|THE OLYMPICS INDUSTRY|
February 19, 1999
While Salt Lake City fights to regain respectability following the scandal over its bid for the 2002 Winter Olympics, Betty Ann Bowser reports on the growth of big business around the games.
MARGARET WARNER: Finally tonight, international Olympic officials meet this weekend to discuss the widening corruption charges surrounding the games. Betty Ann Bowser looks at the motivations and money behind the scandal.
(Band playing fanfare)
BETTY ANN BOWSER: This is the picture most people have of the international Olympic games: Thousands of the world's finest athletes coming together, going for the gold. (Cheers)
But as recent events have shown, there is another, darker side to the Olympics, a world in which competing cities gave, and some members of the International Olympic Committee accepted, expensive gifts and thousands of dollars in cash. Olympic historian Kevin Wamsley says one of the reasons improprieties have taken place is because there is so much money involved.
KEVIN WAMSLEY: They're seen as being valuable for a number of economic and cultural reasons, and this is where the problems begin. That is when the I.O.C. members can see that they may ask certain things of host cities. There's more money floating around, for example. Host cities are extremely competitive. They are driven to win the Olympic bid.
ANNOUNCER: The 18th Olympic winter games on CBS.
BETTY ANN BOWSER: $400 million in TV rights and $200 million from corporate sponsorships are at stake in the 2002 winter games in Salt Lake City. But the stakes were not always so high. In fact, there was a time the Olympics made no money at all. In 1894, the Olympics as we know them were created. A wealthy French baron named Pierre de Coubertin organized a handful of European aristocrats into the first International Olympic Committee. He also staged the first modern-day Olympiad in Athens. Besides an interest in sports the baron had one primary criteria for membership.
KEVIN WAMSLEY: It has to be remembered that the baron purposefully recruited very wealthy individuals so that they could pay their own way-- pay their own way to get to congresses, Olympic games, meetings, et cetera. And the second thing is, interestingly enough, he wanted to make sure that they wouldn't be subject to bribery, because they were independently wealthy.
BETTY ANN BOWSER: In its early days, the Olympics were run on shoestring budgets. Host governments and the IOC usually had to find the money to pay for the games, because there were no corporate sponsors. (Cheering and band music in background)
What countries got out of the Olympics then was political capital. In 1936, Hitler showcased his Third Reich, and in 1972, Munich wanted the games to show off the new West Germany. But by the 1976, construction for venues drove the cost of staging the games sky-high. Host City Montreal is still paying off a $2 billion debt. Then in 1980, a former Spanish diplomat named Juan Antonio Samaranch was elected president of the IOC. He did something that changed the games forever: He went after worldwide corporate sponsors.
KEVIN WAMSLEY: Since Samaranch's term, he's made the Olympic games and the IOC one of the most powerful organizations in the world -- billions and billions of dollars, and an influence that reaches many corners of the world. Some of the largest corporations have organized their global corporate marketing around the Olympic games and made the Olympic rings one of the most recognizable symbols in the world. (Cheering in background)
BETTY ANN BOWSER: 1984 was a turning point. Los Angeles businessman Peter Ueberroth for the first time got big companies to underwrite the city's cost of staging the games. He was also able to contain construction costs by using existing stadiums and venues. Los Angeles turned an otherwise lackluster Olympics into a gold mine, netting $200 million.
HOWARD PETERSON: And we had a run -
BETTY ANN BOWSER: But former U.S. Olympic Committee member Howard Peterson says there was also a downside.
HOWARD PETERSON: After Los Angeles made so much money in '84, what I saw changing, was instead of bid cities being mainly sports people-- which meant they had a son or daughter in events, or they officiated, they were a volunteer, they a coach-- all of a sudden, the people that showed up were marketing or economic development people, and to a great extent having nothing to do with sports.
BETTY ANN BOWSER: And there was another change that took place. The IOC decided their members could travel to potential host cities before voting, at those cities' expense. IOC U.S. Representative Anita De Frantz says that's where the real trouble started.
ANITA DE FRANTZ: It was the travel, and in the bid cities trying to become hosts, just like a city bidding for the Democratic or Republican national convention. There was all sorts of things that we might, in ordinary life, think is a little silly. But they were doing that, just as a city bidding for a national convention would do. But they had to do it for 100 members, and so it gets very expensive, it gets very difficult to monitor, and obviously, it got out of control.
BETTY ANN BOWSER: By the late 1980's, when Atlanta was bidding for the 1996 summer games, IOC members were routinely driven around in limousines and given expensive gifts. They were invited to lavish receptions. Cities spent millions to show off their bids to visiting IOC members. Atlanta organizer Billy Payne says some members had extravagant expectations, but his city broke no rules.
BILLY PAYNE: We did encounter, you know, silly things that you just learn to deal with. "I don't like my hotel room. Give me a bigger one." "My car is not as big as his car. Give me another one." But you know, we did consider that part of the process, and you just bite your tongue and go on with it, because at the end of the day, what you're trying to do is bring something so magnificent and wonderful, and have it embraced within, by the people of your own community, and, you know, it's worth putting up with some of that stuff.
BETTY ANN BOWSER: But Salt Lake City Councilwoman Deeda Seed says she doesn't think it's worth it.
DEEDA SEED: These people apparently expect to be treated like royalty when they come to an Olympic host city. For example, in the budget for the organizing committee, there is a provision that the members of the Olympics family be provided breakfast over the two-week period that they are here, which is fine, except that breakfast is going to cost over $700,000 for 14 days. And this is for a very small number of people. They are going to have a very lavish breakfast, I guess.
BETTY ANN BOWSER: IOC Vice President DeFrantz denies Seed's charges.
NITA DE FRANTZ: The numbers released were for 3,500 people to have breakfast, not the 100 members of the IOC. And among the 3,500 people who would be having breakfast includes heads of state, our sponsors, other people who have supported the games, and other people who are interested in making sure those games are a success. So you need to understand the full picture.
BETTY ANN BOWSER: Bid cities have complained about the behavior of IOC members.
JUAN ANTONIO SAMARANCH: Salt Lake City. (Cheers)
BETTY ANN BOWSER: It's also clear that host cities themselves were anxious to provide extravagant gifts. That's what former United States Olympic Committee member Peterson alleges happened in the bid process for the 1994 games.
HOWARD PETERSON: I was offered, in the context of helping my career, free travel anywhere in the world I wanted to go.
BETTY ANN BOWSER: By?
HOWARD PETERSON: By Anchorage, which was bidding at the time. And -
BETTY ANN BOWSER: Did they want anything in return?
HOWARD PETERSON: Of all the bribes I've been offered, all the gifts I've been offered, no one has ever said to me, "here's a car, and you have to sign here saying you'll vote." It's all the family. It's the Olympic family. It's "we like to help you." No one, of course, has ever asked, has ever offered me anything when I didn't have a vote.
BETTY ANN BOWSER: There were charges of improprieties in the bidding for the 1998 winter games, as well. Top businessmen in the winning city of Nagano, Japan say they provided geisha girls, gifts and expensive trips worth thousands of dollars to IOC members. And Toronto's organizing committee, which lost the bid for the 1998 games, complained as far back as 1991 to the IOC that some members and their companions materially benefited by obtaining airline tickets from local sources at sometimes-discounted prices, and demanding hard currency in return. But when the IOC tried to investigate, officials in Toronto refused to name names. But until the improprieties were uncovered in Salt Lake City, IOC Vice President DeFrantz said there never was any hard proof of wrongdoing.
ANITA DE FRANTZ: I certainly had heard rumors. And I had asked, "well, what we are doing about it?" And the answer was well, until we get someone's name, unless someone is willing to say "this happened here and this is how it happened," the executive board said "what are we supposed to do?"
BETTY ANN BOWSER: Ironically, no city has made huge profits from hosting the Olympic games since 1984. Billy Payne originally predicted Atlanta's games would make $150 million. But unlike Los Angeles, the city had to launch a massive construction project to accommodate all the athletes and sporting events. Salt Lake City is doing the same thing. And in the end, the Atlanta games made only $10 million in profit, and half of that went to the IOC and the U.S. Olympic Committee. Sports economist Philip Porter, who studies the effect of large sporting events on communities, says it's not unusual for cities to make less than projected.
PHILIP PORTER: What I'm looking at is do the communities make any money? Is there any additional sales, is there any additional revenue, is there any additional income? And what I'm finding is for a lot of discomfort, there's no return. And the end result is, the people go away, and you're left with a bunch of stadiums that no longer are filled, and venues for things that local people don't do, like cyclodromes and toboggan ski runs -- but no wealth.
BETTY ANN BOWSER: In Atlanta, the committee spent $20 million on this outdoor, state-of-the-art aquatic center on the campus of Georgia Tech. The university was delighted to inherit the facility, but can only use it for competition a few months of the year. Now, Georgia Tech is trying to raise another $20 million to enclose the facility for year-round use. But Wayne Clough, the president of Georgia Tech, thinks the effort will pay off.
WAYNE CLOUGH: There is no question from the standpoint -- certainly, Georgia Tech accrued some facilities it would never have gotten, especially in such a short period of time. I think particularly in terms of an urban institution, we had neighborhoods around us that were not the most desirable that are being transformed, and that is a huge plus for us.
BETTY ANN BOWSER: The University of Utah in Salt Lake is also going to inherit a number of venues being built for the 2002 winter games, including this $50 million football stadium. But Utah's Governor Mike Leavitt says sponsoring the Olympic games is more complicated than just dollars and cents.
GOV. MIKE LEAVITT: Anyone who seeks the Olympic games for money doesn't acknowledge the difficulty it is for a community, or for that matter, the risks that are inherent in it. The reason to seek the Olympic games is, in my judgment, it defines a community, in a way that no other event can, as a high quality place. It defines it as a place that, a community that is significant, and in which the future can be seen. And we are entering the 21st century, and jobs are becoming more global. This is not just about sport alone, but it's simply not being done for -- simply for money -- economics, yes - but to earn money on the games themselves, no.
BETTY ANN BOWSER: The continuing flood of bribery accusations could change the economic equation. A number of international corporate sponsors are withholding millions of dollars until they see how all this plays out. At present, Sydney is still $100 million shy of the corporate sponsorship it needs. And Salt Lake City, which thought it would be done with corporate fund-raising by this time, is still $250 million short.
MARGARET WARNER: A final update on Betty Ann's piece: A Washington Post article today reports former Atlanta Olympics official Charlie Battle concedes his group did violate some IOC gift-giving limitations. But Battle says while Atlanta officials may not have abided by the strict letter of the rules, they did nothing "illegal, unethical, or improper."