COVER

THE GOLD RUSH

March 23 1987
COVER

THE GOLD RUSH

March 23 1987

THE GOLD RUSH

COVER

The wind howls. High atop a ski jump, blue-suited Ron Richards pushes off to begin his descent. “I think he was about seven years old when he won his first competition,” says a man. Cut to the speaker, the skier’s father, Ron Sr. of Oshawa, Ont. Stocky, wearing a redand-white sweater and a modest smile, he sits before a shelf of ski trophies and says, “I have to bite my tongue and not be the proud father and talk about it.” Back and forth the camera cuts. The son soars past snow-coated trees. The father says that “you live and die with every move they make. I’m more tuckered out at the end” than the skiers. Meanwhile, back on the slope, Ron Jr. glides to a stop. He raises an arm in victory as a crowd cheers and an announcer intones: “Not every kid makes the Olympics, but

every parent knows the trials. Labatt’s salutes them.”

Let the games begin—the corporate games, that is. As Calgary continues to gear up for the 1988 Winter Games less than a year away—and as Canadians last week savored skier Laurie Graham’s second-place finish in the women’s World Cup downhill in Alberta and skater Brian Orser’s gold-medal victory at the World Championships in Cincinnati (page 31)—corporate sponsors like Labatt’s are already breaking from the starting blocks with advertising campaigns designed to cash in on the Olympic countdown. And the Olympiques Calgary Olympics organizing committee (OCO), chaired by energetic oilman Frank King, is making them pay dearly for the privilege.

Ancient: On the face of it, such enterprises seem a far cry from the ideal of pure, unexploited sport espoused by Baron Pierre de Coubertin, the Frenchman who revived the ancient Greek games in 1896. But in recent

years those games have been beset by escalating costs, political boycotts and even terrorism. And many officials, led by International Olympic Committee (ioc) president Juan Antonio Samaranch of Spain, have concluded that in order to save itself the Olympics must sell itself.

Bounty: For the Calgary organizers, the impetus is as simple and inescapable as the Games’ five-ringed logo: to avoid the Olympic-sized overruns of the 1976 Montreal Games, which left Quebec taxpayers with a $l-billion deficit. OCO officials prefer the model of the 1984 Summer Games in Los Angeles, whose unabashed, if tightly controlled, commercialism produced a $284-million profit. As a result, the Calgarians, with the can-do spirit of the Canadian West, have taken up the torch of free enterprise. Already organizers are projecting an income of $76 million from sponsors and suppliers, and 37 firms have bought the rights to imprint the Olympic logo on everything from cowboy boots to cal-

endars. In addition, the ABC network paid a record $309 million (U.S.) for TV rights (page 36). Buoyed by such bounty, organizers predict that despite Alberta’s economic slump, OCO will at least break even, and King points to a legacy of athletic facilities that Calgary will inherit (page 33).

Pinnacle: But the

marketing of the Games is not the only evidence of the Olympics’ new money-mindedness. For decades the IOC clung, at least officially, to its insistence on amateur participants—despite the radically changing realities of “amateurism.” Those realities were apparent last week as World Cup skiers raced down Mount Allan, the Olympic alpine-skiing site 91 km southwest of Calgary. Like rocketing

billboards, they sported brand names on helmets, goggle bands and their national uniforms. Off the slopes, many maintain notoriously rich-and-famous lifestyles (page 34). Those same skiers will tackle Mount Allan in next year’s Games—minus advertisements, but still amateurs in name only. Over the past dozen years the IOC has gradually moved away from the amateur concept and is now beginning to grant Olympic eligibility even to open professionals in some sports. The changes, says Richard

Pound, Canada’s IOC president, were designed to eliminate hypocrisy and ensure that the Games “remain the pinnacle of athletic events.”

Calgary organizers first waded into the big-money world of the modern Olympics more than two decades ago when they bid for the 1964 Games. Later they made another unsuccessful bid to the IOC. But in 1979 they decided to try again and, led by King, launched a $1.5-million campaign. They collected donations, sold Olympic-theme artwork and held fund-raising dinners. For two years organizers literally circled the globe—King himself flew 250,000 miles—to lobby IOC officials. They even showered them with boxes of chocolates and German

wines, Eskimo art and gold maple-leaf brooches for the wives. Calgary’s Swedish and Italian rivals proferred gifts of their own. But in October, 1981, in the West German resort town of BadenBaden, IOC officials gave Calgary the

nod, sending some 100 delighted Canadians bunny-hopping around the casino.

But getting the Games was only the beginning; financing the billion-dollar bash is another matter. There are two separate budgetary streams. The first, estimated at $494 million, essentially covers OCO’s planning, marketing and operating costs. It also includes a $79million bonanza for the Calgary Olympic Development Association, the group

that won the Games for Calgary, to operate several Olympic facilities afterward, and $30 million for the Canadian Olympic Association to bankroll amateur sports. Offsetting those expenses are revenue projections of $542 million,

leaving a $48-million cushion to cover unexpected contingencies. The bulk of the revenues will come from TV rights and sponsors, plus a projected $36 million from ticket sales.

Class: Those sales have led to OCO’s biggest debacle to date. Last October OCO fired ticket manager James McGregor for allegedly instructing 8,000 Americans to make mail-order payments to his own company. McGregor,

charged with fraud and theft, is due to stand trial on March 23. Also in October the committee acknowledged that 50 per cent of all tickets had been reserved for Olympic and Calgary officials. That provoked a storm of protest from Calgarians, prompting OCO to limit the Olympic family of organizers, officials, guests and the press to first chance at 23 per cent of the tickets. So far OCO has sold one million tickets, with another 600,000 still available, and it is planning to add extra seats for hockey and skating.

The cost of building or upgrading Olympic facilities comprises another set of books of about $395 million. Funding for that comes entirely from governments:

$200 million from Ottawa, $129 million from Alberta and $66 million from the city of Calgary. The resulting projects include the $97-million Saddledome, home to the NHL’s Calgary Flames since 1983; the $62-million Canada Olympic Park for ski-jumping,bobsleigh and luge events; and the $40-million indoor speed-skating oval. “We didn’t build just for the Olympics but for generations,” said Alberta Recreation Minister

Norman Weiss. “I’m pleased with what Albertans got in world-class facilities.” Not everyone is pleased, however, about the $25.3-million Mount Allan. Chosen as the Olympic site in 1983, it had a relatively gradual descent below the mid-station level that prompted criticism from IOC officials; they well remembered the way U.S. skier Bill Johnson— a fast but considered by some to be a technically flawed racer—glided to a gold medal on a similar course at Sarajevo in 1984. In response, OCO hired experts to redesign the run, sharpening grades and adding bumps. But they cannot control the weather. For years Mount Allan has received virtually no snow in February, when the Games will be held, and it is subject to warm chinook winds. Indeed, two weeks ago the warm weather turned the manmade snow to slush and delayed training for the women’s World Cup competition. Eventually, though, the races were run—and the slope received generally favorable reviews. “It’s a very nice course,” said Switzerland’s Pirmin Zurbriggen, this year’s men’s World Cup

downhill champion. “It is much better than Sarajevo.”

While controversy may continue to swirl around Mount Allan, the marketing arrangements for the Games seem to be running smoothly. The key is selling the exclusive rights to the Olympic emblem for a range of products, whether it be soft drinks or banking. The idea was pioneered at the Los Angeles Games by organizer Peter Ueberroth, who learned

from the negative experience of the Lake Placid Games in 1980. There, some 381 sponsors, many competing with each other, contributed only $9 million. Seeking to emulate Ueberroth’s success—about 30 sponsorships accounting for $160 million—the Calgary committee set out to find blue-chip sponsors willing to pay a minimum $2 million in cash or services.

Exclusive: OCO offi-

cials say they have not pitted companies against each other in bidding wars. The key considerations, they say, include not only a firm’s financial offer but the extent of its proposed advertising, which will indirectly support the Games. So far the committee has signed up 14 sponsors, and officials say they expect to reach their goal of 21. In the Calgary office of OCO vice-president William Wardle, a display tells

the story: paid-for Olympic decals on a Coca-Cola bottle, a can of Labatt’s Blue, a model of a Federal Express cargo jet. “We’re happy that the corporate community accepted the prices,” says Wardle. “Some felt they were too high, but then I’m relieved to hear that—otherwise we’d think maybe they were too low.”

Of the 14 sponsors, six have purchased international rights for both the Calga-

ry Games and the Summer Olympics at Seoul, Korea. Those companies made their deals not only with OCO but with the Swiss-based International Sports & Leisure (ISL), which contracted with the IOC in 1985 to become the exclusive agent for marketing the Olympic logo to international firms. ISL, partially owned by Horst Dassler, the West German who heads Adidas sporting goods, has in turn formed partnerships with national Olympic committees around the world, as well as with the Calgary and Seoul organizing committees. The remaining eight firms have bought the Canadian rights from OCO —although the rights are not in all cases exclusive. In the oil industry, PetroCanada is sponsoring the cross-country torch relay, Shell-Canada is backing the native exhibition at the Glenbow

Museum and other oil companies are paying to advertise themselves as part of Team Petroleum 88. Explained Wardle: “It wasn’t appropriate in Canada’s petroleum capital to offer exclusive rights to any one oil company since so many of our volunteers were oil company personnel.”

Clamor: How the sponsors use their Olympic association is up to them. But according to David Shanks, OCO’s gener-

al manager of corporate relations, studies of the commercial fallout from the Los Angeles Games point to a clear conclusion: advertise early or be drowned out by the Olympic clamor. Labatt’s officials obviously agree. The company, which won the sponsorship over rival Molson’s, is already running two other TV commercials in the same vein as the skijump spot, each focusing on a Canadian athlete and parent. And John Yokom, the company’s marketing director in the Prairies, said the firm will follow up on that theme by flying the parents of all Canada’s Olympians to Calgary and paying their expenses. “We’ve done research,” Yokom said, “that shows if you try to

be too blatantly commercial you can turn your customers off.”

Other companies are also investing heavily in the games. Dale Boniface, general manager of Coca-Cola’s Olympics marketing division, refused to disclose how much the firm paid for the international rights to the Olympic logo. Whatever the cost to Coke, Boniface said that Coca-Cola would spend far more for personnel, promotion and advertising—the latter featuring former Canadian skier Ken Read. Such sponsorship can have far-reaching business benefits. As part of its deal, Royal Bank is the exclusive agent for ticket applications at bank branches—and can include its own marketing brochures with confirmation mailings. Olympic ticket-buyers, says Peter Case, vice-president for advertising, “represent a reasonably affluent group. It’s expensive to buy those tickets. So we’re able to make some use of those lists.”

In addition to the sponsorships, OCO has already contracted with 20 companies to provide a minimum of $500,000 each in products, services or cash to the Olympics. These companies include Bombardier Inc. of Montreal and

Canon Inc. of Tokyo. The Calgary committee—for a 10-per-cent royalty—also licenses firms to produce souvenirs bearing the Olympic emblem. Already, Calgary’s White Ram Knitting Co. has thousands of Olympic sweaters in stores at prices ranging from $50 to $80 each—and reports $500,000 in back orders. Olympicedition cowboy boots will retail for $225 to $250 a pair. And there are plans for Olympic jeans, socks, shirts, belt buckles and stuffed versions of OCO ’88 official mascots, Hidy and Howdy.

Challenge: If the road to Calgary is paved with entrepreneurial intentions, many of the athletes who travel it next

year will bear little resemblance to the unpaid Olympians of long ago. The amateur ideal fell to latter-day forces. Eastbloc countries began to train and support state athletes who were pros by any other name. Many supposedly amateur Western athletes began to accumulate trust funds full of prize and endorsement money. After years of resistance, the IOC has at last begun to accept such changes. The committee stopped using the word amateur in 1975, and in 1982 it permitted the trust-fund practice. And in a series of decisions since, the IOC has even opened the door to participation by open professionals by adopting the eligibility requirements of each sport’s international federation, some of which allow pros. “I don’t think you can turn the clock back,” says the IOC’s Pound, a

Montreal lawyer. “You might as well approach the problem realistically.” East-bloc officials naturally oppose the inclusion of Western professionals, who, in such sports as hockey and basketball, could pose a stiffer challenge to Iron Curtain competitors. But for many IOC officials, that is precisely the point: to make the Olympics a stage for the best athletes in the world and, if possible, to make a profit in the process. “The real aim of the Olympic Games is, of course, to have people doing their best,” says Raymond Gafner, the IOC’s acting administrator. “But it is also to gather money to develop sport at all levels. This

needs millions and millions of dollars, and to get that you must offer something that is first class.”

Reality: For the moment, the IOC ruling affects all major sports except tennis, which was an Olympic exhibition sport in 1984. The tennis issue will be considered at a full IOC meeting in Istanbul in May, raising the prospect that the likes of Martina Navratilova, Carling Bassett and Boris Becker could be swinging their rackets at Seoul. At Calgary the most intriguing question surrounds hockey. Professionals from the National Hockey League were not allowed to participate at the last Winter Games; the IOC has now abandoned that hair-splitting distinction, a decision that awaits only federation approval next month to become reality. But while NHL players may be eligible

at Calgary, that does not mean they will play. “It would be nice to think that we would have a Wayne Gretzky available,” said Murray Costello, president of the Canadian Amateur Hockey Association. “But it’s not going to happen.” The reason is simple: the Winter Games fall in the middle of the NHL season, when team owners are unlikely to release players for a three-to-four-week Olympic commitment.

Flame: But even without the added glitter of NHL stars, the Calgary Games promise to be a world-class extravaganza. Preparations are on schedule, and Calgary organizers seem confi-

dent. But they have clearly not forgotten Montreal Mayor Jean Drapeau’s now-infamous prediction of 1975: “The Montreal Olympics can no more have a deficit than a man can have a baby.” Fear of running a Montreal-style deficit has fuelled the Calgarians’ drive for dollars, and the hype and hoopla are only beginning. If Baron de Coubertin could see his games now, he would undoubtedly be appalled by the blatant commercialism—as well as by the growing professionalism. But modernday IOC officials would have a ready explanation: it is the only way to keep the Olympic flame flickering.

-BOB LEVIN with JOHN HOWSE in Calgary, ANN SHORTELL and ANN FINLAYSON in Toronto, ANTHONY WILSON-SMITH in Montreal and ROSS LAVER in London