Thursday, January 25, 2007

The 2016 Olympics -- they will be held in either Chicago or Los Angeles

Monday, the United States Olympic Committee received the Domestic Bid Books from the two U.S. Candidate Cities under consideration to be selected as the U.S. Applicant City for the 2016 Olympic Games – Chicago and Los Angeles. The good news, one of the two cites in all likelihood will host the 2016 Summer Olympics. The best news, whichever city isn’t selected by the USOC. The bad news, the city that is selected by the USOC faces a $20 billion bill once they are selected by the International Olympic Committee in October 2009. The IOC vote will be held in Copenhagen, Denmark.

“The submission of the Domestic Bid Books is another important milestone in our process and the cities are to be commended for the outstanding work they have done,” said USOC Vice President, International Bob Ctvrtlik, who is overseeing the bid process for the USOC. “There are three things that are immediately apparent when reviewing the Bid Books. First is the passion and enthusiasm that each city has for the Olympic Games and Olympic Sport. Second is the strong desire of each city to work with the USOC in building long-term, meaningful partnerships with the worldwide Olympic Movement. And third is their recognition of the universal importance of the Olympic Ideals in our world today.

“These are critical factors in the success of any bid, and it is clear our two U.S. Candidate Cities understand this,” added Ctvrtlik.

The 1996 Summer Games were held in Atlanta, the 2000 Games in Sydney, the 2004 Games in Athens, the 2008 will be in Beijing and the 2012 Games are scheduled for London. Geographically that’s North America, Australia, Europe, Asia and back to Europe. That leaves the IOC with little if any choice except for North or South America for the right to host the Summer Olympics in 2016.

As is the usually the case with the IOC’s decision more than two years away there are more that 20 cities that have expressed interest. However, if one follows the geographical location of previous cities where the Olympics have been held, considers historical factors it is almost inevitable the 2016 Summer Games host will be from either North or South America.

The 2014 FIFA World Cup is scheduled to take place in South America, likely in Brazil. Rio de Janeiro expressed an interested in hosting the 2016 Olympics in September. However with Brazil and Columbia vying for the right to host the 2014 World Cup (and rest assured Brazil will be selected) Rio will be eliminated as a host city for the 2016 Olympics. An Olympic Games have never been held in South America. Both Argentina and Chile have indicated their interest in hosting the 2016 Summer Games. However, neither country offers what Rio might have. At the same time both Argentina and Chile have little if any infrastructure capable of hosting an Olympic Games. Those factors make it next to impossible for a South American city to be awarded the 2016 Olympic Games.

That leaves Mexico, Canada and the United States. Mexico City the host of the 1968 Olympics has shown any interest. Interestingly Montreal Mayor Gerald Tremblay announced the city that hosted the debt ridden 1976 Olympics was interested in hosting the 2016 Games. Nice to see Montreal’s interest, never say never but it’s a pretty safe bet the IOC won’t ever be interested in returning to a city whose lasting Olympic legacy was its debt. For all the right or wrong reasons that leaves either Chicago or Los Angeles as the host of the 2016 Games.

There is a belief among many Olympic pundits the International Olympic Committee remains a European centric group with strong anti-American sentiments.

President Jacques Rogge speaking with’s Alan Abrahamson earlier this week made it clear the IOC was ready to seriously consider a Summer Games bid for the United States.

“I think there is absolutely no negative anti-Americanism. I think that is a wrong perception."

To those who might suggest otherwise, Rogge said, "It may be that you are seeing the situation through too-dark glasses."

Abrahamson raised a number of important issues. The International Olympic Committee's policy-making executive board is made up of 15 IOC members, none from the United States. Abrahamson also suggested the IOC’s decision to eliminate baseball and softball and New York’s dismal fourth place finish (out of the final finalists) in the bidding for the 2012 host city are symptomatic of anti-American feelings on the IOC.

Before anyone gets too excited as to why baseball and softball were not included in London’s 2012 Olympic program consider these financial numbers. According to The London Telegraph, London Olympic organizers stand to save $86.9 million with baseball and softball off their Olympic menu. In a country with no grassroots baseball and softball programs, the building of baseball and softball stadiums in a country where baseball and softball aren’t on the sports landscape, it makes perfect sense to not have a baseball and softball event(s).

As for New York’s fourth place finish, it may have surprised some the 2004 and 2012 Games are both being held in European cities. Yes the IOC’s current 108 members include 56 Europeans. Madrid who nearly stole the 2012 Games from London is expected to bid again for the 2016 Games, but three of four Summer Games being held in European cities – just not going to happen. And suggestions Tokyo will bid for the 2016 Games, there may not be a great many American IOC members but let’s remember the economic engine that drives the Olympic Games – American corporations who have led the way in the Olympic sponsorship program. And then consider the financial commitment American television has made to the IOC.

Consider the rights NBC has paid the IOC for last year’s Torino Games. At the same time, why not factor in the commitments NBC has made to the Olympics through the 2012 London Games. NBC has the rights through the 2012 Games; the Games beyond 2012 have yet to be offered for broadcast tender:

$614 million for the 2006 Torino Winter Games.
$894 million for the 2008 Beijing Summer Games.
$820 million for the 2010 Vancouver, B.C. Winter Games.
$1.181 billion for the 2012 Summer Games.

The IOC generated $833 million in broadcast rights from the Torino Games. The latest IOC Olympic broadcast revenue chart indicates, the IOC is projecting broadcast revenues of $1.706 billion in world wide rights from the Beijing Games. In total the IOC expects broadcast revenues of $2.539 billion from this quadrennial (the four year period that includes both the Torino and Beijing Games), with NBC contributing $1.508 billion, more then 60 percent of the total broadcast revenues the IOC will realize.

According to the IOC, during the four-year Olympiad, that includes the Turin Games and the 2008 Summer Games in Beijing, the IOC believes sponsors and broadcasters will pay more than $4 billion in fees for the quadrennial up from the $3.6 billion in similar revenues the IOC collected for the 2002 Salt Lake City and 2004 Athens games. The IOC keeps 51 percent of the broadcasting and marketing dollars each Olympic Games generate, with the host organizing committee receiving the other 49 percent.

Of the eleven IOC Top sponsors, a designation given to the select group of companies who each invest tens of millions of dollars in the Olympic ‘ideal’, six are companies with their world-wide headquarters based in the United States: Coca-Cola, General Electric, Kodak, Manulife Financial, McDonald’s, and Visa.

Rogge made it clear he has tremendous respect for USOC chairman Peter Ueberroth. After Montreal’s disasters debt ridden 1976 debacle the only city interested in bidding for the 1984 Olympics was Los Angeles. After a United States boycott of the 1980 Moscow Olympics nearly ended the modern Olympic movement, Los Angeles agreed to move forward with their 1984 selection only if the Games wouldn’t cost taxpayers a dime.

Organizers turned to Peter Ueberroth, who stood and delivered. The Montreal Olympics had more than 600 sponsors, the 1980 Lake Placid Winter Games more than 350 sponsors. Ueberroth believed fewer sponsors (exclusivity) would bring bigger dollars. It was Peter Ueberroth who conceived the Olympic TOP program, it was Peter Ueberroth’s vision that saved the Olympic Games and turned the debt ridden Games into a money making machine. The 1984 Games, eight years after Montreal lost more than $1 billion generated a profit of $250 million. That is the man at the helm of the USOC today, the man who save the Olympic Games.

Rogge said of Ueberroth, is a "very, very capable man" who has "brought peace and stability and prestige to the United States Olympic Committee.

"Definitely," Rogge went on. "I think he is also preparing for the future by hiring new people, by empowering new people." Among them: Jim Scherr, the USOC's chief executive; Norm Bellingham, the chief operating officer; Bob Ctvrtlik, the USOC's vice president for international relations, and Robert Fasulo, an American who had for years been based in Lausanne, now the USOC's staff director for international affairs.

"That is very wise from his point of view," Rogge said.

Soon after the 1984 Games (Ueberroth was selected as Times Man of the Year in 1984), then IOC President Juan Antonio Samaranch reportedly wanted to honor Ueberroth by appointing him to the IOC. That never happened, but you can believe Ueberroth who went from running the 1984 Games to becoming Major League Baseball commissioner hasn’t forgotten that he was snubbed by the IOC. Men like Peter Ueberroth have long memories, and while Ueberroth has never suggested he even cared about being appointed to the IOC, a man as proud and successful as Peter Ueberroth has to have thought about the insult sent to him by the IOC more than 20-years ago.

70 percent of the revenues the International Olympic Committee generates are from American based companies. The economic engine that drives the Olympic movement is the United States of America. Another issue that has upset the European centric is the United States being the only country that gets its own cut of Olympic broadcast and marketing revenues. Worldwide there are 203 National Olympic Committees. When one country is generating 70 percent of all the revenues common sense dictates that country will receive the biggest share of the pie.

The 2016 Summer Olympics will be held in the United States of American for both economic and geographical reasons. There is no other rationale choice for the IOC to make, and Peter Ueberroth is the man who will deliver the Games back to an American city.

For Sports Business News this is Howard Bloom. Sources citied in this Insider Report:

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