurs).

   2. Sport, Social and Cultural Benefits Sport, social and cultural benefits are described in the Assessment Guide, which requires bid groups to describe the activities that will produce such benefits. This cost-benefit analysis further requires that the bid group demonstrate the effect of their activities and the amount of benefit arising from them. For easier comparison to costs, these benefits should be measured, where possible, in dollar terms. Where this is not possible, measures such as the target population, the number of recipients, or the duration of the benefit can be used to give some idea of the extent of the benefit.

   Identifying Net Benefits from Tourism and Taxes

   Increased economic activity stimulated by the games generates net increases in tourism spending that would not other wise have occurred and, thus, net increases in taxes. This net increase in taxes may be claimed as a benefit to the federal government, if the distinction is made between the spending (and resultant taxes) made by local residents in the normal course of events and new spending by visitors who would have spent their money outside Canada, if not for the event. (See Economic Impact, Steps Three and Five).

   Warning: Economic Impacts are Not Benefits

   Increased jobs and economic activity resulting from spending done to host an event constitute an economic impact but, for purposes of the cost-benefit analysis, are not considered a benefit. This type of economic impact may benefit the local community or region which, without the event, would not have had such a level of jobs or economic activity but with respect to the whole Canadian economy, it is only a redistribution of spending from some other part of Canada. An equivalent expenditure anywhere in the economy would also have had the effect of increasing jobs and economic activity (see Economic Impact Assessment, Introduction). However, benefits associated with the increase in economic activity or jobs, such as the reduction of regional disparity. 0r the creation of opportunities to gain experience for the unemployed in a region of chronic unemployment, can be cited in the cost-benefit analysis (see Economic Impact Assessment, Step Five).

   Attributing Tax Increases to Subsidy Givers

   When estimating the net amount of taxes to be gained because of net new spending, it is important to recognize that not all increases to federal taxes are attributable to federal government spending. Private investment and subsidies by other levels of government are also responsible for increases spending which helps fill federal coffers. It is important to attribute to the federal subsidy only those tax revenues that it genuinely generated.

4. Compare the costs and benefits

   This step summarizes the costs and benefits described above so that the benefits can be easily compared to the costs being borne by each contributor, and so that the federal government can know what benefits Canadians are receiving in return for its subsidy.

   The benefits of an event will be produced by combined efforts of many contributors. It is important to attribute the amount of benefit to the contributors in proportion to their level of contribution to the total cost.