SBJ/20090907/Opinion

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  • Consider intangibles when weighing Olympic host city benefits

    We noted with great interest the recent announcement from the Chinese government in Beijing that it made $146 million in operating profit from hosting the 2008 Summer Olympic Games. This proclamation was notable insomuch as the outcome didn’t suggest any forensic accounting had been conducted by an impartial third party.

    But that’s the norm. Each city hosting the Olympics wants to show its citizens (or government) the pomp and circumstance didn’t cost anyone anything. As Shakespeare might have said, “All’s well that ends well … if we’re profitable.”

    But there is much more to hosting the Olympic Games than simple cost accounting. Although varied views exist, and there is undeniably significant impact on a city beyond ticket sales, researchers still need to explore a variety of investments including economic development, branding, volunteer training, facility legacies, health care improvements and more.

    In the case of Beijing’s Games, did BOCOG’s investment strategy go beyond net profitability? Was it more important for the Games to showcase China’s growing economy and tourism/branding than to improve the quality of life for Beijing residents? What is it really like in Beijing and the outlying districts one year later?

    For many, the Chinese government probably succeeded on numerous levels, but scholars and journalists should still ask if bidding cities and their governments are fully considering the investment “quantum” of winning the Games. Are legacy programs or volunteerism vehicles more developed because the International Olympic Committee demands as much in the bid or because the organizing committee truly wanted to change social conditions for their huddled masses?

    We fully understand this is treacherous political ground and it explains why press releases stick to reporting profitability or, when the result was unprofitable, promoting infrastructure “leave-behinds” for the next generation. This is logical but limiting. For the benefit of future bidders, shouldn’t someone focus on and aggregate the other impacts of the Games? If the answer is yes, what should happen next?

    The Chinese government reported $146 million
    in operating profit from the Beijing Olympics.

    First, we should ask how Vancouver 2010, London 2012, Sochi 2014, and the four 2016 bidding cities of Chicago, Madrid, Rio de Janeiro and Tokyo can optimize their respective up-front investments.

    In Vancouver, where 64 percent of citizens voted in favor of hosting the Games in a 2003 plebiscite, the Games have come under scrutiny for budget shortfalls necessitating a bailout loan of approximately $87 million (U.S.) and a recent request for around $20 million (U.S.) related to the construction of the Olympic village. (In Vancouver’s case, the IOC has already announced it will financially help with — but not completely cover — VANOC’s debts if there is a deficit following February’s Winter Olympics).

    In London, news is emerging that forensic accountants are suggesting a massive shortfall (roughly $160 million, U.S.) in the London Development Agency’s 2012 Olympics account. If accurate, that is one deep hole.

    Shouldn’t someone probe the issue of host city investment logic/strategy going in and the real results coming out? Is there an over-focusing on costs and a lack of emphasis on long-term direct, indirect and intangible outcomes?

    Granted, Olympic impact measurement has been around for years and both of us have previously written on it. Many others have also conducted considerable research, yet the nut that is a true holistic review is still not cracked.

    The challenge of unexpected cost overruns during construction, massive operating budgets and increasing media scrutiny as the Games approach, is common. But when the Games cost billions to stage and then show a relatively slight profit or healthy loss, then the citizens of hosting cities deserve some form of independent “here’s how we really benefited” findings two to five years later.

    This is where we can learn from economists who study economic impact. Generally speaking and widely agreed upon, the impact of an event is calculated under three distinct areas: (1) direct financial impacts (e.g. jobs created to build facilities, visitors related to the Games, etc.); (2) indirect financial impacts (e.g., tourism incremental gains due to Games, long-term job growth, etc.); and (3) intangibles (e.g. improved volunteer base, stronger city brand, healthier population, etc.). Clearly, measuring direct impacts is easier; however, it is possible to measure or estimate the indirect and intangible impacts.

    There is also the issue of “unit of analysis.” Do we measure impact by the organizing committee, the city, the province/state, or the country? Or all of them collectively? For example, in Barcelona (1992), the Spanish government was reportedly left a $6.1 billion (all figures U.S.) debt despite the organizing committee reporting a profit of $3 million. Similarly, in Nagano (1998), reports suggested the Olympic committee showed a $28 million profit but various government groups were left with $11 billion in debt. Some Games do not differentiate, such as Albertville (1992), which reportedly lost $57 million, and Atlanta (1996) and Sydney (2000), who both reported breaking even.

    In consideration of intangible benefits, can we actually say Atlanta only broke even? Is Atlanta a bigger, better, more respected global city for having hosted the 1996 Games? Is it higher on people’s to-visit list when they consider a holiday? Was the city’s thrill at hosting Australians, Austrians and Argentineans ever measured? Is their population healthier? Did the city secure a better future?

    A review of the published plans for Vancouver, London, Sochi, Chicago, Madrid, Rio de Janeiro and Tokyo portrays considerable attention to legacy aspects, ranging from facilities to volunteerism to health outcomes. However, these aspects and others of interest need to be enhanced and evaluated conservatively with appropriate metrics, clear benchmarks and long-term data collections. And done so independently well after the circus has rolled up its tent and left town.

    Further, we think evaluations of the Olympic Games bidders and hosts should not be based solely on costs and cost overruns, but on the holistic outcomes generated. Evaluations must go beyond dollars and scratch at what hosting the Games really does to a city and then helping bidding cities articulate what they want the Games to do for them.n

    Rick Burton (rickburton5@gmail.com) is the David B. Falk Distinguished Professor of Sport Management at Syracuse University and former chief marketing officer of the U.S. Olympic Committee. Norm O’Reilly (noreilly@syr.edu) is an associate professor at the David B. Falk Center for Sport Management at Syracuse and will work for the Canadian Olympic Committee at the 2010 Games.

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  • Don’t ignore popularity of youth running sports

    I again read with interest this year’s SportsBusiness Journal youth sports analysis (Aug. 17-23).  Ironically, the total sum of the “running” sports in high school (track and field and cross country, boys and girls) exceeds 1.2 million and is the most popular participatory sport for scholastic age children. Local newspapers and now Web sites across America are filled with articles and results from this sport and ArmoryTrack.com, our local Web site, receives 2 million page views monthly and is part of a national network, MileSplit, which records close to 20 million per month.

    Despite these numbers, chronically, there is little attention afforded by SportsBusiness Journal to this huge number of American youth many of whom will actually continue their sport into adult life as joggers, competitors and even marathoners. It would be prudent from a business model to not miss all these very loyal fans of tomorrow. Of interest, the SGMA survey of kids playing on team sports is not accurate as they use very soft and skewed indicators for actual participation in organized sports.

    Dr. Norbert Sander Jr.
    New York City

    Sander is executive director of The Armory Foundation.

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  • Kennedy’s legacy lives on in Title IX

    All manner of tributes to the late Sen. Edward M. Kennedy hail him as a vital part of some of the biggest legislation and most important social changes in U.S. history. Indeed, from his seat in the highest lawmaking body in the country, which he held for 47 years, Kennedy has been remembered for playing a prominent role in issues and efforts oriented toward improving life for all Americans. But lost among the reviews of his vast record is the prominence of sports.

    In the American experiment, Kennedy saw the sum of disparate parts working together toward common objectives. This is something he learned a great deal of through experience as part of a politically charged family. But when they weren’t participating in politics, the members of the Kennedy family were playing sports.

    Despite the presence of sports in his youth, few remembrances recalled that Kennedy played three seasons of football at Harvard. He worked his way into the starting lineup as a senior and even caught a pass for the Crimson’s only score in a 21-7 loss to Yale. Even fewer have recalled that Kennedy became an accomplished enough football player to have drawn a letter of interest from the Green Bay Packers, an opportunity he turned down by famously saying he was headed toward a career in “another contact sport, politics.”

    It is difficult to overestimate the importance of sports — and football, in particular — as the proving ground for leaders in 20th century America. Just as the will of Cecil Rhodes ordered that recipients of the Rhodes Scholarship shall be chosen for their scholastic achievement, character and “fondness of and success” in sports, so too did significant educational legislation championed by Kennedy include a focus on athletic participation. This is especially true of Title IX, legislation that is perhaps as controversial as Kennedy himself.

    Title IX of the Education Amendments of 1972 is a federal statute that was signed into law in order to prohibit sex discrimination in education programs that receive financial assistance from the federal government. Despite the popular link between Title IX and athletics programs, the statute did not originally address or otherwise reference athletics. But following a two-year comment period on Title IX during which a majority of the nearly 10,000 comments received referred to athletics, Congress passed an amendment that included intercollegiate athletics as part of Title IX.

    By the 1980s, issues surrounding opportunities and equity in expenditures across women’s sports began to heat up, and Kennedy fought to pass the Civil Rights Restoration Act of 1987, which gave Title IX back much of its legislative teeth with regard to sports. In so doing, he helped open the door for generations of women to demonstrate their enthusiasm for and success in sports. He also did the same for people with disabilities, in tribute to one sister who suffered from mental illness and alongside another who created the Special Olympics, by championing the passage of the Americans with Disabilities Act.

    F. Scott Fitzgerald, another famous Irish-American, once wrote of his twin regrets of having never starred in football at Princeton or having been a hero in World War I. It turned out that Fitzgerald would find immortality as an author. Kennedy experienced success on the gridiron but never achieved the presidency, an expectation that fell upon him by weight of heredity and tragedy.

    But in the final analysis, Kennedy counted among his friends those who sat across the aisle and were of differing opinions. This, along with the spirit and resilience to get up, time and again, after so many public tragedies and knockdowns may be the attributes for which he is best remembered.

    Robert Boland (robert.boland@nyu.edu) and Lee Igel (lee.igel@nyu.edu) are professors of sports management and sports business at New York University’s Preston Robert Tisch Center for Hospitality, Tourism and Sports Management.

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  • This Week's Cartoon

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  • Turner-USOC union set standard for cooperation

    John Naber’s letter in the [Aug. 24-30 issue of] SBJ inspired me to write regarding the mess that is USA Olympic sports television. I think there are lessons to be learned from the recent foibles of USOC leadership.

    No one can argue what NBC has done in promoting and televising the Games themselves. But Naber’s letter calls to memory what incredible vision and leadership was supplied in the late ’80s by Ted Turner, Robert Wussler and Harvey Schiller when the USOC and Turner Broadcasting entered into a mutually beneficial arrangement to create a weekly television program, called “U.S. Olympic Gold,” that spotlighted most of the national federations and their competitions, and led also to TBS and TNT featuring comprehensive live and prime-time coverage of the U.S. Olympic Festivals, the Pan American Games from Havana, the first basic-cable extended coverage of any Olympics (Albertville and Lillehammer), and yes, multiple Goodwill Games, winter and summer, from all over the world.

    This relationship in some ways cost both sides, in money and resources. Sacrifices were made by NGBs, the USOC, and certainly by the Turner checkbook. But I think Naber — and many of his fellow Olympic alums who were employed by Turner as announcers and analysts — would agree that at no time in history were Olympic federations better treated and presented on a continuous national platform than in the Turner years.

    The adage says, “There is no limit to success when you don’t care who gets the credit.”

    I would encourage all the stakeholders to spend some time studying the output of the Turner/Wussler/Schiller vision and aim first for that kind of cooperation.

    Don McGuire
    Orlando

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