Valerie Nimchuk paints murals of bull riders and horses playing wash-tub basses on storefronts in Calgary, part of decorations for a cowboy festival billed as the “Greatest Outdoor Show on Earth.”
This year, Nimchuk is hoping her playful drawings for the Calgary Stampede will buoy spirits and paint over the economic woes in Canada’s energy hub that’s reeling from the collapse in oil prices.
“Everybody likes to get into the Stampede spirit,” said Nimchuk. “It’s a great community event for Calgary.”
While Nimchuk’s decorations are going up, companies are scaling back on the parties and cutting sponsorship spending after the crude decline led to thousands of job cuts. It all points to a more subdued Stampede this year.
“If they just laid off a bunch of people, they’re probably not looking to be spending a lot of money, even if they can afford it,” said Brian Guichon, who owns a western wear clothing store in Calgary. “The optics don’t look very good.”
The 103-year-old Stampede attracted 1.26 million people last year, the second most on record. The white cowboy hats offered to visiting dignitaries contribute to the city’s ‘Wild West’ image, while the parties and conferences make the festival one of the most important networking opportunities for the oil industry. For executives, bankers and investors, relationships forged over pancake breakfasts or late-night drinks can lead to deals and business long after Stampede.
Companies are pulling back on sponsorships and buying fewer tickets to the rodeo and chuck-wagon horse races, pushing corporate sales down 10 percent for the nine-day fair that begins July 3. Raymond James Ltd.’s Stampede conference has 25 percent fewer investors flying in, with U.S. crude hovering around $60 a barrel after falling by half last year.
“There are still the parties, it will still be fun, but it won’t be to the extent that it’s been in the past,” said Mark Salkeld, president of the Petroleum Services Association of Canada, which represents drillers and fracking companies. “You can’t compare it to last year, when everything was top of the charts.”
Sales tied to parties are down at Riley & McCormick, Guichon’s retailer that started selling harnesses, saddles and western wear in 1901. Rather than ordering snap-button shirts with their corporate logos for employees, companies are opting for scarves, Guichon said.
Crescent Point Energy Corp. canceled its annual sponsorship of the Stampede Roundup concert, which includes a beer tent for employees. The company doesn’t want to celebrate when locals are losing their jobs. The oil company will still make a charitable donation to the Rotary Club, said Trent Stangl, vice president of marketing and investor relations.
Alberta’s economy will probably stagnate this year, said ATB Financial Chief Economist Todd Hirsch, as oil companies reduce spending on expansions and cut tens of thousands of jobs. In the meantime, office vacancies in Calgary have risen to about 11 percent from lower single digits, according to Calgary Mayor Naheed Nenshi, and sales of homes and apartments in the city have slowed.
Corporate sponsorship is down 21 percent to C$2.78 million ($2.24 million) for the chuck-wagon race, a tradition invented in Calgary where wagons pulled by four horses compete on a dirt track. Oilfield service companies have long been the top sponsors of drivers, though this year the Tsuu T’ina Nation aboriginal community made the highest bid, at C$170,000.
The oil industry isn’t abandoning Stampede. Suncor Energy Inc. and Cenovus Energy Inc. are in multi-year sponsorship contracts for events on the fairgrounds. Bankers and lawyers will continue to host parties seen as key to their relationships with clients.
“This particular Stampede is going to be all about releasing the pressure valve a bit,” said Sonny Mottahed, managing partner and chief executive officer of Black Spruce Merchant Capital Corp., a Calgary bank. “We certainly don’t have control over the commodity in our eight square blocks or for that matter, our province, so let’s go out and have some fun.”
Black Spruce invited guests to its party with the e-mail message: “$60 oil…When life gives you lemons, break out the tequila and salt.”
One bright note is that the lower value of Canada’s currency is drawing more visitors this year, with international sales for access to fairground events up 3 percent, according to Stampede organizers.
For the average visitor to Calgary during Stampede, the parades, window murals and straw bales beside restaurant patios may disguise the more muted parties in corporate Calgary.
“We saw this exact same thing happen in 2009 in the last oil price downturn,” Hirsch said. “Every so often there’s a bit of a pause in terms of how big these parties are getting.”