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BIKING IN THE LOIRE VALLEY
The Venture Philanthropist
Venture philanthropy and social entrepreneurship are hot topics these days. One of the first such enterprises to gain attention in Canada, though, was started 15 years ago. I wrote about it then for CPAmagazine.
It wasn’t exactly a eureka moment, but it was pretty close, says Bill Young, founder and president of Toronto’s Social Capital Partners Inc.
He is referring to his decision to dedicate his time and money to charity, not long after his mother gave $40 million she had made off a hot tech stock to a charitable foundation. “I’d volunteered my time on boards, been a Big Brother, but I always had an inkling that I’d like to do more,” says the 48-year-old CA.
So in 2001, Young opened SCP, which provides grants to early stage nonprofit organizations that don’t rely on government funding.
“The idea is to invest in visionary leaders and offer them our expertise. It’s venture philanthropy,” says Young.
SCP’s aim is not only to make a success of its beneficiary organizations but also to ensure disadvantaged employees get valuable training. While still in its early stages, SCP has five deals on the go, including a $65,000 commitment to a Winnipeg joint venture of five not-for-profits called Inner City Renovations, whose staff of 15 (12 are disadvantaged First Nations people) renovates inner-city homes. “It provides both low-income tenants and the unemployed with a future and with hope,” says Young, calling it a holistic solution to some larger social issues.
Young, who spent 20 years in the private sector, supports his philanthropic venture with its three full-time staff with $10 million he earned after investing in his cousin’s Red Hat Inc. The US company hit pay dirt when it became the leading supplier of Linux operating system software and is the source of his mother’s windfall.
“What I’m doing now has a double bottom line: a beneficial financial outcome for the organizations we give to and tremendous social returns,” says Young. “This is giving me the opportunity to do something truly meaningful.”
–-Bonnie Munday
Copyright CANADIAN INSTITUTE OF CHARTERED ACCOUNTANTS Mar 2009. Provided by ProQuest LLC. All inquiries regarding rights or concerns about this content should be directed to Customer Service. For permission to reuse this article, contact Copyright Clearance Center.
Top Businesspeople Who Care
Who says that high-flying executives aren’t giving back enough? More and more Canadians are giving their time, money and effort to make a difference in the lives of others. These three are no exception; I wrote about them in 2003 for CPAmagazine.
“Muchas gracias, senor, muchas gracias,” says the principal of the Pastobamba school in the mountains of southwest Ecuador as he earnestly shakes the hand of Edmonton FCA Wayne Kauffman. A makeshift dental clinic has been set up at the school on this sunny January morning, and Kauffman is about to show the children how to brush their teeth. “They drink cane sugar water and have little idea about dental hygiene,” says the 57-year-old associate executive director of the Institute of Chartered Accountants of Alberta, who will send the kids on to see the dentist. Kauffman and his wife, Vivien Wulff, also a CA, are part of a team of 32 Canadian volunteers – including orthopedic surgeons, physiotherapists, dentists and nurses – who have come to Ecuador to offer surgery and medical care to people in need. But Kauffman is not just a volunteer here; he also led the fundraising that made this trip, as well as missions in the area in 2001 and 2002, possible. Through speeches and appeals to Edmonton-area Rotary clubs, he raised $109,000 for this mission alone – money that pays for much-needed medical supplies and equipment.
Of course, the most rewarding part, says Wulff, is to see how the money is being used and how appreciative the people are. Kauffman agrees the hands-on volunteering makes all the difference. “When there are tasks to be done, it’s my nature to not just stand by, but to make it happen,” he says. “It takes a whole team, but I feel like I’ve made people’s lives a little better.”
Kauffman and Wulff are among an increasing number of Canadians in recent years who have been looking for ways to give back to their communities and to humanity as a whole. They are doing so by giving their time, money and effort. Volunteerism in general is up: a 2000 Statistics Canada survey shows the average number of annual hours contributed by a volunteer rose to 162 from 149 between 1997 and 2000. Total charitable giving in Canada has also increased; fundraising consultants Ketchum Canada Inc. estimates donations rose 12.6% to $7.8 billion from 1999 to 2001. Corporations are getting in on the act too: Statistics Canada reports donations as a percentage of corporate pre-tax profit rose by more than 50% from 1988 to 2000 – in dollar terms that’s $1 billion. And, according to Volunteer Canada, a national umbrella group of volunteer centres, employer-supported volunteer programs are on the rise.
But individual business professionals are now searching for unique ways to contribute to society, says David Bornstein, author of the soon-to-be-published How to Change the World: Social Entrepreneurs and the Power of New Ideas. “At cocktail parties there used to be obsessive talk about the stock market and leveraged buyouts. A lot of that has shifted to what businesspeople are doing to apply their business skills and money to make change happen in society. It’s the most exciting thing you can do right now.”
Social entrepreneurship and venture philanthropy are “definitely major world-wide trends in business,” says Bornstein, a McGill commerce graduate. He points to high-profile examples such as Bill Gates’ donation of hundreds of millions of dollars to combat AIDS and malaria, and eBay founder Pierre Omidyar’s foundation to support social entrepreneurship. In addition, major US business schools – including Yale, Harvard, Stanford and Columbia – have new courses on social entrepreneurship, with students re-evaluating workplace values.
“I get a sense that with recent corporate crises like Enron and WorldCom, some business students are concerned about being part of that trajectory: going to a glamorous firm, making bags of money and then finding that at the core the firm was unethical,” says Ann Armstrong, who teaches a second-year elective MBA course on social entrepreneurship at the University of Toronto. “Some students are saying, ‘For me and my values, I’d like to use my skills to make a difference.’ ”
CAs are doing their part, too, contributing in ways far beyond sitting on charity boards or volunteering at tax clinics each spring. Take Toronto-based CA Bill Young. The 49-year-old father of two used to work in the private sector, most recently as head of Optel Communications, but always wanted to do more with his life. “I sat on various boards and committees and was a Big Brother, but I was thrilled when the circumstances came together to start Social Capital Partners,” he says.
As CAmagazine reported in December, Young launched the nonprofit SCP in 2001 with a $10-million tech-stock windfall, offering expertise and grants to start-up businesses across Canada, the majority of whose employees are the disadvantaged. One year later, Young is more committed than ever to venture philanthropy.
SCP’s first project – a $200,000 investment in Pivotal Services, a London, Ont., nonprofit company that began by hiring psychiatric patients to assemble product packaging – now has more than $1 million in revenue. The company has 50 employees from outside the economic mainstream and provides them with a crucial stepping stone for re-integrating into society. Young calls this double bottom-line the social returns. “We’re looking for a beneficial social outcome,” he says.
He expects the same from the $65,000 SCP invested in Inner City Renovations of Winnipeg in August 2002. The joint-venture enterprise (which employs 28 staff, more than half Aboriginal Peoples) has transformed 30 derelict houses, mostly in Winnipeg’s depressed north end, into lowincome housing and boasts $100,000 in monthly revenue.
“There’s about 50% unemployment in that neighbourhood,” says SCP’s director of social returns Joanne Norris, one of three full-time staff. “We hire those who have little hope of getting work elsewhere. Most haven’t finished high school, or have spotty employment histories and criminal records.” Working under skilled supervisors, employees earn on average $10 an hour to support their families. They used to rely on food banks, but very few need them now.
Most recently, SCP issued a grant of $60,000 to Quebec nonprofit firm Montrealite, a T-shirt company that employs youths in danger of dropping out of school but who show promise. The idea is to give them jobs in the summer and mentor them in the winter with such incentives as bursaries to continue studies. The venture – which kicked off in summer 2002 with 21 students designing the T-shirts and selling them at four kiosks they managed in Montreal tourist spots – didn’t prove to be as successful as Young had hoped because of difficulties obtaining quality, high-traffic kiosk locations. But Young expects SCP to hit bumps along the road. “We do our due diligence, but what we fund is ultimately on a proof-of-concept basis,” he says. “Few venture capitalists look at pure startups, so we recognize we’re going to have a higher failure rate.”
Because Young feels Canada needs more outside-the-box social initiatives, he gave $200,000 to U of T’s Rotman School of Management for an MBA fellowship for social entrepreneurs. “Partly it’s to get people thinking the way we at SCP do,” he says. “Giving people from the not-for-profit sector a business education may help facilitate more hybrid organizations.”
Armstrong says Young’s scholarship and the SCP example is spreading the word about social entrepreneurship. “Through trial and error, Bill is helping us understand what its challenges are and is hastening its development in Canada.”
Gary McPherson, executive director of the Canadian Centre for Social Entrepreneurship at the University of Alberta, agrees: “Bill Young is one of the new leaders of Canada’s venture philanthropy trend. His work is innovative, and I hope he’ll make it a success.”
Indeed, Young is “absolutely committed” to the path he’s chosen and is driven by the idea that he can help make venture philanthropy more mainstream. “My motivation is knowing that if I don’t make this work, I’m going to be letting lots of people down,” he says.
Bornstein would also like to see others follow Young’s lead and believes chartered accountants are well-positioned to do so. “They have developed trust relationships and have their contacts built up, so they make good social entrepreneurs,” he says. “I’d love to see more CAs raising money or starting organizations for causes across Canada. It’s a great way for the profession to contribute to society.”
Harvey Kestenberg is certainly doing his part. This Markham, Ont., CA has led the way in Canadian fundraising for the Juvenile Diabetes Research Foundation. Kestenberg’s involvement with the JDRF began 10 years ago when his three-yearold grandson, Jared, was diagnosed with the disease. “That broke my heart,” says the 63-year-old partner with tax firm Kestenberg Rabinowicz and Partners LLP. “It means insulin injections three or four times a day, finger pricks up to eight times a day and around-the-clock monitoring for the rest of his life.”
He realized Jared’s best hope was medical research and in 1995 entered his family in the JDRF walkathon. By sending letters to friends and business contacts, he raised $2,000. “And I said to myself this isn’t enough.” The next year he raised $5,000, and has increased the amount each year for a grand total of $95,000 in the six years he’s been involved.
“What he’s raised is unheard of,” says Lynn Conforti, JDRF fundraising coordinator for Ontario’s York Region. “For four or five years he was the No. 1 donor in Canada.” Then two years ago, a British Columbia family called Conforti and wanted to know what Kestenberg’s goal was that year because it wanted to beat it. And it did – by bringing in $29,000. “Harvey has really raised the bar,” says Conforti. “The standard he’s set and the money he’s brought in has had a direct impact on the amount of diabetes research being done.”
One such advance is the insulin pump, which has helped sufferers such as Jared, now 14. It sits on his lower back and when he pushes a button a needle injects insulin. “He doesn’t have to stop what he’s doing four times a day to prepare needles,” says Kestenberg. His ultimate hope is for a cure.
So what’s his fundraising secret? Conforti thinks it’s partly the passion he conveys in speeches and letters. But it’s also the way he makes use of the contacts he’s built up in his firm. “I send them letters asking for support,” he says, “and I call, cajole and sometimes pester.” Some people simply ask him what they gave last year and then write a cheque for $1,000 or $2,000.
Jane Rowland, formerly of Imagine, the corporate arm of the Canadian Centre for Philanthropy, is convinced that leveraging connections is the key to fundraising success. “I think it’s just human nature that if someone you know approaches you for a donation, you’ll pay more attention.”
“It boggles my mind they care that much,” says Kestenberg. “I have friends who give me $350 and I ask why so much. What if this request came in the mail? And they say, ‘but it came from you.’ ”
JDRF is just the latest organization to benefit from Kestenberg’s generous efforts – he’d previously served four years on the board of a charity for Jewish seniors, and provides, through his firm, financial support to nonprofit organizations such as the Colorectal Cancer Association. He also contributes to a host of causes including hospitals, the Cancer Society, the Hearing Association and others. What motivates him to do so much?
“I had a pretty rough time of it growing up,” he says. “My father worked at a furniture manufacturer, so I didn’t miss any meals, but those early years were difficult.” Once Kestenberg, the first in his family to attend university, got on his feet and was able to give something back to the community, he did. “I believe it’s necessary,” he says simply. “There are organizations that require help.”
As for Kauffman, his original inspiration to get involved in the Ecuador missions was a speech at his Rotary club by Thomas Greidanus, an Edmonton orthopedic surgeon who had led previous, smaller medical trips. But the key to his success is old-fashioned hard work. “The most outstanding thing about Wayne is his perseverance,” observes Greidanus. “He just sticks to it and works away. I’ve had other people say to me in the past, that sounds like a great cause, I’ll help you, but then nothing happens. Wayne takes the cause and runs with it.”
That’s not to say Kauffman takes himself too seriously – his enthusiasm and sense of fun adds to the spirit of the missions. For example, when the medical team visited a school to perform surgery on students with clubfeet, Kauffman brought them soccer balls as a motivation to recover quickly. “He’s always joking and teasing, and just mixes right in,” says Greidanus. “Some of the patients were calling him Dr. Wayne. He thought it was pretty neat to have that title.”
Of course, most of the work comes before the trips. Kauffman spends about 100 hours soliciting donations and preparing grant applications to Rotary Foundations and other organizations. That’s where being a CA is particularly helpful, since the clubs need answers to a host of questions – about the project’s objectives, recipients, budget and bank accounts. In fact, Kauffman is now applying his CA skills in a different capacity – he recently accepted a three-year post as district chair of the Edmonton-region Rotary Foundation.
But what kept Kauffman going was seeing the money he raised in action. Thanks to the missions, some 500 people have received dental treatment and 70 have undergone life-changing orthopedic surgery they couldn’t have hoped to afford on their own. Olga Lopez, for instance, had been wheelchair-bound much of her life and in 2002 Greidanus’s team brought the young mother a prosthesis and performed hip surgery on her. When they next saw her, in 2003, she hobbled up to Kauffman using only a crutch and thanked him.
“Seeing her tears of joy at that moment was very moving, and the fact that she is mobile is amazing,” he says. “By reaching out to people, at the end of the day I feel I’ve made a positive difference. It’s a labour of love.”
Bonnie Munday is a Toronto-based freelance writer
Copyright CANADIAN INSTITUTE OF CHARTERED ACCOUNTANTS Mar 2009. Provided by ProQuest LLC. All inquiries regarding rights or concerns about this content should be directed to Customer Service. For permission to reuse this article, contact Copyright Clearance Center.
Championship Vision
For the first time in years, I’m excited about being a Leafs fan. Those changes at the top–from GM to President to Coach–are what we’ve all been waiting for. Sure, we may need a few years to be a top contender, but we’ve got to start somewhere. Nobody has disputed the success of the organization as a business, though. For proof, here is a story I wrote more than 10 years ago for CPA magazine, a profile of the CFO of MLSEL.
Ian Clarke shakes his head as he signs the first paycheques of the 2002/2003 NHL season for the Toronto Maple Leafs in his downtown Air Canada Centre office.
“Sometimes I’m signing biweekly payroll deposits that are more money than I’ll make in a year,” he says with a boyish grin. But he doesn’t seem to mind. It’s not just for the financial returns that Clarke is senior vice-president and CFO of Maple Leaf Sports & Entertainment Ltd. (MLSEL) – which owns the Toronto Raptors, the Leafs, Raptors TV, Leafs TV and the 19,800-seat Air Canada Centre. “I am proud to be associated with these teams,” says the 42-year-old CA, who clearly loves what he does. “I’ve felt very lucky to work with a great bunch of people in a fun business.”
When Clarke joined the company as a controller in 1990, it was known as Maple Leaf Gardens Ltd. and had 110 full-time employees with revenue of $36.6 million. Since then, the organization has experienced explosive growth, especially in the four years since the Leafs bought the Raptors and the ACC, and the organization became the MLSEL. Today the number of employees – coaches, marketing staff, maintenance people – is 380, plus about 1,800 part timers (ushers, ticket-takers, concession staff). Revenue has grown to more than $350 million from $70 million just before the merger.
Clarke oversaw most of the financial changes during this period, and while he modestly refuses to claim any personal responsibility for the organization’s successes, it is clear that his boss sees him as a special and valued member of the MLSEL team. President and CEO Richard Peddie, recognizing his energy and proactive attitude, named him senior vice-president in 1999, a few months after the ACC opened.
“Ian is an excellent CFO,” says Peddie. “The output of his whole team – he has IT as well – is fast, accurate and thorough. Our monthly financial package is one of the best I’ve ever put out, and that’s the feedback from our banks and directors as well. The board seldom seems to have questions.”
BORN AND RAISED in Montreal to a family of modest means – dad was a highschool teacher and university professor, mom worked in accounts at Bell Canada – Clarke graduated with a BComm from Concordia University in 1984 and moved to Toronto in the fall to article at KPMG. Among his clients were the now-defunct Grafton Fraser retail chain, Ontario communications and cable giant Rogers and, from 1985 on, Maple Leaf Gardens. When MLG’s secretary treasurer Donald Crump announced he was leaving to become CFL commissioner, MLG “borrowed” Clarke from KPMG in May 1990 and offered the 29-year-old the controller’s job a few months later.
“Ian showed a wisdom and a sense of how to deal with issues that were far beyond his years,” says Bill MacKinnon, a former partner in Clarke’s audit group and currently CEO of KPMG. (Clarke describes MacKinnon as his mentor.) “Frankly, I think that’s what attracted the Gardens to hire him. And he’s a natural leader. He would have made an excellent partner if he’d stuck around.”
Up to the early 1990s, vestiges of the Harold Ballard ownership era had left the MLG management group with a tough fight in the arena of public opinion, as the organization had somewhat of a reputation for being a cash box. The fans just kept coming though despite their team’s poor performance; indeed, ticket revenues exceeded player compensation. But the new management was trying to turn the organization’s image around, and Clarke came in as this was getting underway.
“The new strategy was to invest in our team and our arena,” he says. “In the Gardens itself we fixed up the concourse and the food and beverage outlets, we started selling beer and we added more corporate suites. ” And they started spending more on talent. According to Clarke, player remuneration, which is estimated by ESPN to be US$54.3 million, today far exceeds ticket revenues. (Clarke will not disclose either amount but does acknowledge it is the team’s largest source of revenue.)
Then came the greatest change: its purchase of the Raptors and the ACC. In late 1995, the team played in the unwieldy SkyDome. Its owners had been accumulating land near the lakefront to build a more basketball-friendly venue that could also host concerts. About the same time, MLG, led by Steve Stavro, was also looking to build a modern home for the Leafs downtown. It soon occurred to both the groups that it might be wiser to put two teams under one roof, since what makes an arena profitable is having a sports team to play in it – guaranteeing audiences for a certain number of nights (41 regular NHL season games, plus any playoff games). With two teams, at least 90 games would be locked in, plus there would be revenue from concert bookings and the associated food and beverage and merchandise sales.
So, in April 1998, the Leafs bought the Raptors and the ACC, which was already under construction. The newly minted MLSEL added to the ACC a practice facility, larger and more suites, escalators and a brew pub, making it a $265-million project. The arena opened in early 1999.
Practically overnight, the organization where Clarke was CFO had grown from corner store to supermarket. (MLSEL’s value has been estimated to be $1 billion.) “Ian played a big role in that transition,” says Ken Dryden, president of the Toronto Maple Leafs and Clarke’s boss from 1997 until the merger. Indeed, Clarke found himself involved in all the due diligence and legal work that must be done in a merger; he also temporarily had HR reporting to him as the two organizations were put together. Dryden says Clarke was now managing something that had much more of a corporate structure.
The MLSEL’s transformation mirrors the change underway then in the sports and entertainment business across North America. Up to the early 1990s the industry had been laid-back and shapeless; now it has become more structured and is being run in a more businesslike manner. Teams have to be organized: they need financing to cover the ever-increasing player salaries, and as a result grading agencies such as Moody’s have, for the past four or five years, been examining teams’ creditworthiness.
Player salaries are, of course, a major challenge for Canadian teams since players are paid in US dollars, while revenues are in Canadian dollars. “That means we need to generate $1.57 [depending on the exchange rate] for each US dollar we pay out,” explains Clarke.
One of the ways Clarke deals with this is to hedge annually. “Let’s say today I decide I’m going to buy US$4 million next April. The bank that I deal with will lock me into an exchange rate, say, $1.57. That way I can do my budget for the next year knowing that I bought that amount of dollars and what my cost for those dollars will be. Then as we go to set our ticket pricing and other pricing, I know what our cost base is. Clarke says he hedges between 65% and 80% of the US dollars he will need on a yearly rolling basis, and goes unhedged for the remainder. “Hedging means we don’t end up looking at a big unexpected hit due to the exchange rate shifting.”
The dollar-value discrepancy is a legitimate issue for Canadian clubs, but observers say it’s something they know going in. “Owners shouldn’t complain about that,” says David Coriat, CA, CFO of Standard Broadcasting Corp. Ltd., in Toronto. Coriat was on the Raptors board of directors representing former owner Allan Slaight before the Leafs bought the NBA franchise. “There’s no question the lower dollar value has an impact compared to US-based teams, but it’s a known factor when you decide to buy a team. Owners can moan all they want about it, but that’s the reality. And despite that, it’s still worthwhile to run those franchises in Toronto.”
The financial figures appear to bear him out. MLSEL is not a public company so Clarke won’t disclose numbers. Forbes magazine, which annually publishes estimates on NHL franchise values, speculated last fall that the Leafs are worth US$241 million (seventh in the league; Detroit is No. 1) and have an operating income of US$24.2 million – by far the highest in the league. Indeed, the next highest team is the Minnesota Wild, at what seems in comparison paltry at US$12.1 million. The Leafs’ debt-to-value ratio is 26%, down from 68% two years earlier; most if not all of that debt is thought to be the construction of the ACC.
Clarke also won’t break down the values of the MLSEL’s respective assets (Leafs, Raptors, digital channels, and the ACC) but the latter is thought to be of great value to the company.
“It’s a very well-run building,” says a respected Toronto-based sports business consultant who did not wish to be named. “It’s stand-alone good.”
Another advantage that many US team owners have over their Canadian counterparts is little or no property taxes and government-funded arenas. According to Clarke, MLSEL not only spent $265 million on the ACC, it also spends millions on upgrades each year. Next year, for example, it will spend $6 million.
“Improving the facility is one of our challenges every year,” he says. “It’s what our fans have come to expect.” But there is a lot of interest cost that goes along with that kind of money, he adds. “If you’re in a US city where the local government finances that and gives you the revenue streams, it’s obviously easier. But when you pay $265 million for your building, you have to carry that interest component. If you don’t get funding, your financial model changes.”
But again, say critics, this is just a fact of life. “These people operate a private business, and they operate it for profit,” says David Shoalts, a 16-year veteran hockey reporter with The Globe and Mail. “What goes on in the US has nothing to do with what goes on here.”
Besides, he says, NHL teams in cities such as Phoenix and Nashville, to name just two, have “basically been handed their arenas, yet they’re still in trouble.”
There’s no denying that the economic realities of running an NHL team in Canada make it especially difficult for smaller markets such as Calgary and Edmonton. But Toronto is fortunate in that it’s home not only to extremely loyal fans, but, more important, also to so many corporate head offices. That partly explains why the Leafs have an average attendance of 100% despite having the highest ticket prices in Canada (the average ticket price is US$60). League-wide, according to an October 2002 Team Marketing Report survey, they are fifth-highest. MLSEL also put ticket prices up for this season by almost 10%, which is the fourth-highest increase in the league.
“You have people who feel our ticket prices are high,” says Clarke, “but it’s one way we mitigate the 63 dollar.”
The currency difference is a valid reason for having to charge a lot for tickets, says the sports business consultant who declined to be named. “But I feel it’s tied more to what the market will bear. And they have a huge corporate base. I mean not a lot of individuals are paying the $200 a seat per game for season’s tickets.”
Shoalts is more blunt: “The Leafs have proven that in this market, people will pay anything to watch hockey. Those corporations will just sign the cheque every year for season’s tickets and not even look at the price. People will line up to pay.”
How else do the MLSEL teams earn money? After fan attendance, Clarke says, it’s broadcast rights, followed by such corporate sponsorships as Molson, Air Canada and Bell, and also suite rentals. Clarke won’t reveal numbers, but the Raptors are thought to be taking in between US$25 million and US$30 million a year from the NBA for TV rights in the United States; all NBA teams receive the same share. “That definitely helps the team’s financials,” says Clarke. The Raptors’ local TV deals are not nearly as lucrative (no dollar figures are available). The Leafs, for their part, get an equal share along with all the other Canadian NHL teams of national TV rights — according to the Globe, that works out to between US$6 million and US$8 million per club. But the real TV money for the Leafs comes from local TV rights, estimated to be $23 million a year, by far the highest among Canadian NHL teams.
A UNIQUE organization such as this — which has two teams in one arena that it owns – can certainly create some synergies. “You have less overhead so you can maximize efficiency,” says Clarke. “Not too many sports organizations in North America can say that.” But this also puts MLSEL in the unique position of having to market both a newer franchise in a sport that is relatively unknown in Canada, and a 75– year-old team playing a game that’s part of the fabric of this country.
“The Leafs are a tradition here, they’re the blue and white, and the Raptors are up and coming – they’re establishing an identity as exciting, young, vibrant,” says Clarke. “We keep the two separate. We recognize that a trap you can fall into is trying to market yourself to the public in a confused way.” And yes, he acknowledges, in keeping the teams separate there are some extra marketing costs, but ultimately it pays off.
Another challenge is to figure out how to turn basketball into something as popular and as tied into the Canadian psyche as hockey. “Our research shows that basketball is very close to being the second most popular sport in Canada,” Clarke says. “But we need to get the grassroots going. We know that if you play a sport as a kid, you become a fan in the future. It’s about getting new fans into the arena”
One way of doing that, of course, is to attain and keep as many big-name players as possible. “We jumped a hurdle last year when we re-signed all our free agents, including Vince Carter and Antonio Davis,” says Clarke. “So now we can start to say, yes, Toronto is a hockey town, but it can also be a significant basketball town in the minds of the players.’ And what MLSEL needs to do now, he says, is build on that, have people come see the product.
Unfortunately, the first half of this season has been plagued by injuries, which hits the bottom line hard. “First, you have to go out and get more players who can play, while you’re still paying the injured player,” explains Clarke. “Second, if the injuries mean your team loses a few more games, some fans might not come. And if they don’t buy a ticket, they’re not in the arena buying your T-shirts or your hot dogs either.”
But the Raptors are in no way a liability to the company. The team sold almost 14,000 season’s tickets in 2002, a slight decrease on the previous season but easily in the top third of the NBA. And last season they sold out more than 80% of their games. Fan attendance to Raptors games is also in the top third in the league, according to Clarke.
It’s true that average NBA salaries are higher than those in the NHL – last year they were US$4.5 million versus US$1.64 million. According to Clarke, though, the overall payroll is about the same for both teams, since included with the Leafs’ payroll are farm team players (the Raptors don’t have a farm team). “You’d always like to be more profitable. But the Raptors are fine,” he says.
“The Raptors aren’t causing problems for MLSEL,” agrees the sports business consultant. “If they continue to not be a winning team, then perhaps the profitability of MLSEL will be affected if ticket sales go down. It will be interesting to see how the fan base reacts”
Clarke won’t disclose the amount or proportion of money that has been budgeted for MLSEL’s respective teams, other than to say that 70% of overall company expenditures are for payroll, but he does say that the organization’s philosophy is that the teams are its engines. “In sports you can take the attitude that if things go to the tank you’ll spend less on players, but we say spend on players and you’ll bring back the fans through success. You’ve got to make an investment to have it pay off in the long term. And it’s a continual process.”
Despite the spending, Maple Leafs fans are frustrated that the team hasn’t won the Stanley Cup since 1967. Clarke, however, is adamant the organization wants its flagship to win it as much as they do. The company truly believes it’s running things the way the fans want it to.
“We have spent significant money on the Leafs to win the championship,” he insists. Unfortunately, he says only one team out of 30 is going to win the Stanley Cup, “but in the past four years we’ve gone to the final four twice. Not many teams can say that. But we haven’t had the ultimate success we’ve wanted, and that our fans have rightfully wanted.” In the past four years they have ranked in the top seven or eight teams in the league in terms of spending.
“If anyone wants to say we’re not committed I would argue at great length with them. This year we increased the team payroll by 32%.” In fact, reveals Clarke, this spring the Leafs will be either the third– or fourth-highest spending team in the NHL.
Clarke and the MLSEL definitely want playoff success because, besides making the fans happy, it’s also very profitable. This is because salaries are paid only during the regular season games; players earn league and contract bonuses in the playoffs. “So if my players’ salaries exceed ticket revenues during the regular season,” Clarke explains, “I need other revenue to make money. But when you make the playoffs, tickets revenues are a bonus.”
The organization has certainly come a long way in the dozen years that Ian Clarke has been part of it. Indeed, another change was the sale by 75-year-old chairman Steve Stavro, of his controlling interest to BCE Inc.’s Bell Globemedia. When the two teams first merged, Clarke and others carried out best practice studies on cities with arenas for both an NHL and an NBA team – such as New York (Rangers and Knicks) and Vancouver (Canucks and Grizzlies, which has since moved). Now, sports organizations are doing best practice studies on MLSEL. “People are coming to us and asking how we did it,” says Clarke.
“We’re winning marketing awards, arena awards, and that’s what we’re about– we have a championship vision. We want to be No. 1 in North America.”
For now, the unique combination of elements that make up MLSEL appears to be a match made in sports heaven. And Ian Clarke embodies that perfect fit.
Bonnie Munday is a freelance writer based in Toronto
Copyright CANADIAN INSTITUTE OF CHARTERED ACCOUNTANTS Mar 2009. Provided by ProQuest LLC. All inquiries regarding rights or concerns about this content should be directed to Customer Service. For permission to reuse this article, contact Copyright Clearance Center.
Hold That Tiger!
The upcoming Grey Cup 2016 to be held in Toronto got me thinking about an article I wrote about the then-owner of the Hamilton Tiger Cats. This article was published in CPAmagazine in 2001.
By Bonnie Munday
THE ROTUND, ELDERLY MAN WEARING A BLACK BOWLER IS IDENTIFIED ONLY BY THE NAME ON THE BACK OF HIS SHIRT: Pigskin Pete. Positioned in front of the east stand at Ivor Wynne Stadium for Hamilton’s 2001 season home opener, Pete leads the boisterous crowd of nearly 20,000 in the time-honoured Ti-Cats chant:
Oskee We Wee, Oskee We Wa, Holy Mackinaw, Tigers, Eat ’em raw!
Pigskin Pete has been a Tiger-Cats mascot for half a century (this 27-year veteran is only the third person to take on the role), but the team itself has been alive for much longer. At 132 years and counting, it’s the oldest in the Canadian Football League and a source of pride in “Steeltown;’a city of more than 624,000 halfway between Toronto and Niagara Falls.”I just couldn’t imagine Hamilton without the Tiger-Cats,” says Sandy Arnott, 37, a bookkeeper, mother of one and lifelong, die-hard fan. To thousands of other Hamiltonians, the disappearance of the city’s only professional sports team doesn’t even bear contemplating.
Yet the unthinkable almost happened just a few years ago. With the economy in recession, big layoffs in the steel industry and a dismal team on Ivor Wynne’s artificial turf, the Ti-Cats were on the skids by 1993. That’s when CA David Macdonald entered the game.
From the office of the vice-chair at Brawley Cathers Ltd., a financial and investment consultancy in downtown Toronto, you can see the Toronto Stock Exchange and the banks of Bay Street – not an unexpected setting for a financier’s place of work. But inside David Macdonald’s office, the scene is a little different. On one wall is a huge colour photograph of a live, stalking tiger, and on the other, a bookshelf loaded with signed footballs.
“I’ve always been a sports fan,” says the plain-speaking, stocky 50-year-old. Macdonald played junior and university hockey, and still plays pickup hockey, hardball and softball, and touch football on some weekends. “But the last thing I ever thought I’d do is run a football team.” Nonetheless, he seems tailor-made for the job of Tiger-Cats chair, CEO and majority owner: soon after he bought the team, it was awarded the CFL’s Comeback Franchise of the Year award, followed by Franchise of the Year. The city of Hamilton even presented the new owners with the keys to the city. And, oh yes, they won the Grey Cup for the first time in 13 years.
“One of the things that strikes you about David is his enthusiasm and the passion he has for the product,” says former CFL commissioner Larry Smith, now president and CEO of the Montreal Alouettes. “He had the courage and determination to take a troubled franchise and try to move it forward.”
Until 1991, however, Macdonald was more accustomed to financing movies, Broadway plays, oil and gas, mining and manufacturing ventures. Then, he was hired as investment adviser for an expansion team of the National Hockey League – the Ottawa Senators. He ended up creating the franchise group (consisting of two financial institutions plus some individuals, including himself) that made the team’s first payment to the NHL.
So in 1993, when it was clear that the Hamilton Tiger-Cats were in trouble, Larry Smith thought of Macdonald. The then-CFL commissioner had heard of Macdonald’s success as a dealmaker and desperately needed someone to turn the football franchise around.
“We were on the verge of bankruptcy,” recalls Roger Yachetti, a Hamilton lawyer who at that time headed the community– based group that had taken over the Tiger– Cats when the previous owner made it clear he wanted out. The group had quickly gone through the $750,000 line of credit the region had provided the year before. “My office was a media scrum most days: Yachetti says, referring to the dark era when he was making regular pleas to the people of Hamilton to buy tickets. “I was very vocal about our need for greater support from the community – that without it, it was game over.”
Smith brought Yachetti and Macdonald together, and Macdonald came on board, initially, for a review engagement. “I reviewed the finances,” Macdonald explains. “I looked at cost structure and revenue streams, and figured if it was properly structured, it could work.” He also liked the salary cap the CFL had in place, and the fact that he could negotiate a favourable long-term lease on the Ivor Wynne Stadium. “So I went out and started to raise the money.”
Macdonald came up with something novel in the world of professional sports operations: he proposed investing in the franchise by way of a limited partnership, which he says allowed for much-needed tax deductions. As a result, he was able to raise $3.3 million in operating capital half of it his own, and half from other investors, who put up $150,000 per unit. “It wasn’t difficult,” he says. “This was an attractive financial proposal, with a good return guaranteed in the first year under the limited partnership agreement”
But two years later, with the money gone, he ended up exercising his option of buying the team for $1, which meant assuming a portion of its debt – by now $3.7 million. (The new ownership includes Torontonian George Grant, who has bought out all but one other minor investor to become co-owner and vicechair.) “I had to take it over to protect the initial investment,” says Macdonald. And that day in the spring of 1995 was the day the team’s fortunes began to rise.
“I think that, from the start, the new ownership brought a more businesslike approach to the club’s operation,” says Rogers Cable Inc. president and CEO John Tory, who was CFL chair at the time and commissioner from 1997 until last season. Not only did Grant and Macdonald do a “very honourable thing,” in Tory’s words, by looking after a lot of the team’s past debts around the community, “they also managed to increase their revenue and decrease expenditures.”
That’s largely due to Macdonald’s cost– conscious approach, which he attributes to his CA training. “We count paper clips,” he says – and he’s not joking. “If there’s one thing I’ve learned from my profession, it’s that you can control costs but you can only guesstimate revenues. We control costs. And we’re always on budget or under– budget.” The new regime allows for few perks. “Coaches, players sometimes, once had unlimited long-distance phone bills. I mean, if each person spends $800 a month and you’ve got 50 people doing it, that’s $40,000,” says Macdonald. “There was tons of that kind of thing that we put a stop to.”
Travel costs for players, most of whom are from the United States, were also cut in half by flying them into Buffalo, New York, instead of Toronto. The airfare was that much cheaper. And, says Macdonald, all expense reports, even for lunches, now have to be approved by either Macdonald or Grant. “So we control costs, and we still put a professional product on the field,” he notes. Macdonald has even been known to chase ticket scalpers off stadium property on game nights: “Hey, they’re stealing from us,” he says simply.
Still, all that cost-cutting was just part of the equation. The new owners also needed to get the fans out to games. Just prior to Macdonald’s takeover, Roger Yachetti’s group held a “drive for ’95” at the end of the 1994 season. The goal was to sell at least 12,500 season’s tickets or the CFL would revoke the franchise. Even the players went knocking on doors. The team met its goal, but that didn’t do much for the Ti-Cats’ on-field performance. In both the 1995 and 1996 seasons, they posted eight wins and 10 losses, never going beyond the semifinals. The 1997 season was a disaster: two wins and 16 losses. Fan support was tenuous at best, which isn’t good enough in a city where there are other pro-sports choices within a short drive (to Buffalo in one direction and Toronto in the other).
“For years, Hamilton just wasn’t playing the kind of football the fans were used to,” Yachetti recalls, “and that’s hard-nosed, winning football. That compounded problems at a time when you had a lot of sports fans spending their entertainment dollars on, say, the Blue Jays instead.”
Grant Williams is one such Hamiltonian. “I had kind of slipped away from the team,” Williams says, “even though I’d been a lifelong fan.” As a boy, Williams and his friends sold pop at Ivor Wynne so they could watch the games for free. “In the early and mid-’90s, the Toronto BlueJays were hot, and the Ti-Cats were brutal,” says the 47-year-old jeweler. “I guess my friends and I became more interested in seeing the Jays play.”
It was time for a shake-up. After the disastrous 1997 season, Macdonald hired Ron Lancaster, a CFL quarterback legend and Hall of Famer who had been working wonders coaching the Edmonton Eskimos, and added receiver Darren Flutie and quarterback Danny McManus. “And,” says Macdonald, “you know what? We bounced back and went all the way to the Grey Cup the very next season, which is unheard of.”
That year, the team lost to the Calgary Stampeders on the last play of the game. Not to worry; they won the big prize the next year, in 1999. The 2000 season saw the team plagued by injuries (although they did make the playoffs), but 2001 was looking good at press time. All of which means the fans are coming back – Williams included. “I’m going to at least six games this season,” he enthuses, adding that he even went to a preseason game.
Clearly, the new ownership has hit on a winning formula. And successful play makes for a happy owner. “I’m excited,” Macdonald says. “It’s taking longer than I thought to make a good profit” – though neither he nor anyone else will reveal just how much the franchise made last year and while he says he isn’t in it to make a fortune, Macdonald is convinced it’s going to be “a heck of an investment.”
Despite his insistence that he got into this thing “strictly as a business decision,” one doesn’t have to look very hard to see that there must have been more to it than just good numbers: David Macdonald simply loves the CFL, and always has. Born in Montreal, Macdonald was an Alouettes fan from an early age, but when the family moved to Ottawa, his only way of staying close to the game was to watch the now-defunct Rough Riders games. Working at Lansdowne Park was a way to see them for free. “I sold hotdogs in the stands as a kid, then moved on to parking cars, and in university I was an usher,” says Macdonald, who earned his BCom at Carleton and an MBA at Queen’s.
Even his first date with Joanne, his wife of 24 years, took place at a football game. The young couple went to see the Toronto Argonauts at Exhibition Stadium. “She invited me,” Macdonald insists. “I spent the first half of the game explaining the most basic rules to her,” he recalls. She was nodding all the while, but by the third quarter she seemed to have caught on awfully quickly, and was hollering out plays to the guys on the field. “Well,” Macdonald says with a laugh, “that’s when I realized that I was set up. It turned out that not only was she already a big football fan, her boss owned the Argos!”
Joanne loves football still (though she left her job as executive assistant to John W.H. Bassett long ago to become a full– time mother), and she accompanies her husband to all the Ti-Cats games. In fact, with their son and daughter both away studying commerce at Queen’s University, watching sports has become the couple’s main pastime – and David’s obsession. “I’m a sports fanatic,” he admits. “Hockey, football. Some people like music, some like the arts, some have cottages. My hobby is sports – especially CFL football. It’s truly Canada’s game.”
He’s got a point. The CFL’s Grey Cup is the oldest continuously contested trophy for Canadian professional championships. And the league is the only one with all– Canadian teams. In fact, if the Ottawa Rough Riders were to re-join the CFL fold (which seemed very likely at press time), the league would have nine teams which is the same number of teams that the NHL, NBA and MLB have in Canada combined.
Canadian football wasn’t always looking so strong. While the league has long been solid in the west, the east has struggled in recent decades to retain fans in a market with lots of pro-sports choices. And, claims Macdonald, who as a franchise owner is one of eight on the CFL’s board of governors, the league “lost a generation of fans.” One reason, he says, was that for a period in the mid-’80s, it blacked out TV broadcasts of games in the Toronto– Hamilton market, with the intention of drawing more fans out. “That backfired. People watched NFL instead.” And the league’s experiment with bringing US cities into the CFL in the mid-’90s was not only short-lived, “it was a black mark on us,” Macdonald says, because the CFL ended up losing some traditionalist fans.
But now the CFL is experiencing a rebirth. The league’s commissioner Michael Lysko points to the numbers: “The television ratings are up this year, our sponsorships are up, virtually every in-stadium audience, all are up significantly,” he says. “And look what happened in Montreal.” The Alouettes almost disappeared a few years ago, and now every game is selling out. Not incidentally, it was David Macdonald who played a big role in ensuring that team’s survival, going to Montreal on behalf of the CFL to hammer out a resolution to the team’s cash-flow problems. “Regina, Calgary, Vancouver,” continues Lysko, “with the exception of Toronto, the level of fan interest in this game hasn’t been as strong in many, many years.”
Maybe people are rediscovering a pro sport with an old-fashioned appeal, in which players earn working wages (the average is C$60,000, compared with the NFL’s US$1.2 million). Or maybe some fans of gridiron football have realized that Canada’s version is simply more exciting than its NFL counterpart. The CFL game has only three downs and a wider, longer field, which allows for more motion. “A star defensive back from the NFL might not cut it here because he’s used to playing on a smaller surface,” contends Macdonald. And, he says, the fact that the next play must be called within 20 seconds versus the NFL’s 40 makes for better value because fans get more action. “NFL football is boring,” he adds with a smile. “We call it the No Fun League.”
And what does he say to critics’ claims that the CFL is full of NFL rejects? “Well, it’s partly true, but that’s a good thing,” says Macdonald, explaining that the NFL gets to choose the top 2% of the 10,000 or so graduating football players a year in the United States, while the CFL gets the next 1%. “Most of our players were the best athletes in their state when they graduated from high school,” he claims. Also, NFLers who play a fourth season automatically get a pension, so the league sometimes cuts them for that reason and they may end up playing here. (Meanwhile, the NFL maintains its right to grab CFLers in their option year, in the off season.)
“We have great guys who play for the love of the game,” Macdonald says. “Nobody’s earning $5 million a year and then refusing to sign an autograph. Players are out there in the community, they’re going to see kids in the hospitals. There isn’t one I’ve ever known who I wouldn’t be proud to have as my own son.’
The league south of the border generates hundreds of millions of dollars with the help of lucrative sponsorships, as well as, says Macdonald, betting on the games in Vegas. “Take away the gambling,” he contends, “and I’m not sure the NFL would do that well. In the CFL, the number-one goal is to get more fans out. So it’s a good sign if television ratings are up (in fact, in Canada, Grey Cup overall ratings last year beat those for the Super Bowl) because that translates later into fan turnout. “We have to somehow take that next step from the closet CFLer who watches it on TV, to `bums on the seats,’as we call it,” says Macdonald.
The changing fortunes of the CFL are due in part to Macdonald’s efforts. John Tory credits him with having helped the league reduce expenditures and make a profit. “As a governor, David took an interest and spent some personal time on those numbers,” says Tory. “The year I became commissioner [ 1996], we were having to make some significant budget changes to rebalance the operation, and he helped us identify almost on a line-by-line basis, where we had to change to improve financial performance. And, in Tory’s words, the proof is in the pudding: “The league has been able to once again distribute money to teams. And David was a real leader in that process.”
The current commissioner is just as pleased to have Macdonald as an owner. “David is one of the reasons I have a lot of confidence in this league,” says Michael Lysko. “He’s absolutely passionate about the game, and he’s very creative. He’s always got different ideas. ” And he and George Grant play fair, Lysko says, referring to the CFL’s salary cap of $2.3 million per team. The Tiger-Cats stuck to it without question. “I have a lot of respect for that,” says Lysko. “David knows that being financially responsible is part of the reason why we’re coming out of the funk we were in.”
In Lysko’s words, what Macdonald has achieved in Hamilton has been the result of good, honest hard work. “David has put his hard cash down but he also put in his blood, sweat and tears,” he says. “He and his partner have revitalized interest in football for the city of Hamilton. You don’t win the Grey Cup without sacrifice. David knows that – he’s wearing the ring.”
David Macdonald remains optimistic about his team’s future but realizes it’s an evolution – one he’s willing to help orchestrate. “One thing we’re doing is trying to grow minor football in this region,” he says. “Because if you don’t play a sport, you don’t follow a sport.”
As for the larger picture – the future of the CFL – Macdonald takes a moment to reflect. His prediction is blunt: one day, the CFL may be the only pro league with any teams in Canada. “There’s nothing else left besides the CFL that’s truly ours,” he says emphatically. “They’re our rules. We’ve given hockey away to the Americans and the Europeans.
“Being a CFL franchise owner is my contribution to Canadiana,” adds Macdonald. “And in my belief, we Canadians should be patriotic. We should stand up and be counted.”
If that means getting your bum on a seat for a CFL game and screaming oski wee wee along with Pigskin Pete, it seems like a small price to pay to keep a little piece of Canadian heritage around maybe even for another 132 years.
Bonnie Munday is a freelance writer based in Toronto.
Copyright CANADIAN INSTITUTE OF CHARTERED ACCOUNTANTS Mar 2009. Provided by ProQuest LLC. All inquiries regarding rights or concerns about this content should be directed to Customer Service. For permission to reuse this article, contact Copyright Clearance Center.
The Bermuda Angle
Front Street. Hamilton, Bermuda
Published in CAmagazine
CAs are waking up and finding themselves in this mid-Atlantic paradise, but the reasons why are no big mystery
By Bonnie Munday
THE FIRST STORM of the hurricane season has left in its wake subtropical deadfall, a clear blue sky and blazing sunshine – perfect weather for the biannual Bermuda Ball Hockey Association tournament at the Admiralty House recreation area on the island’s north shore.
As Hurricane Karen makes its way across the Atlantic toward Nova Scotia, members of the six teams – mostly expats, half CAs – are warming for a crack at the prized Robin Hood Cup (named for a favourite watering hole). Anyone not on the outdoor cement surface is sitting on coolers at the grassy sidelines drinking Heinekens or Gatorades, ready to cheer on their favourite team. Music blares from portable stereos as the audience soaks up the action and the glittering aquamarine seascape.
“Bermuda may not be the kind of place for someone whose life is centered around work,” says Cari Hunter, one of the hundreds of Canadian CAs practising in Bermuda. The 29-year– old from Winnipeg, with Ernst & Young, is at the recreation area (once home to the commander of the Royal Navy Squadron) to cheer on her husband, Scott, also a CA. “Sure, we all work hard, but here you can have a balanced lifestyle. It’s the kind of place where you can get out a lot and have fun all year round.”
[PHOTOGRAPH] Carl and Scott Hunter are among the hundreds of Canadian CAs who have found a balance between work and play practising in Bermuda
The island, 920 kilometres off the coast of North Carolina, is experiencing rapid growth as a financial services centre. It is not unusual for the career sections of the newspapers to have four or five pages of ads for professionals. Given Bermuda’s low unemployment rate and population of 63,000 (one of the best-educated populaces to boot), companies often have to look elsewhere to find qualified professionals to fill employment needs. As a result, of the 700 chartered accountants on the island, 200 are Bermudian and the others are either Canadian or British, split more or less evenly (there are a few CPAs).
Canadian CAs are prime recruits because Bermuda follows Canadian accounting rules and the Institute of Chartered Accountants of Bermuda (ICAB) has been a part of the CICA since 1973. Proximity to North America and the fact that it is a self-governing British colony are two reasons why it joined the CICA, says Alan Bissell, executive director of the ICAB.
Another reason CAs are easier to recruit than CPAs could be that under Canada’s tax system, citizens who can prove non– residency for two years do not have to pay income tax.
About half the CAs who come to Bermuda are hired in industry, most often in financial services areas such as mutual funds and insurance. Robert Blee, president of the ICAB, says there are many accounting jobs in the insurance industry, and many CAs are employed on the underwriting side.
Bermuda is considered a world leader in the insurance industry; only the US has more insurance companies than Bermuda. (Insurance has surpassed tourism as the biggest earner of foreign currency for the island.) And according to Blee, people in the industry actually refer to Bermuda as “the reinsurance centre of the world.”
The reason? “Bermuda has a more business-friendly environment than, say, the U.S.,” explains Blee, who is also chief accounting officer of Bermuda-based Ace Ltd., one of the largest insurance companies in the world, with 9,000 staff and operations in 50 countries.
“This is a tax-advantaged business centre, so it provides a flexible capital management structure,” he says. “Here, you can roll out a new idea within a matter of months or even days because Bermuda has very few regulatory hurdles.”
But don’t confuse this mid-Atlantic paradise with banking centres such as the Caymans or Turks & Caicos, which have come under fire in the past as places where criminals find it easy to hide their illegal proceeds. “There are only four banks in Bermuda, and the banking laws here are very strict” says Blee. “We’re known worldwide for being very clean.”
About half the Canadian chartered accountants work as audit seniors. After they’ve renewed their initial two-year contract, they either get promoted to manager (and perhaps, eventually, to senior manager) or move on to industry.
CAs usually go to Bermuda on twoyear contracts, and love it so much they renew their contracts and stay for as long as they can. They earn good US-dollar salaries that are virtually tax-free, while gaining international business experience and having the time of their lives.
“In 28 years of international recruitment to Bermuda, I can count on the fingers of one hand the number of people who broke their contract to leave because they didn’t like it there,” says Marleine Kay, Managing Director of K-International Group in Toronto. Most stay from five to seven years, she says. “In fact, lots go from being single, arriving in Bermuda with nothing more than their briefcase, golf clubs and suntan lotion, to marriage and a kid or two by the time they leave.” Kay says CAs working in Bermuda, especially those who have recently qualified, find it’s a wonderful experience, because “it opens up their eyes to the world, and it’s a nice change of pace after years of studying.”
Mark Herauf is one of many CAs who moved from public practice to industry. The 34-year-old Edmontonian went to Bermuda as a CA student with Ernst & Young, and after passing the UFE in early 2000, he joined Davison’s of Bermuda, a family-run retail clothing firm, as financial controller. Herauf is one of many CAs who are controllers for small Bermudian companies.
“In Canada, it would probably take a new CA five or 10 years as an assistant before [he or she] could hope to move up to the controller position,” says Herauf, who plays on a softball team and golfs year-round. “But the great thing about working somewhere small like Bermuda is that you can take a shortcut. Instead of moving up the ladder rung by rung, you can take it three at a time.”
However, for all the pluses of sunny Bermuda, there is a downside. Spouses have a hard time finding work. Despite the need for professional workers, the Bermudian government is anxious to keep the beautiful island from becoming overcrowded and maintains strict laws regarding how it allows expatriates into the country, and for how long. Under government regulations, spouses of company– sponsored employees aren’t permitted to take a job that a Bermudian can fill.
[PHOTOGRAPH] Nova Scotian Dale Arnburg, a fund administrator with Meridian Corporate Services Ltd., was happy to exchange the cold Atlantic waters of home for scuba diving through Bermuda’s reefs
Julie Herauf, Mark’s wife, has a bookkeeping background but she couldn’t get work. Last summer she returned to Alberta to study to become a pharmacy technician at Red Deer College. Julie plans to rejoin her husband in Bermuda this summer and is optimistic about getting a job in her new field.
Clearly, the best scenario for a CA considering a stint in Bermuda is one in which his or her spouse is also a CA or in financial services, nursing or IT – all of which are in high demand on the island. Not desirable is a background in the retail or hospitality industries, since there are plenty of Bermudians to fill such positions.
In fact, recruiters say that ideal imports to Bermuda are recently qualified CAs who are single. Peter Diab, a CA and managing director with The Finance Department Ltd., a Toronto firm specializing in the placement of CAs to southern Ontario, the Cayman Islands and Bermuda, should know. In 1992, he went as a single man to Bermuda, where he met his wife, Cheryl, a Toronto chartered accountant. The two spent four years building a nest egg before returning to Canada. Soon ofter, Diab set up his company with a partner. “I had a fantastic experience there,” he says. “And I know from being in Bermuda, and now from sending new recruits there, that those who get the most out of the experience are at the early stages of their lives and their careers.”
To illustrate his point, he tells the story of a Canadian CFO who came to Bermuda with his wife and two young children (it’s worth noting that only two kids per expatriate family are allowed to live in Bermuda, and that private school fees range from US$6,000 to US$8,000 per year). “The family didn’t come for a visit first, they just moved right down and didn’t know what to expect,” Diab recalls. “A couple of weeks after they arrived, the CFO went home from work one day to find a note from his wife that said, ‘I’ve taken the kids and gone back to Canada. I saw a cockroach.’ The CFO followed.” Diab acknowledges this is an extreme example, but his point is if both partners don’t enjoy their experience in Bermuda, then no one wins, including the sponsoring employer.
Marleine Kay goes further in warning of the difficulties of going to Bermuda with an unemployable spouse. Although her firm has placed CAs of varying ages and at different career stages, the majority of firms simply say no to such a candidate. “These companies want to give their new employee and his or her spouse an enjoyable experience, and it often doesn’t work out if the spouse can’t find a job.”
Besides boredom for one partner, the main pressure for a single-income couple in Bermuda is the high cost of living. Monthly rent on an unfurnished one-bedroom apartment is between US$1,500 and US$2,000; furnished places go for more. Single employees are often encouraged to share a three-bedroom house with colleagues – at US$3,000 to US$4,000 a month, you get more space for your money. Prices vary depending on proximity to the capital, Hamilton, where the majority of CAs work. (For most people, the cost of buying a house in Bermuda is prohibitive.)
Given that Bermuda is an expensive place, the large accounting firms provide detailed cost-of-living information for incoming CAs so they know exactly what they’re getting into. KPMG, for one, regularly updates its excellent guides for arrivals, which include photocopies of restaurant menus and grocery store ads from the local newspaper. The Robin Hood pub and restaurant, for example, offers large pizzas for about US$20, burger and fries for US$7.50. The more upscale Ascots features appetizers from US$11 to US$14 and main courses from US$19 to US$30. A typical bottle of house wine is US$25. Groceries can run from US$3.29 for a tray of six apples to US$3.30 for a loaf of bread and US$3.55 for two litres of milk.
As for transportation, most CAs new to the island buy a moped or motor bike rather than a car. “You can get around faster on a bike here anyway,” says Evan Schemenauer, a 25-year-old from Lake Lenore, Saskatchewan, who came to Bermuda in October 2000 with Ernst & Young and is now with Consolidated Group of Cos. Bikers can slip past cars in “traffic jams” (which, at peak times, last about 15 minutes), and there’s plenty of free parking for bikes, which is not the case for cars. A motorized bike costs approximately US$3,000, plus US$312 in licence fees and insurance. For cars, you’re looking at a minimum of US$13,000 (in addition to almost US$1,000 in fees and insurance). And often tenants are unable to park cars at their homes.
The high cost of living in Bermuda is partly due to its income tax free status, which means heavy duties are placed on anything imported, including much of what you yourself bring in with you. But everything is relative: audit seniors at one of the big firms can expect to earn a base salary of US$50,000 plus bonus or overtime (minus small deductions for the company health plan, payroll tax and social insurance). If they’re promoted to a manager’s position, audit seniors will earn between US$60,000 and US$70,000. Those working in industry typically start at US$60,000.
“I sit down with CAs considering the move and we do a breakdown of what the costs are versus what they’ll earn,” says Marleine Kay. “Usually they find that, ‘my gosh, I can save money, and I can have a good time doing it.’ One audit senior came back after two years and told me he’d saved US$23,000. But many others who save less than that have the mindset that every weekend is a holiday.”
It seems it would be easy to start thinking that way, given all there is to do in Bermuda in one’s leisure time. “There is quite an active social life here,” says Chad Critchley, 34, a senior manager with Ernst & Young who has been in Bermuda five years. Critchley’s area is the financial services industry; he deals with audits of investment hedge funds and of insurance/ reinsurance companies. “Dinner parties, barbecues, and lots of sports. Many of us, the women too, are athletic.” Critchley’s favourites are beach volleyball and ball hockey; Schemenauer, his former colleague, plays those sports, plus soccer, badminton and the odd game of golf. “It’s an athlete’s paradise.”
Dale Arnburg, who originally went to Bermuda with Grant Thornton, is an avid scuba diver. The reefs surrounding Bermuda have sunk many a ship over the centuries, making it an ideal place for wreck diving. At one point Arnburg moved back home to Nova Scotia, but after the experience of diving in the cold Atlantic waters, returned to Bermuda. “On Christmas Day, 300 of us do a ‘polar’ dip at Elbow Beach – the water is 65 deg F,” laughs Arnburg, a fund administrator with Meridien Corporate Services Ltd.
Standing behind the boards at the Admiralty House ball hockey tournament, Arnburg considers the negatives of working in Bermuda. “There aren’t too many,” he says. “You love it or hate it. The ones who hate it either don’t like leisure pursuits, or they’re too ambitious.” Cari Hunter agrees. “I only know one person who left, but that person didn’t like to socialize,” she says. And, she explains, because one now must be Bermudian to become a partner here, CAs working for public accounting firms have to put aside lofty dreams of working hard and someday getting to the top. “While you’re here, you just have to enjoy life.”
“Sixty thousand drunks clinging to a rock in the Atlantic,” jokes Mark Herauf when describing the social life in Bermuda. “Seriously though, the diversity of the people, all the accents you hear being spoken around you, the fact that you can save your money – it’s a great experience.”
Being in Bermuda offers the chance of working with people from all over the world, agrees Ken O’Neill, an audit partner with KPMG who left Ireland to go to Bermuda 22 years ago. O’Neill specializes in reinsurance and also runs the shipping practice, but before that he did all the recruiting for his firm. O’Neill says staff do a lot of international business with the US, Britain, Japan and South Africa. “Bermuda does have an international air about it,” he says, “yet it also has the feel of a small town. It’s a very friendly place.”
Indeed, not only is the crime rate very low, but Bermuda is the kind of place where strangers say good morning to each other on the streets, and where the most formal office wear for men consists of Bermuda shorts and a blazer, except from about January to March, when the average daily high is the mid-teens Celsius – cool enough that a warmer jacket is welcome for the moped ride to work. In summer, it gets hot and humid, while spring and fall suit most Canadians just fine.
“You do get ‘rock fever’ a couple of times a year,” warns Peter Diab. “But I found that’s easily solved with a quick get– away to New York or Miami.” Most east coast US cities are no more than a two– hour flight away, and Toronto is two-and– a-half hours away.
Another irritant to those who have just arrived is the lack of selection of products. But, says Chad Critchley, the advantage of a tax-free environment is that “at least you get to choose how you’ll spend your money.” And then there are the inch-long flying cockroaches, which are a reality in a subtropical climate – but so are the flowering shrubs in evidence everywhere. No poisonous snakes or spiders inhabit the island.
Christy McMullen, 29, came to Bermuda three years ago with KPMG but decided to stay on and is now controller for Engravers Ltd., a commercial printing company. “I wanted to stay because I feel like I’m part of a close-knit family,” she says. “I’m having lots of fun, and because everyone is away from family here, we make an effort to be friendly to each other.”
The best thing about Bermuda, according to Marleine Kay, is it gives CAs a jumpstart in their careers. “It rounds them out, because not only do they get many different perspectives on financial services, they also get the experience of life in an international setting,” she says. “They end up standing head and shoulders above those back in Canada, when they eventually return.”
[SIDEBAR] Home is where the hockey is
The introduction to the Bermuda Ball Hockey Association website promises to tell visitors everything they need to know about “a bunch of hockey washouts who no longer wear their skates but still manage to pick up a stick and whack an orange ball around an outside court in the middle of the North Atlantic.”
Anyone who gets to see these “washouts” in action understands the humility of a statement such as that. At a recent tournament at Bermuda’s Admiralty House recreation area, the players – all but three or four of whom are Canadian, and at least half of whom are accountants – go hard after the ball in the subtropical heat. Guys with names of NHL players like “Hossa,” “Damphousse” and “Gill” on their shirts fight for the ball at the boards (actually a five cinderblock high wall) for the ball. In one game, “Bull” plays on despite a bleeding gash on his left shin and a badly scraped right knee. The Bermuda Sharks score one on the Puckheads and a cheer goes up from the sidelines.
“Many of us played hockey in Canada before we came down here, and we missed it,” says Chad Critchley, a CA from Alberta. “This is the next best thing. And it’s the same kind of camaraderie you get with ice hockey.”
Ball hockey has existed in Bermuda since the early ’80s, when military servicemen from Canada and the US played at their bases. And the tradition has carried on. “There’s definitely been growth even in the three years since I’ve been in Bermuda,” says BBHA spokesperson Tom Murray, an advertising account manager with a Bermuda newspaper. The loosely organized association now has about 50 members, and since Murray arrived from Halifax with his CA wife, the number of games has increased from one per week to three. “The sport has just exploded here, and we have been getting invited regularly to international tournaments,” adds Murray.
Indeed, Bermuda was the surprise team at an international tournament last spring in Toronto, beating teams from Germany, Austria and the US in its firstever appearance in international competition to take fifth place. As Evan Schemenauer, a Saskatchewan CA who played backup goaltender, puts it: “Not too shabby for a bunch of CAs from a tiny rock.”
Bonnie Munday is a freelance writer
Copyright CANADIAN INSTITUTE OF CHARTERED ACCOUNTANTS Jan/Feb 2002
Copyright CANADIAN INSTITUTE OF CHARTERED ACCOUNTANTS Mar 2009. Provided by ProQuest LLC. All inquiries regarding rights or concerns about this content should be directed to Customer Service. For permission to reuse this article, contact Copyright Clearance Center.
Spotting the Signs of Heart Attack
Check out this article I wrote for Sunlife.ca in February 2016.
Quick: What disease do you fear most? Many of us would likely say “cancer.” And indeed, that’s the number-one cause of death in Canada. But don’t overlook your risk of heart disease, which accounts for the second-highest number of deaths in this country each year, according to Statistics Canada. (Stroke is the third-leading cause of death.)
“We are so afraid of getting cancer that we tend to overlook symptoms of heart disease,” says Dr. Susan Biali, a Vancouver-based physician. “We don’t tend to think of it as something to worry about.”
Yet, according to the Canadian government, more than 1.3 million Canadians have heart disease, and it’s one of the leading causes of death in Canada, claiming more than 66,000 lives per year.
Types of heart disease
Heart disease includes a long list of conditions. Four common ones are:
Angina. This happens when your heart doesn’t get as much blood as it needs because of a blockage of one or more of the heart’s arteries. It causes pain in the chest in the form of a squeezing, suffocating or burning feeling. Angina is not a heart attack; it’s a warning signal that you are at increased risk of a heart attack, cardiac arrest or sudden cardiac death.
Arrhythmia. A diagnosis of arrhythmia means you have an abnormal heart rhythm – either faster (tachycardia) or slower (bradycardia) than the typical 60-80 beats per minute. There are many types of arrhythmias. Some have no symptoms or warning signs, some are not very serious and others may be life threatening. Symptoms vary from person to person.
Heart attack. Not to be confused with cardiac arrest, a heart attack occurs when the blood supply to the heart is severely reduced or stopped because of a blockage. The narrowing of coronary arteries due to the buildup of plaque (a combination of cholesterol, fatty substances, cellular waste products, calcium and blood-clotting material) causes more than 90% of heart attacks. The length of time the blood supply is cut off will determine the amount of damage done to the heart.
Cardiac arrest. This is not the same thing as a heart attack, though the terms are often, and incorrectly, used interchangeably. A heart attack is a circulation problem; cardiac arrest is an “electrical” problem that occurs when the heart suddenly and unexpectedly stops functioning. It can be caused by abnormal heart rhythms such as ventricular fibrillation, but can also be triggered by a variety of factors including coronary heart disease, a heart attack, congenital heart disease, electrocution or recreational drug use. Read more about the differences between heart attack and sudden cardiac arrest.
Heart attack warning signs
Heart attacks are particularly worrying, since thousands of Canadians die from them every year because they don’t receive medical treatment quickly enough. The Heart and Stroke Foundation of Canada urges you to call 911 (or your local emergency number) if you (or someone you’re with) are experiencing any of these typical warning signs, which may vary from person to person:
- Chest discomfort (uncomfortable chest pressure, squeezing, fullness or pain, burning or heaviness)
- Discomfort in other areas of the upper body (such as neck, jaw, shoulder, arms, back)
- Shortness of breath
- Sweating
- Nausea
- Light-headedness
Heart disease affects both men and women, but not always in the same way. According to a 2009 report by the Public Health Agency of Canada, Tracking Heart Disease and Stroke in Canada, “hospitalization and death rates for cardiovascular disease increase dramatically among men at age 45 and among women at age 55.” Female hormones offer some protection against heart disease, but that advantage disappears after menopause.
The signs of a heart attack may be less defined in women, says Dr. Biali. “For example, a woman may experience fatigue, difficulty sleeping, shortness of breath, chest tightness, burning in the chest that feels like heartburn, unusual anxiety, cold sweats or dizziness. And they can have these vague symptoms for up to a month before an actual heart attack.”
Heart attack risk factors
What puts you at risk for a heart attack? The Mayo Clinic cites, among others:
- High cholesterol
- Hypertension
- Diabetes
- A family history of heart attack
- Lack of physical activity
- Tobacco use
- Obesity
- Stress
Most of these are factors you can control.
So, you know the drill: Start by eating plenty of fruits and vegetables and cutting back on foods that offer little nutritional value. Exercise regularly, whether it’s a long daily walk or a fitness class three times a week. Don’t smoke. Reduce stress. And, what’s most important: Talk to your doctor about your risk of heart disease and what you can do to reduce it.
Published at Sunlife.ca in February 2016.
Keeping Lips Healthy Year Round
Smooth, soft lips–who doesn’t want them? Skiers in particular know lips can get dry in winter, and not just because of the dry air. We forget about the sun’s effect. Whether it’s a day on the slopes or a walk in the city, I love a nice lip balm, but for me it always has to have an SPF, or what’s the point? You’re risking UV damage and skin cancer without it. (Another tip: To get rid of dead skin and avoid flaky lips, exfoliate them, whether with a lip exfoliating product, or by simply rubbing gently with a face cloth.)
All of which brings me to this: Yesterday I had the pleasure of sitting down at the gorgeously laid table, pictured below, and enjoying a delicious teatime event, courtesy of Blistex. Our lovely host was Valerie Ryan of Blistex (great to see you again, Valerie!), and the venue was the Coriander Girl florists’ studio in west end Toronto (just LOOK at those roses–and guests got to take a few home, too).
Beautifully decorated table, and luscious treats, at this Blistex-hosted tea.
One of my favourite makeup artists, Vanessa Jarman, whom I’ve worked with over the years at magazine photo shoots, was there to give her own insights into lip balms as a spokesperson for Blistex’s new Soft & Lush. She calls it an “all in one beauty treatment for day and night.” Indeed, the salted-caramel scented (and flavoured) balm is enhanced with ceramides, which strengthens the skin barrier and helps lips retain moisture. And, yes, the balm has an SPF 15.
At just $4, it’s something worth keeping handy now, while winter holds its grip, and into the warmer months.
Feel-better Tea
I’m feeling a bit knocked down with a cold this morning; congested chest and stuffy sinuses. I just made myself a soothing tea by stirring the following into a mug of hot water:
- 1/4 lemon, squeezed
- 1 tsp honey
- A couple of sprinkles turmeric
- A few drops echinacea seal