Sunday, December 21, 2008

Is the 'International Olympic Commitee' playing hardball with the 'USOC' or is it the other way around?

The IOC is taking the international credit crisis quite seriously and they are leveraging external profit centers for more money. In fact they are pointedly asking the United States Olympic Committee (USOC) to take a smaller cut in both Olympic Sponsorship deals and broadcast revenue sharing.

In none too subtle ways, the Chicago 2016 Olympic bid has been hinted as the carrot the IOC will use to get the USOC to agree to smaller percentage deals. From the L.A. Times:
Many IOC members have been applying public pressure for three years to insist that the USOC reduce the shares it gets from global Olympic sponsorship (20%) and U.S. broadcast rights money (12.75%)

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Now, though the IOC has categorically stated that they can ride out this credit crunch, IOC reserves have dropped 14% to $400-million dollars due to their financial officer making a bad bet against the dollar.

From another L.A. Times article:
As of last week, IOC reserves had dropped about 14% in 2008, to $400 million, according to IOC Finance Commission Chairman Richard Carrion of Puerto Rico. The stock market decline was an obvious reason for the drop, but another loss shows just how hard it is to hedge bets. The IOC's investments in currencies other than dollars also dropped because the dollar strengthened -- until the Federal Reserve cut interest rates to nothing this week.

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There is a Nigerian proverb that states: "When the mouse laughs at the cat, there is always a hole nearby!"

The fact that the USOC will not negotiate a compromise means the USOC is the "mouse" here and that the proverbial "hole" has got to be the massive interest USA media companies have on bidding for the Olympic Games. From AP News:

NEW YORK (AP) — CBS Corp. and Time Warner Inc. executives have discussed joining forces to bid on rights to televise the Olympics in 2014 and 2016, turning that competition into an even greater clash of media titans.

TV empires headed by incumbent NBC, Fox and ABC-ESPN have all said they expect to bid on the U.S. rights to the games. Because of the economy, the International Olympics Committee has said it is prepared to postpone its bid selection until after the host city is named next October for the 2016 Summer Games.

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Another curious thing that has been suggested is that IOC appears to be planning to wait till a host city is selected before opening the bidding for television rights for the 2016 Olympic Games. Now, if Chicago is selected, I suspect USA Media interests would bid more frantically since the US would be the host country. From Hellenic Athletes.com:

According to the IOC, a contract for the US market could be quite the bidding war as NBC, CBS-Time Warner, Fox and ABC Sports-ESPN are all reportedly chomping at the bit to televise what could be another US based games. The IOC’s main revenue source is broadcasting rights, with close to $4 billion alone for the 2010-2012 two-Games package. NBC’s portion -- long the lion’s share -- is about $2.2 billion, from a bid agreed to back in 2003.

And that is the issue -- prices agreed to many years in advance. The US rights deal has been considered the most important IOC television contract because it represents one of the largest source of funds..."

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Though I am hoping for a Tokyo 2016 Summer Games, I suspect that Chicago is the likely pick especially since the President elect of the United States has ties to that city, that there is a global recession in the horizon, and several enthusiastic USA media conglomerates are ready to go to auction. Hence it appears that Chicago is the likely candidate, and the IOC will likely place a bet on that horse.

As for the economic health of the United States and its global standing post Beijing. Our government has made a lot of bad choices. Americans have made a lot of bad choices and we share the blame for this economic credit collapse. Our government and the citizens herein generally only change when we HAVE TO and the people I associate with feel a sense of panic and severe embarrassment at this time!

Now is an opportunity for the US to change and get innovative or to simply circle the drain as we have been doing.

The "feeling on the ground" here in the US is that we are about to print up a lot of money and spend it on taking the US to the "next level" with massive energy projects and infrastructure projects like this country did in the 1930's and 1950's. I suspect Chicago 2016 will get some of that money and I bet the IOC really wants to hear that.

So, post cash infusion into our economy, I expect either a renaissance on a "Biblical scale" or the United States becoming a second tier nation in the next 30-years with a ferocious military. I for one am betting on the renaissance for that's what Americans do, they believe, and we take chances.

1 comment:

Trev said...

Wow. Great post, Tony! Very interesting and insightful.