Not So Pro Sports

Not So Pro Sports

March 26, 2010 09:51 ET

Ashbridge's Bay Volleyball Beached?

22,000 on Verge of Being Booted Off The Beach

TORONTO, ONTARIO--(Marketwire - March 26, 2010) - John Morrison, the founder and creator of the beach volleyball scene at Ashbridge's Bay beach, and his 22,000 volleyball players and social club members, are at risk of not being able to conduct their league play at Ashbridge's Bay any more in an upcoming decision by the City of Toronto.

Through his company, TESSC Inc., better known as Not So Pro Sports, Morrison started from scratch 14 years ago at Ashbridge's and proceeded to build the largest recreational beach volleyball league in North America right here in Toronto.

Morrison's company has paid the City continually increasing fees to the tune of over $2 million since he began, including more than $1 million in the last five years and a total of more than $230,000 in 2009, including capital project contributions. That is the most money paid in the history of the City for beach volleyball in a single year.

Morrison now faces the prospect of losing the business he and his staff built through well more than a decade of investment, risk taking and hard work.

City Council decides next Wednesday, March 31, whether it will award a 5-year contract to the Ontario Volleyball Association with an option for 5 more years.

"It is just morally wrong," said Morrison passionately, indicating that his company has been ready to pay the City in full for the outstanding balance at the end of its 2004-2009 contract and move forward with its five-year renewal. The City has so far refused to accept payment and move forward.

Morrison said that it isn't just his company and his employees who could be harmed by the type of decision made next Wednesday.

This would unfairly hurt his 22,000 members, the local businesses in the beach community who receive significant spin-off revenues from those members, the youth volleyball program that has become the model for other programs across the country and the local charities that Morrison's company supports.

Background Information on Payment Issue

It is extremely important to have full context in order to truly understand the situation.

According to John Morrison, his company, TESSC Inc., better known as Not So Pro Sports, has a very strong track record when it comes to payments to the City.

The company always paid the City fully and on schedule through seven permits, two contracts and three RFP's for over 12 years. The City added financial commitments for two capital projects into the latest contract under the third RFP and that was over and above increased rent fees. This had never been done before and it put both the City and Morrison's company into uncharted waters.

Morrison had recommended putting the payments for one capital project into the first five-year contract he had won and putting the payments for the second capital project into the second five-year contract renewal he would be eligible for. The City refused and insisted on putting the payments for both capital projects into the first five-year contract.

Morrison told the City that he knew the realities of the revenue streams from beach volleyball and that this was going to be too onerous in the first five years. The City was adamant about putting the payments for both capital projects into the first five-year contract.

The company paid its increased rent from 2005 to September, 2009, and also paid in full for the construction of a new $125,000 playground at Ashbridge's Bay beach. The City was supposed to start construction in September but the project has still not been started.

Morrison's company cash flows, as he had predicted, were not enough to fund the second capital project, a renovation of the bathing station at Ashbridge's Bay, by the end of the first five-year contract.

Knowing his company had already paid in full for a first City project that is late, that his revenues suffered significantly due to mass garbage and a lack of services during the 2009 City strike (not to mention the worst worldwide recession in modern history) and that he had an impeccable track record with the City over so many years, Morrison asked to have the payment for the bathing station deferred until the beginning of the upcoming five-year renewal contract. The City refused.

That left him with only one option and that was to obtain financing, so future cash flows could cover the cost of the project up front.

However, every time Morrison and his staff tried to get the City to reveal the terms of the next contract and what the fees would be, the City stated that it would be up to the General Manager of Parks, Forestry and Recreation to decide and that it would only be revealed if and when the General Manager decided to renew the contract.

This made it effectively impossible for Morrison to obtain the necessary financing to fund the second capital project and pay for it with 2010 and 2011 cash flows. The financial institutions he spoke to required the very information the City would not provide as well as a letter of intent, which the City would also not provide. As a result, Morrison's company was unable to meet the scheduled payments for the second capital project.

The City informed Morrison in December, 2009, that it would not exercise the option to renew his contract and then issued an RFP on January 25, 2010, for beach volleyball at Ashbridge's Bay.

Morrison's company was told by City staff that it was not eligible to bid on the new RFP because it owed the City money and the company did not bid on the RFP as a result. The RFP process yielded only the one bid that council votes on next week. (All previous beach volleyball RFP's had multiple bidders.)

City staff finally informed Morrison's company on January 25, 2010, what the terms of its next contract would be and that it was still possible to pay its balance off in full in the form of a certified cheque and sign its five-year contract renewal. That was reiterated by staff on February 10, 2010.

Upon finally obtaining this information from the City, Morrison immediately obtained the necessary commitments for financing and has been in a position to pay the City in full ever since. Again, the City has so far refused to accept payment and move forward.

Morrison's company continues to be ready to pay the City the outstanding money in full and to sign its five-year contract renewal.

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