Making money
IOC official suggests ditching profit-sharing deal
Posted: Tuesday February 16, 1999 05:20 PM
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Michael Payne: "It would seem the first place to start is to look at the whole profit deal, which we thought was a bad idea in the first place." AP |
LONDON (AP) -- Sydney Olympic organizers can ease their financial troubles by reallocating more than A$100 million (US$66 million) from a profit-sharing deal back into the games, the IOC's marketing chief said Tuesday.
"You would solve the financing issue in a stroke of a pen," marketing director Michael Payne said.
Raising money from corporate sponsors for the 2000 Sydney Games has become a major concern, especially in the wake of the Olympic corruption scandals.
With Sydney about A$200 million (US$130 million) short of its target for sponsorship revenues, Payne suggested the controversial profit deal should be reviewed.
"There is no way the games should be compromised because of a profit deal that we were opposed to," he told The Associated Press in a telephone interview from IOC headquarters in Lausanne, Switzerland. "This money should be put back into the games."
Payne said the IOC warned the Australians three years ago against projecting a surplus for the games. Sydney organizers have predicted a surplus of A$30 million (US$17.7 million).
"The IOC was saying, 'This is crazy to be talking about a profit now. You should wait until the day after the closing ceremony,"' Payne said. "For various reasons, they wanted to lock down issues on profit two or three years ago. Maybe that should be reopened. There's more than A$100 million involved."
Under terms of the IOC's contract with Olympic cities, 90 percent of any surplus goes to the host country and 10 percent to the IOC. Of the 90 percent set aside for the host country, 10 percent goes to the national Olympic committee.
The profit-sharing arrangement for Sydney has gone through several changes.
In a deal with the New South Wales government, the Australian Olympic Committee (AOC) agreed to give up its veto power over key decisions in exchange for a guaranteed sum of A$100 million (US$66 million).
Later, the NSW government effectively bought out the AOC's right to the money. The funds go to the AOC whether there is a surplus or not.
"That money has now been taken off the balance books," Payne said. "In hindsight, it might have been premature to talk about profit."
The IOC's share of the profit deal was eventually capped at A$13.5 million (US$8.95 million). The IOC has said it would earmark most of its share to a special fund for sports programs in Australia and the rest of the Oceania region.
Payne said IOC president Juan Antonio Samaranch has made clear the international committee is ready to help out if the organizing committee and government request it, including reconsidering the IOC's profit share.
"It would seem the first place to start is to look at the whole profit deal, which we thought was a bad idea in the first place," Payne said. "We would never do a deal of this nature again. Never in a million years."
Even before the corruption scandals involving Olympic bid cities, Sydney was struggling to meet its A$2.6 billion (US$1.65 billion) budget.
Specifically, organizers have fallen short of their A$874 million (US$542 million) sponsorship target.
This has led to fears that budget cutbacks will be made that could affect the games.
In Sydney, Olympics Minister Michael Knight suggested for the first time Tuesday that the Olympics could get by without the extra sponsorship revenue.
"You can run a pretty fantastic Olympic Games on A$2.4 billion (US$1.52 million)," he said.
Payne said Sydney organizers erred by setting their latest sponsorship revenues too high.
"SOCOG has twice met their targets, and got the most successful marketing program we've ever seen for the games," he said. "If it's a problem, it's because they were too successful early on. They allowed the targets to continue to be raised.
"I think the current target is wrong," he said. "It never should have been raised to this height. It's like a high jumper. You can keep raising the height, but eventually he can no longer make it over the bar."
Jacques Rogge, the IOC executive board member who heads the IOC coordination commission for the Sydney Games, said he is optimistic that Sydney will raise enough money.
"Yes, there is still some revenue to be found, but it's too soon to be worried," he said in a phone interview from Belgium. "I'm very relaxed about it.
"We are vigilant. But today no one can say there is a danger, a shortfall, a problem. We'll have a better idea in June after ticket sales have started and new efforts have begun to find new sources of revenue."
Copyright 2003 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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