American Green Is Envy of Others
One day before the International Olympic Committee voted on where to stage the 2012 Summer Games, IOC officials were locked in a backstage test of wills with the U.S. Olympic Committee over the sports movement’s most precious resource: money.
At issue last July in Singapore was how to split up hundreds of millions of dollars in sponsorship revenue over the seven years it takes to produce an Olympic Games.
Four of the cities seeking the 2012 bid, Moscow, Madrid, Paris and London, had reached agreement with the IOC months earlier.
But the USOC, the IOC and 2012 bidder New York struck a deal only minutes before an IOC-imposed deadline -- and only after a series of tense, obscenity-laced meetings marked by “hardball negotiations,” according to people with knowledge of the events.
The next day, London won the 2012 Games. New York finished a dismal fourth.
The behind-the-scenes events in Singapore underscored long-simmering tensions between the IOC and the USOC, which has traditionally enjoyed a notably large share of Olympic television and marketing revenues.
That special cut has pumped up USOC revenues. But people in U.S. and international Olympic circles say it also has undermined U.S. influence within the Olympic movement and fueled anti-American sentiment.
That not only helped to derail New York’s 2012 bid, these insiders say, but also could color the selection process for 2016 if the U.S. decides to submit a bid.
Anti-Americanism helped boot baseball and softball out of the Olympics, they say, and could hurt the chances of U.S. candidates seeking seats on the IOC’s executive board.
Officials say other factors also have played a role in recent USOC struggles. They include a lack of a coherent international relations strategy; the collapse just weeks before the Singapore vote of New York’s West Side stadium plan; Major League Baseball’s struggle with doping-related issues during the 2005 season; and the European domination of the IOC’s membership rolls.
At the same time, said one senior IOC member, speaking on the condition of anonymity, “There is an anti-American feeling ... there has to be an understanding the world has changed -- it really is not 1984 anymore,” the year of the triumphant Los Angeles Summer Games, headed by current USOC Chairman Peter Ueberroth.
While the USOC’s fund-raising abilities and professional staff are the envy of other nations, the Americans are also “perceived as greedy and avaricious and not caring about sport and only about money,” said a longtime Olympic insider.
Influential Olympic insiders elsewhere want the U.S. to receive a smaller share of marketing revenues, but the USOC maintains it is being a good Olympic citizen, settling for amounts far below what it could generate if freed to pursue marketing efforts on its own.
“The American dream is something that people appreciate,” said Anita DeFrantz, the senior U.S. delegate to the IOC, a member since 1986. “And yet it can be something that angers people. That can be a part of what’s felt as a current of anti-Americanism.”
Ueberroth and IOC President Jacques Rogge have discussed these issues during face-to-face meetings, including one at IOC headquarters in Lausanne, Switzerland, in late November.
“In all families there are times when the different members do not agree 100% on everything -- but what is important is that there exists a bond between the members, and a desire to work through the issues and find solutions,” Rogge said in a statement. “This is certainly the case between the IOC and the USOC.”
Ueberroth, interviewed recently at his Newport Beach offices, acknowledged what he called a “continuing friction” between the USOC and IOC.
“It’s based on the misconception that the Olympic Games are a financial bonanza for the United States and that the United States takes more than its fair or proper share of the revenues from U.S. television and from sponsors,” Ueberroth said.
He added, “I have a high degree of confidence that the Olympic leadership at the IOC is beginning to understand that we can grow the economic pie together substantially and the best way is through mutual cooperation.”
A measure of how the Americans are viewed could come this week, when IOC members might vote on whether to reinstate baseball and softball, and on whom to place on the executive board.
DeFrantz and another American IOC member, Jim Easton, are seeking board seats, but a number of Olympic insiders said it would not be surprising if both were rejected.
After the 2006 Winter Games, which begin Friday in Turin, the next likely test of U.S. influence involves the 2016 bid process, which concludes in 2009.
With a decision on a U.S. entrant expected in 2007, Los Angeles officials have already announced an intent to bid; San Francisco and Chicago are among other possible applicants. Internationally, Rio de Janeiro, Tokyo and Rome are seen as possible bidders.
“You need to go back to North America every now and then to recharge the economic batteries,” said Michael Payne, the IOC’s former marketing director, stressing that he was not backing any nation’s candidate.
The IOC’s primary source of revenue has long been the sale of American television rights, which for the Turin Games, for instance, is three times the combined amount of rights fees paid by other broadcasters around the globe. NBC is paying $5.7 billion to televise the Games in the U.S. from 2000 through 2012.
The USOC receives 12.75% of the fees paid by NBC. No American television deal has been made for 2016, giving the USOC leverage.
At the same time, while the USOC acknowledges it must better coordinate and facilitate such vote-winning issues as entry into the United States and IOC-mandated guarantees for certain construction overruns, there will be an American entry only if there is a “level playing field,” Ueberroth said.
Which means the USOC and IOC must come to terms with the finances of the Games.
For many IOC members, the complexities translate simply: The USOC is greedy. USOC officials call that nonsense.
The tension is rooted in complex revenue-sharing formulas in three areas -- certain marketing rights afforded a host nation’s Olympic committee and local organizing committee; the IOC’s separate top-tier global marketing program, featuring such longtime IOC sponsors as Coca-Cola and McDonald’s; and the broadcasting revenues.
While the Singapore flap centered on the how much of the so-called domestic marketing revenues the USOC would have had to share with New York had it won the bid, a greater source of international friction is the 20% share of global marketing revenues that goes to the USOC.
Each of the 11 top-tier sponsors is paying more than $80 million total over the four years from 2005 to 2008 for the right to use the five-ring Olympic mark in its advertising and marketing programs.
When the 20% fee was negotiated, U.S. companies dominated the roster of top global sponsors. Now the scene is different. The lineup includes companies based in Japan (Panasonic), South Korea (Samsung), France (the IT firm Atos Origin), China (computer maker Lenovo), Switzerland (watchmaker Omega) and Canada (insurer Manulife).
If a majority of top global sponsors are no longer U.S. companies, critics ask why the U.S. still gets that 20%.
While the USOC gets 20%, the world’s other 201 national Olympic committees are left to scrap over another 20%.
“We have a lot of internal problems because out of 202 NOCs, 201 of them are very much against the percentage the United States is getting here,” said one senior IOC delegate.
The remaining 60% is divided this way: 30% to the host city’s Summer Games organizing committee, 20% to the winter organizers and 10% to the IOC.
Some have suggested the USOC give back some of its one-fifth share as a gesture of goodwill -- dropping to, say, 17%.
“Yes, it’s about money,” said one insider. “It’s also about respect, and a recognition that the USOC -- an admission by the USOC -- that it recognizes the value the IOC and the other nations of the world bring to the Olympic movement.”
USOC officials say they need their full share to remain competitive, since, unlike many other nations, the American Olympic effort receives no government funding.
Ueberroth said the USOC is already being generous by taking part in the revenue-sharing arrangement rather than negotiating on its own with whatever companies it saw fit.
“U.S. television and U.S. sponsors generate substantial worldwide Olympic revenues. If we kept the U.S. rights only, they would be far more valuable to us than the current sharing arrangement,” Ueberroth said.
An influential Olympic insider observed, “As you look to the future, this problem will only become bigger -- particularly with China’s market. Those numbers are huge. They will start to rival the U.S. What if China says, ‘I want the same deal as the U.S.?’
“It’s something that’s going to need to get addressed in some manner that is revenue-neutral to the United States. It’s going to need to get addressed,” the source said, “because it creates so much ill will.”