IOC rattles rusty saber that still could wound Chicago Olympic bid

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Here we go again.

More saber rattling from the International Olympic Committee on the revenue issue that I have consistently noted could injure Chicago’s 2016 Olympic bid.

In a Wednesday story, Steve Wilson of the Associated Press quotes Swiss IOC member Denis Oswald, president of the International Rowing Federation, as saying the IOC could break the 21-year-old revenue-sharing contract with the U.S. Olympic Committee if the USOC doesn’t accept a reduced share of the revenues.

First of all, that likely is an idle threat, even if Oswald told Wilson that lawyers have indicated the contract can be broken. You always can find a lawyer to take whatever position you want on a dispute like this.

More on the legal part later.

Last June, IOC President Jacques Rogge told me, ‘A clear indication the USOC is willing to find a solution and not refusing a solution could be very good for Chicago,’ adding that it would not be a negative if there were no such sign.

So the timing of Oswald’s latest comments is not coincidental, coming as it does a week before the four 2016 finalist cities make presentations before a large group of Olympic sports leaders at a meeting called Sport Accord in Denver.

Oswald did the same thing almost exactly a year ago before a major Olympic meeting in Beijing.
He set back ongoing negotiations on the issue by sending a letter dated March 7, 2008, to every Olympic sports leader and IOC member saying it was ‘no longer morally acceptable’ for the USOC to receive such a large share of the revenues.

(Funny, but I don’t remember him being so outraged about Olympic morality a decade ago, when it was revealed that 24 IOC members – one-fifth of the membership at the time -- were grabbing every bit of revenue and every gift they could in a bribes-for-host-city-votes scheme. For the record, not a whiff of that scandal touched Oswald.)

Last June, during the meeting when the IOC narrowed the 2016 field from seven to four cities, Oswald backed then-IOC member Hein Verbruggen of the Netherlands as he used the word ‘immoral’ again in speaking to the media about the revenue issue.

(This is the same Hein Verbruggen who stood idly by for 14 years as the president of the International Cycling Union while the sport turned into a doping cesspool.)

Those two incidents –- the letter and the public censure -- infuriated USOC Chairman Peter Ueberroth, a man you don’t want to infuriate.

Ueberroth called the letter mean-spirited and a bold-faced attack on Chicago’s bid. He used his final meeting before turning over the chairmanship to Larry Probst last October as a pulpit to tell the IOC where to get off on the revenue issue.

A little background: In an open-ended deal begun in 1988 and renegotiated in 1996, the USOC receives 12.75% of U.S. broadcast rights and a stated 20% (although it actually comes to about 16%) of the IOC’s revenues from its global sponsorship program (TOP).

People familiar with the deal say the IOC has no leverage to change the TV percentage at least until after 2012, when the current contract with NBC expires. Because some of the IOC’s global sponsorship deals already stretch to 2020, there also is a legal argument that the percentages can’t be changed before then on that part of the USOC-IOC contract.

I learned Wednesday there is a dirty little secret in all this that the IOC doesn’t want you to know: About 60 other national Olympic committees also have specific revenue-sharing deals with the IOC. Unlike the USOC contract, the terms of those never have been made public to avoid, say, having a Germany get angry should it learn that a Japan has a better deal.

The IOC members clamoring to have the U.S. share reduced point to the increased percentage of non-U.S.-based global sponsors (now five of nine) over the last two decades –- but more than 60% of IOC revenues still come from U.S. sources.

And what people like Oswald don’t get is that the USOC has a nuclear option at its disposal: It can simply pull out of the TOP program and seek its own sponsors in the same categories, with the full backing of a federal law on its side. It hasn’t used that weapon out of a desire to remain a good partner in the Olympic movement.

Think TOP sponsors like Coca-Cola (signed until 2020) would pay even half as much (an estimated $120 million) for a deal that did not include the United States? Yes, it sells a lot of product worldwide, but the company certainly values its U.S. market. So do the other eight TOP sponsors.

The 1978 Olympic and Amateur Sports Act, a federal law, says the IOC has to go through the USOC to do Olympic business in the United States.

That not only gives the USOC power to block TOP sponsors from using the Olympic rings as a marketing tool on U.S. territory but also the power to prevent the IOC from tendering a TV contract to a U.S. network.

And some people think the USOC share of U.S. television rights ($894 million for the 2008 Olympics) should be even higher, given the percentage of time NBC spent showing U.S. athletes.

The USOC gets about 50% of its total revenues from the IOC deal. Taking less could affect the quality of the teams U.S. networks pay to show. And what might Congress think about the USOC taking less money for athletes, since –- unlike the rest of the world’s Olympic committees –- it gets no government funding?

Rogge said last December he wanted a new deal ready for the IOC executive board to consider at its meeting during Sport Accord.

But there have been no face-to-face negotiations since then involving the principals on both sides: Oswald, Mexico’s Mario Vazquez Rana and Norway’s Gerhard Heiberg for the IOC, and some combination of Ueberroth, Probst and Bob Ctvrtlik (the USOC vice president for international relations) for the USOC. Talks are to take place in Denver.

As always, Heiberg remains the voice of reason. I know that he and Ueberroth had a handshake deal in 2007 that was nixed when it got back to Switzerland –- where, not coincidentally, Oswald lives and the cycling federation and IOC has its headquarters.

‘I hope we can leave speculation about Chicago out of the meeting and concentrate on what we are there for,’ Heiberg, the IOC’s marketing commission chairman, told the AP.

‘I understand some people will have Chicago 2016 in the back of their minds. My standpoint is to leave that out of the discussion completely.’

That is the moral thing to do.

But morality and IOC host city selections have proved to be uneasy bedfellows.

-- Philip Hersh