Olympics

The big-money man

JENNIFER WELLS June 10 1996
Olympics

The big-money man

JENNIFER WELLS June 10 1996

The big-money man

Olympics

JENNIFER WELLS

Dick Pound is wearing the most egregious tie. Even from a distance, the thing blares bad taste. Up close, the Atlanta ’96 stampings that run all over it come into focus. Which does not make it any more appealing. Pound could care less. “I’m just a billboard,” he says.

In fact, Dick Pound is much more than breathing signage for the Olympics. He is the hydra-headed holder of myriad Olympic offices, including executive board member of the International Olympic Committee and chairman of the New Sources of Finance Commission, the Centennial Working Group, the Television Negotiations Committee, and the Atlanta Co-ordination Commission, the last of which makes him the point man between this summer’s Atlanta Games and the IOC. All this and more make Dick Pound the second most powerful individual involved in the smart end of the Olympic movement, after President Juan Antonio Samaranch.

And none of this is Dick Pound’s job. His Olympics command post for these various voluntary positions remains in the bowels of the downtown Montreal law offices of Stikeman, Elliott, where Pound heads the firm’s tax division. The foyer of Stikeman is polished mahogany, little table lamps, a typical Establishment law

firm look. Pound’s digs are as chaotic as ever, a two-bit office strewn with papers, Olympics memorabilia and the binders in which he catalogues the country’s big tax cases, which he rates as a movie reviewer would, on a four-star scale.

Out of this jumble, over the course of a near 30-year official involvement with the Games, Pound has been credited with rescuing a movement that was all but moribund in the late 1970s, when, says Pound, the IOC was “down to a couple hundred thousand Swiss francs in a bank somewhere.” In 1980, Samaranch stepped in as president. “One of the first and foremost problems that Samaranch had to fix—and he turned to Pound to do it—was the financing, because without the financing there was no way the Games could continue,” says Michael Payne, director of marketing for the IOC at its headquarters in Lausanne, Switzerland. “In 1984, the total revenues for the Olympic movement were a few hundred million dollars,” says Payne. “This quadrennium total revenues will be in excess of $3 billion (U.S.).” Payne says the transformation of this ephemeral, assetless non-corporation has been “a classic turnaround in a business sense.” And he gives Pound credit for being the chief architect.

Thirty-six years ago, Pound was swimming the 100-m freestyle in the Rome Olympics. He came in sixth. He won gold at the

Canada's Dick Pound is an Olympic champion

Commonwealth Games two years later. It was Pound’s sporting accomplishk ments that con. nected him to I the Olympic m movement K: in the first B place. And he ■ kept those f ties, through degrees in acr counting and law, through two marriages—Pound and his second wife, Julie, live in Westmount— and through a growing relation-

ship with McGill University, where he serves as chairman of the board of governors. But while he talks about the Games as a “social phenomenon that has the potential for doing good,” Pound’s role has become increasingly aligned with the business end. He has, in fact, worked at applying the precepts of big business to the IOC. If the IOC had corporate titles rather than bureaucratic ones, Pound would be its chief operating officer.

The problem with the business image is that it keeps conflicting with the ongoing operations of the Atlanta Olympics, which begin on July 19. There have been the usual pennyante antics: parasite marketers pushing unlicensed Olympic products. (“It’s the ambush capital of the world,” says Pound of Atlanta.) Then there were the more startling efforts of the city itself to run its own sponsorship program, say with Pepsi, to compete against the Olympics official pop sponsor, Coke. (“It never occurred to anybody that a city would ever think of ambushing its own organizing committee,” he says.) And the way in which Atlanta is charging that organizing committee—the Atlanta Committee for the Olympic Games, or ACOG—for everything from garbage collection to police overtime. (“In future, we will examine much more closely the arrangement between the organizing committee and the host city.”)

What really sticks with Pound in the Atlanta

Games are two points. The first is that the financing model, which demands revenues in excess of $1.7 billion—“U.S. dollars,” says Pound, “not the northern peso”—was built on 100-per-cent backing by the private sector. From the start, Pound had concerns that the model would not work, though he never said so publicly, fearing that any negative comments would burst Atlanta’s public relations bubble.

The second was ACOG’s selling of the U.S. television rights, which is directly tied to point No. 1. In the summer of 1993, ACOG was eager to start the spade work on its $280-million Olympic stadium. There was the small problem of funding, and the fact that ACOG needed a fat contract in hand in order to collateralize a $400-million line of credit with NationsBank Corp. So the decision was taken to negotiate the U.S. television rights to the Games with the big three networks. Pound told them: “Please don’t go now. This is not a good time—you’re going to leave anywhere between $75 million and $100 million on the table.” In the end, NBC signed up for $625 million. “My feeling was we did the best we could do at that time,” Pound says, “but that we did our best at the wrong time.”

In August, 1995, Pound ensured that that would never happen again. With NBC sports president Dick Ebersol, he negotiated a $4.8-billion TV deal that gives the network U.S. telecast rights into the Olympics of 2008, wherever they

may be, excluding the ’98 Winter Games in Nagano, Japan, which CBS has locked up.

The genesis for those closed-door talks, says Pound, came from NBC. He says he drew no assistance from outside economic analysts to signal whether what he was signing was a good deal for the IOC. “We’ve done these things often enough,” says Pound of his deal makings with Ebersol, “that if you put slips of paper into a bowl, and if I got one that said in this negotiation I am Dick Ebersol, I know all his lines. And he knows mine.” Pound was concerned, however, “about getting into a deal based on projections and look-

ing like a complete dummy 13 years from now.” To help prevent that, a three-per-cent inflation index was built into the bargain.

Only time will tell whether rampant inflation will undermine the allure of the contract for the IOC, or whether a cratering in advertising will get NBC parent General Electric Co. to wonder what they could have been thinking. Pound says NBC knows that the network will have no say in choosing future Olympic sites. He says he told Ebersol that he should make his bid with the understanding that “none of the Games will be held in the United States.”

The television lockup, says A. D. Frazier, chief operating officer of ACOG, “has become a powerful anchor to steady the Olympic cash flow.” Certainly it provides a platform from which to build any future Olympic Games, a “financial safety net,” Pound calls it. Building in television revenues, and taking conservative marketing sales into account, Pound estimates that whichever city successfully bids for 2004 can count on $1.2 billion. That does sound handsome, particularly for cities that do not have to shell out big money to build big stadiums. “If you can’t organize a party for $1.2 billion, you’re not doing it right.” The capper for the IOC is an increase in its share of broadcast revenues, to 51 per cent from 40 per cent. Having the television rights in “safe hands,” says Michael Payne, can only

help the structure of future games.

Certainly it should enhance the sponsorship appeal of the Games, which is Payne’s bailiwick, and which Pound oversees. Pound not only meets with players like Ebersol, he goes one on one with IBM CEO Lou Gerstner and Coca-Cola CEO Roberto Goizueta. There is much money at stake. In the two years since Lillehammer, Coke has probably tied up about $650 million. And while other sponsorships, such as Jeopardy! and Wheel of Fortune, have drawn some attention—“It sort of makes your hair stand up on end when you think about it,” says Pound—it is home-town

player Coke that represents a symbiosis between gamesmanship and sponsorship.

And that could make Dick Pound look like a shill for the most Americanized, conspicuously commercialized Games ever.

The facts are somewhat different. In the Montreal Olympics, which left the taxpayers with a $ 1.2-billion debt, there

were more than 100 official sponsors. “The Olympic marks were stuck on anything, from bananas to ladies’ underwear,” says the IOC’s Payne. “There was no control.” The more appropriate antecedent was the 1984 Summer Olympics in

Los Angeles, where a _

heavy dose of corporate sponsorship propelled those

Games into the black. In Atlanta, there are 43 major sponsors, which sounds almost small. On the other hand, the list, running from Home Depot to Kodak to Xerox, is mighty, and, naturally, mighty American.

Faced with the suggestion of commercial overreach, Pound has always had a safe defence. There is not, and will not—at least not as long as Pound has anything to say about it— be any advertising in the sports venues themselves. That, he says, reflects the power of the IOC, which grants Olympic rights and very closely monitors them. The IOC’s Payne offers the example of recent discussions with Rupert Murdoch, whose Fox network unsuccessfully sought the European rights. “We left $600 million on the table,” says Payne, “which, if you were a private promoter, you probably would have jumped at.”

Still, the advertising game is fuelled by the need to get the message out, and Pound is open to suggestions. He is currently pondering the merits of giving AT&T live-time access, hooking up the winner of the moment with mom and dad back home. “If it

CASHING IN

A total of 43 companies have paid about $1 billion to buy into the Atlanta Olympics. There are three levels of sponsorships, each with its own price and perks.

Worldwide sponsors:

Top of the marketing pack, paying up to $55 million each in cash and/or services for the right to plaster their wares internationally with any and all Olympic symbols, including the coveted rings and

any country’s team logo. Get VIP access to Games seats, hotels, transportation and, occasionally, athletes.

Bausch & Lomb,

,— Coca-Cola, IBM,

John Hancock, Kodak, Panasonic,Time lnc./Sports Illustrated, United Parcel Service, Visa, Xerox

Centennial Olympic Games Partners:

The second tier, paying up to $55 million each for the U.S. rights to use the logos for the Atlanta Games or Team U.S. A.—but \ not the Olympic rings by ) themselves. Also get

some choice seats.

AT&T, Budweiser, Champion, Delta Air Lines, Home Depot, McDonald’s, Motorola, NationsBank, Swatch

Sponsors:

The last rung, costing up to $30 million.The sponsors provide services to the Games and are limited in their use of logos.

American Gas Association, Avon, BellSouth, Blue Cross and Blue Shield, BorgWarner Security, BMW, Brunswick Corp., Dial Corp., Georgia Power, General Mills, General Motors, Holiday Inn, International Paper, Jeopardy! and Wheel of Fortune, Merrill Lynch, Nissan, Randstad Staffing Services, ScientificAtlanta, Sensormatic, Texaco,Textron, World Travel Partners, WXIA-TV,

York International

doesn’t work, if it turns out to be nothing but an AT&T promo, we’ll pull the plug,” he says. “It’s a little like William Blake and the “Proverbs of Hell.” You never know how much is enough until you know how much is too much.” But it was Blake, in the same proverbs, who wrote: “The road of excess leads to the palace of wisdom.”

Three weeks ago, Pound flew to Atlanta for the opening of the Olympic Stadium, one that after the Games will look like a free gift to Ted Turner and the Atlanta Braves. Pound has taken issue with the fact that ACO G had to pay for the stadium, which, he believes, should be backed at least in part by governments. This would seem an unfashionable position in these times of government restraint. But A. D. Frazier—they call him All Day down there—agrees with him. The alternative route, the one Atlanta took, just barely worked. It will break even, says Pound, “by the skin of its teeth.” He knocks his desk top when he says it. A lot of the money counting, on the “souvenirs, the ashtrays, these lovely ties,” has not begun. It could not, says Frazier, have worked anywhere else. “No offence intended to any other country. It’s just that this economy is obviously the richest and the deepest.”

And a good thing, too. “These are our Centennial Games,” says Pound. “If these characters stumble, they’re gone. Aug. 5, they’re history. We’re around for the next 100 years. We have to live with it.”

Dick Pound is 54. He won’t be around for the next 100 years. A year ago, his immediate Olympic future appeared shaky.

When the IOC executive voted on extending the tenure of membership to the age of 80, which in turn would offer to extend the tenure of Samaranch, now 75, Pound voted against. It was seen as Dick Pound’s first big career-limiting move. Never, said the pundits, would Pound succeed Samaranch to the presidency.

When Pound did the NBC deal with Ebersol, the betting changed. Pound is a contender again. “If they’re going on business ability,” says James Worrall, the Canadian Olympic runner who nominated Pound to the IOC in 1978, “he has excellent qualifications.” And there is, of course, Pound’s sports roots, a connection that has been all but lost amid his high-level wheeling and dealing.

Pound himself does not take the opportunity to do any advance campaigning. What would he do with the job if he had it? He chooses not to answer. ‘You don’t,” he says, “turn around the Queen Mary in a day.” The comment suggests that for all his hard work, the way in which he has minimized the risk of the Olympics, there is more work to be done inside the virtual behemoth. He does not elaborate. In the meantime, he is as mired in tax litigation as in Olympics work. “My partners say, ‘Listen, as long as you have the same number of billable hours as we do, you can do all the Olympic s—you like.’ ” □