SBJ/June 9 - 15, 2003/Marketingsponsorship

USOC targets 20 jobs as first step to shrink budget by $10M

Staff reduction and other cost-cutting measures forecast two months ago by the U.S. Olympic Committee's new operations boss are scheduled to be in place by the end of June, the first steps toward his goal of trimming $10 million from the USOC budget by late 2004.

Jim Scherr, senior managing director for sports performance, said the USOC this month is eliminating about 20 jobs carrying the titles of manager or above, a move that will shrink the USOC's payroll to fewer than 500 people. The Colorado Springs, Colo., headquarters once had as many as 566 paid staffers, but that number gradually has decreased through attrition to about 520.

Scherr did not specify jobs that are being cut. He said the USOC would rely on outsourcing for professional services in place of selected staff positions.

"Across the board, we'll cut roughly $10 million over the next two years from the approved [$491 million] budget," Scherr said. "We'll do it through reduction in head count numbers, reduction in merit increases, reduction in salary increases. And we'll also look at ways to recover some revenue [not in the original budget]."

Scherr said the USOC is moving back to event-driven fund-raising and away from a narrow focus on soliciting so-called major gifts from high-net-worth donors. As an example, Scherr cited a planned series of three golf events, "Drive of Champions," in which Olympians will tee it up with corporate executives and other guests. One, co-hosted with the national federation USA Basketball, is scheduled in November in Pinehurst, N.C.

The projected profit — as much as $250,000 — is "significant, but so are the relationships you build," Scherr said. "It is a key contact point [to cultivate donors]."

Despite pending staff cuts, an Olympic industry source said the USOC remains on the verge of hiring regional fund-raising directors eliminated when Norman Blake became USOC chief executive in 2000.

  MONEY TRAILS: A few short months ago, the CEO of global Olympic sponsor John Hancock Financial Services, David D'Alessandro, raised questions about escalating USOC administrative costs (such as former CEO Lloyd Ward's six-figure air travel bills) and what he called "financial improprieties." His comments sparked congressional hearings and calls for sweeping reform, which remain under discussion.

D'Alessandro said a comprehensive USOC audit was the answer and suggested John Hancock would help pay for it.

What a difference three months makes. The audit has yet to begin. USOC Chief Financial Officer Early Reese wrote D'Alessandro in mid-May inquiring about next steps in the process. So far, D'Alessandro's office has not replied.

Meanwhile, the USOC's scheduled audit by contracted accounting firm KPMG began recently, even as D'Alessandro himself is under the microscope. He faces a shareholder lawsuit that challenges his $21.7 million compensation package in 2002, a year in which the company's earnings fell 15 percent.

The audit by KPMG, said Scherr, "may answer some of [D'Alessandro's] major questions [about USOC operations]."

As for the audit offer, D'Alessandro spokeswoman Becky Collet said: "We are working with [the USOC] to move forward, but I can't comment on the process. I don't think anything has changed."

  HIGH ON SPEEDO: USA Swimming is in sponsorship renewal talks with competition swimwear maker Speedo, a federation partner for 24 years, according to USA Swimming chief marketer Rod Davis. While it is no secret in the elite swimming world that Nike is a growing presence in the sport, Davis said Speedo has first right of refusal as the federation's sponsor and is exercising that right.

United Airlines, struggling to emerge from Chapter 11 bankruptcy protection, has been redesignated by USA Swimming from sponsor status to "supplier" status under a new agreement. United recently terminated sponsorships of several other Olympic sports.

Steve Woodward can be reached at swoodward@sportsbusinessjournal.com.

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