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Governance: Making The Games Run On Time


Special Report: THE OLYMPICS

GOVERNANCE: MAKING THE GAMES RUN ON TIME

The IOC has turned the Olympics into a money machine. But have ideals been sacrificed?

It promises to be an even more striking corporate headquarters. Below shimmers azure Lake Geneva. Above tower the snowcapped Alps. In 1986, a glass-and-steel annex was added to the original quaint 19th century manor house. Now, finishing touches are being put on a modern, marble-filled wing scheduled to open in June. But this is home to no ordinary multinational. It's the headquarters of the nonprofit International Olympic Committee in Lausanne, Switzerland.

The new building is a metaphor for how the IOC has transformed the Olympics from an old-fashioned operation--bankrupt and amateurishly run--into a global marketing machine. Cities that once had misgivings about hosting the games now battle for the opportunity. And over the past decade and a half, the Olympic movement's revenues have multiplied fortyfold, to an average of about $1 billion annually.

"NEW REALITY." For some, the raw pursuit of money represents a betrayal of the Olympic ideal of athletics for athletics' sake. But for IOC marketers, the newly powerful Olympic "brand" has saved the Games. "Society changes. So does sport and the Olympic movement," says IOC President Juan Antonio Samaranch. "We have adapted our organization to a new reality."

The controversial Samaranch spent more than three decades as a faithful supporter of Spanish dictator Francisco Franco, rising to chief of Catalonia's regional government. When he became IOC president 16 years ago, political boycotts, battles over the amateur status of athletes, and weak financing plagued the Olympics. Host cities marketed the games poorly. In 1980, more than 90% of IOC revenues came from television, and of that figure, more than 90% came from American broadcast rights. Today, TV accounts for only 50% of revenues, sponsorship 36%, tickets 11%, licensing 2%, and miscellaneous items like programs 1%. The IOC takes a 7% cut for itself; the rest goes to the host organizing committee and national Olympic committees.

Samaranch's attention to detail is legendary. After watching a video of a trial bobsled run at Nagano, he ordered the five Olympic rings painted on the ice. "The technicians said: `It's not possible,"' recalls Michael Payne, the IOC's marketing director. "He said: `Do it."' The rings will be clearly visible.

But such micromanagement has paid off. Global sponsors line up to fork over a minimum of $40 million--some much more--for a four-year cycle of Summer and Winter Olympics. Before the Games begin, future host cities are guaranteed marketing revenues of $1 billion. "The financing of the games is now guaranteed," says Richard W. Pound, a Canadian lawyer, former Olympic swimmer, and IOC vice-president.

In return for such largess, hosts must accept ever more stringent IOC oversight. The contract for the Moscow Olympics in 1980 was a single page. The contract for Nagano runs hundreds of pages. After Atlanta allowed street vendors to sell Olympic memorabilia, the IOC pressed Nagano to ban the practice. "We don't want a souk," Pound says.

Some see authoritarian impulses at work in the unrelenting push for ever greater control and ever more bucks. Right after taking office, Samaranch persuaded the Swiss government to award nonprofit and extraterritorial status to his organization, and the IOC still releases no official financial statements. The president hand-picked the majority of the aging 112 IOC members, and most are named for life. Many East European delegates are longtime communists, while many Asian members are distinguished by their close links to deposed or still-ruling dictators. Says Andrew Jennings, author of The New Lords of the Ring, a 1996 book highly critical of Samaranch and the IOC: "It's an authoritarian club run by an old Francoist who doesn't believe democracy works." Under Samaranch's prodding, Jennings charges, host cities have lobbied IOC members by offering them gifts. The IOC, he alleges, has even covered up doping abuses.

Samaranch allies reject these charges. "I wish the media would stop printing all the stories about fur coats," says one IOC member. "When I go home, my wife asks me why I don't have a gift for her." The IOC claims it cracks down on doping much harder than other sports organizations. "There are numerous others who do little, and nobody passes comment," complains Marketing Director Payne.

The IOC is equally defensive about its committee members. Samaranch says he must deal with officials named by governments even if their politics are distasteful to him. After years when the Games served as communist-capitalist battleground, he is proud that more countries will take part in the Nagano Games than in any other Winter Olympics. "The unity which we have managed to achieve is essential," he says. But IOC officials concede that some accountability, some reforms, and perhaps some humility are in order.

FIVE-STAR SUITE. Director General Francois Carrard says the IOC intends to open its books in the near future, though he won't say exactly when. And in the selection process, host city candidates are being advised to spend less on promotion. "We tell the cities: `Please don't be so lavish,"' says Carrard.

Samaranch himself certainly likes the good life. Like all IOC members, his position is unpaid. Samaranch, who is independently wealthy thanks to a family textile business, lives in a suite in Lausanne's five-star Palace Hotel. But more than money, it's power that seems to fuel what even IOC insiders call an "outsized ego." He revels, these sources say, in being on a first-name basis with world leaders such as South Africa's Nelson Mandela.

Who will succeed such a larger-than-life figure? Rumored front-runners include Vice-President Pound and ex-South Korean intelligence chief Un Yong Kim, a member of the IOC. But the 77-year-old Samaranch has succeeded in getting the IOC to push back the mandatory retirement age from 75 to 80. And he won reelection last September through the year 2001. He could even stay on after that date. "He does 40 minutes of gymnastics every day. His health is remarkable," says Carrard.

Whoever eventually takes the torch from Samaranch will head an increasingly powerful multinational with a solid-gold brand name. But the IOC also remains a world body accountable only unto itself. That makes it like no other multinational on the planet.By William Echikson in Lausanne


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