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February 5, 2014 09:48 AM
The U.S. Olympic Committee board of directors finalized a four-year contract extension with Scott Blackmun that will see him continue to lead the organization through the 2016 Rio Games.
Tripp Mickle talks about the challenges Scott Blackmun faced, the job he has done and how his salary stacks up to the rest of the sports industry.
“This extension is an indication of the excellent job Scott has done the last four years,” USOC Chairman Larry Probst said in an email. “Scott has worked diligently to build the reputation of the USOC both domestically and abroad, and we are excited that this extension will keep him as our leader for another four years.”
The contract is Blackmun’s second with the USOC. The deal offers an increase in base compensation but a decrease in performance compensation. Bonuses in his previous deal brought his total compensation to $765,369 last year, according to USOC tax filings, but the new deal doesn’t include a long-term incentive bonus of $425,000 that rewarded him for staying in the job the last four years.
The USOC was in turmoil when Blackmun joined it in early 2010. He was the USOC’s third CEO in less than a year, and he stepped into the job at a time when Olympic partners criticized the organization for becoming insular and ineffective. He responded by promoting a service-minded culture at the USOC that was more inclusive of outside constituent groups like the national governing bodies and former Olympians. He led that effort by emailing NGB executives the summaries of board meetings and sharing the USOC’s financials at the Olympic Assembly — things that had never been done in the past.
“Scott rebuilt the trust and confidence of everyone within the Olympic family that the USOC is a stable partner for all of us, whether you’re an NGB or a corporate partner,” said Steve Penny, USA Gymnastics president and CEO.
Blackmun and Probst also worked to repair the organization’s standing internationally. They traveled to events such as gatherings of the Caribbean Association of National Olympic Committees, Pan-American Sports Organization meetings and Sport Accord meetings. They were rewarded by being named to the International Olympic Committee’s marketing and international relations commissions.
Perhaps Blackmun’s biggest international achievement came last spring when the USOC reached a new revenue-sharing agreement with the IOC. The USOC had faced escalating criticism because of an agreement that gave it 20 percent of IOC sponsorship revenue and 12 percent of Olympic media rights fees paid by U.S. broadcaster NBC. The situation even had been blamed for Chicago’s failed bid to host the 2016 Olympics. Blackmun helped craft a deal that will see the USOC retain $410 million in revenue but contribute a greater share to the cost of future Olympic Games.
For his successes in 2012, SportsBusiness Journal/Daily named Blackmun Executive of the Year. Under his leadership, the USOC increased its total number of sponsors from 13 to 22, adding blue-chip brands such as BP, Citi and Kellogg’s. U.S. Olympic teams also won the medal count at the 2010 Vancouver Games and 2012 London Games.
Blackmun, 56, now is focused on increasing the USOC’s revenue through fundraising and bringing the Summer Games back to the U.S. in 2024. The organization launched a new foundation earlier this year to assist with fundraising, and it is in the process of determining how it will select a potential bid city for the 2024 Games.
“Scott came to the USOC at a time of turmoil and he, along with the senior team he has built around him, have provided not only much needed stability to the USOC but have helped further enhance the Olympic Movement in the U.S.,” Probst said. “I look forward to the USOC’s continued success, and to partnering with Scott for the next four years.”
February 5, 2014 09:47 AM
NBC Sports executives are more optimistic about the Sochi Games than they have been about any Winter Olympics in the last decade.
Ad sales are strong, internal research suggests viewership will be high, and the event is expected to be “comfortably” profitable.
NBC agreed to pay $775 million for the rights to the Sochi Games. The price tag is slightly less than the $820 million the company spent on the 2010 Vancouver Games when NBC’s then-parent company, General Electric, reported a $233 million loss on the event.
But Lazarus said the combination of its lower rights fee and a strong ad market means the company won’t incur a loss on the upcoming Winter Olympics.
Advertising sales have been so strong that Seth Winter, NBC Sports executive vice president of ad sales, said the company is positioned to sell out its first Olympics in more than a decade. Ad inventory is more than 90 percent sold for the Sochi Games, a major reversal from the 2010 Vancouver Games when it was only 70 percent sold less than 100 days before the opening ceremony.
“I’ve never walked into a Games feeling we’re this well sold,” Winter said. He added that he is concerned NBC Sports may not have “enough inventory to meet the demand in the marketplace.”
NBC still has several key categories available, including beer and technology, and Winter expects to find advertisers in those categories in the coming months. He attributed the sales success for Sochi to demand among ad buyers for the strong ratings that the Olympics historically have delivered over 17 days. He also said NBC’s move to divide categories into more refined segments helped sales. He pointed to banking as an example. NBC sold retail, online trading, consumer banking and other categories. It landed deals with TD Ameritrade and Citi.
NBC’s research shows that awareness of the Winter Olympics is at record levels. A survey of Nielsen subscribers that NBC conducts showed that intent to watch the Sochi Winter Olympics is at more than 52 percent, and NBC Sports chief marketer John Miller said that’s before the company has made its final promotional push around the Games. He expects the intent to view to rise closer to the Games and believes the addition of a day of competition on Feb. 6, the day before Sochi’s opening ceremony, will boost viewership for the ceremony.
“My sense is there will be a significant number of people surprised by [Feb. 6],” Miller said. “Then social media will explode between the 6th and the 7th [of February]. More people will watch the opening ceremony, and the number of people who watch the opening ceremony often affects how many people view the Olympics.”
NBC and ad buyers did not discuss any specific ratings projections or share what guarantees have been offered to advertisers. The Vancouver Games averaged a 13.8 rating and 24.4 million viewers for its 17 prime-time broadcasts.
Miller and other NBC executives acknowledged that few Americans know about the actual host location of Sochi, but they’re not concerned about that.
“The stage of the Games is the Winter Olympics,” Miller said. “The location flavors it, shapes it a little, but the Winter Olympics is fascinating to people whether it’s Sochi or Cleveland.”
NBC hopes to overcome the lack of knowledge about Sochi by emphasizing that this is a Russian Olympics. They believe that recent political news about the country has raised Russia’s profile in the U.S., and they hope to capitalize on that.
Over the past year, Russia has been in the news for everything from granting Edward Snowden asylum to brokering a deal between the U.S. and Syria to remove chemical weapons from the Middle Eastern country. Russian President Vladimir Putin also wrote an editorial in The New York Times, and the country’s anti-gay propaganda law has generated extensive news articles in the West about protests and potential boycotts.
“What people do know [about Sochi] is it’s Russia,” Lazarus said. “We believe in the mystery of Russia, and people want to understand Russia. There’s a curiosity around that with the American population.”
February 5, 2014 09:46 AM
When the 100-day countdown to the Torino Olympics began eight years ago, Kellogg’s didn’t hold a press event or announce a marketing program. In fact, it did next to nothing.
More than a dozen sponsors participate in the 100-day-countdown event for the Sochi Olympics last week in Times Square.
Photo by:GETTY IMAGES
“It used to be a struggle to get sponsors to do something early,” said Ted Morris, U.S. Speedskating’s executive director and the former head of marketing at U.S. Ski and Snowboard Association. “Now a lot of sponsors are finding more ways to get beyond the two weeks of the Games, and it’s good for everybody.”
The 100-day countdown is becoming a major milestone, and that’s resulted in more sponsors unveiling Olympic marketing programs earlier than they did historically. For example, Procter & Gamble, The North Face (a USSA sponsor), Ralph Lauren, Oakley, Chobani, TD Ameritrade and others last week made announcements around a 100-day-out celebration in New York, and Citi announced its program the week before to avoid the crowd.
The reasons for the earlier unveilings include the U.S. Olympic Committee’s creation of a 100-day-countdown event in New York, NBC’s expansion of its Olympic marketing efforts around that day, and sponsors’ ability to use social media to drive consumers to Olympic-themed websites with athlete-related content.
The USOC created its first 100-days-out celebration in 2009 for the Vancouver Games. Seven sponsors committed to participate and set up booths around the ice skating rink at Rockefeller Center in New York.
For the London Games and Sochi Games, the USOC moved the event to Times Square and convinced more sponsors to participate. More than a dozen sponsors took part in the Sochi event last week. Anheuser-Busch brought its Clydesdales and Chobani passed out yogurt. The event was expected to draw 170,000 people, and several sponsor executives said it prompted them to roll out their activations last week.
“Because the USOC is getting messaging out there, it does make consumers aware and creates a natural timing for programs to launch,” said Sandy Uridge, senior director of integrated consumer promotions at Kellogg’s, which didn’t do any marketing around the 100-day-out mark for the 2006 Torino Games.
NBC’s approach to the 100-day-out mark adds to sponsors’ interest in doing something then. The Olympic broadcaster has treated the date as a marketing milestone, releasing additional commercials and scheduling Olympic-related programming on everything from the “Today” show to NBC Sports Network’s “SportsDash.” The noise it’s able to make has been amplified since the Comcast merger gave NBC six more channels to promote the Olympics across beginning that day.
P&G took advantage of that last week, arranging for skier Lindsey Vonn to appear on the “Today” show and discuss the company’s “Thank you, Mom” campaign. That opportunity led P&G to roll out its Olympic marketing campaign last week.
“We worked closely with the USOC and NBC to make sure our plans match with theirs,” said Jodi Allen, P&G North America vice president of marketing and brand operations. “Their best learnings are that starting [100 days out] then is the best way to build momentum.”
Both Kellogg’s and P&G developed websites with digital videos that tell their athletes’ stories. Several other sponsors, including BP and Citi, did the same thing. The sites are inexpensive compared with the print and TV media that sponsors would have needed to buy years ago to support Olympic campaigns this early, and sponsors can use their athletes’ Twitter feeds, Facebook pages and Instagram accounts to push consumers to the sites before the Games.
“Ten years ago, it would have been very expensive and highly ineffective to come out with an Olympic program now,” said Dave Mingey, president of GlideSlope, which works with Citi and Dow on their Olympic sponsorships. “But in terms of how we consume mass marketing these days, people are willing to accept the start of Olympic marketing now through digital and social. It flows into an overall marketing trend where people can customize the messages they receive, and you’re seeing that window [of Olympic marketing] becoming much broader.”
Not every sponsor has bought into the idea of releasing its Olympic-marketing program 100 days before a Winter Games. Many executives look at the calendar and prefer to wait until after Thanksgiving and Christmas to release their programs.
Ralph Lauren’s “Made in the U.S.A.” uniforms for Team USA are unveiled; freestyle skier Alex Schlopy sticks his landing; more than 170,000 fans were expected at the Times Square event.
Photo by:GETTY IMAGES (3)
“We want to keep focused on one message,” said Ryan Luckey, AT&T’s assistant vice president, corporate sponsorships. “The Olympics can be phased in later, probably early next year.”
February 5, 2014 09:45 AM
When news broke last year that Ralph Lauren made Team USA’s Olympic opening ceremony uniforms in China, the company was trashed on social media and blasted on Capitol Hill. It responded by pledging that the uniforms it supplies to athletes competing in the 2014 Sochi Games would be made in the United States.
But the company went several steps further.
The U.S. team marched in at London wearing uniforms made in China, prompting criticism.
Photo by:GETTY IMAGES
The effort forced Ralph Lauren to make changes to its manufacturing and sourcing process. For example, it found sheep for its wool sweaters in Oregon.
Ralph Lauren declined to make an executive available to discuss the changes. A company executive is expected to appear on NBC’s “Today” show Tuesday to unveil the uniforms and talk about how the company overhauled its sourcing and manufacturing process.
Returning to NBC’s “Today” show to introduce the new, made-in-the-USA uniforms is fitting. It was there in July of 2012 that the company unveiled Team USA’s uniforms for the London Games.
A day later, ABC News, which competes with NBC, did a story on the fact that the labels in the uniform said “Made in China.” Congress latched onto the story. Senate Majority Leader Harry Reid said the U.S. Olympic Committee should be “ashamed of themselves” and suggested the organization burn the uniforms and “start over again.”
Ralph Lauren initially declined to respond to the criticism, but it eventually released a statement saying it would manufacture future Team USA uniforms in the U.S. It added, “Ralph Lauren promises to lead the conversation within our industry and our government to address the issue to increase manufacturing in the United States.”
Securing a “Made in the USA” label is not easy. The Federal Trade Commission has guidelines for using the label that say that it should be reserved for a product that’s “all or virtually all” made in the U.S. That means that all of “significant parts and processing that go in the product must be of U.S. origin.” For apparel, that means that the fabric used must be from the U.S., as well.
Immediately after the London Games controversy, Ralph Lauren began working to find fabrics and manufacturers that would allow it to put a “Made in the USA” tag in its USOC-related apparel. That was the only effective way the company could avoid facing similar public and political criticism ahead of the Sochi Games, said Ann Wool, managing director of Ketchum Sports and Entertainment, which doesn’t work with Ralph Lauren but works with Olympic sponsors such as Procter & Gamble and Liberty Mutual.
“There are no other options that would give them this type of positive public perception,” Wool said. “Having a ‘Made in the USA’ tag inside a uniform is the right thing to have. It’s absolutely a good PR move. It may beg the question from an industry standpoint: What about the rest of production? But for Team USA merchandise and opening ceremony uniforms, it’s great.”
February 5, 2014 09:44 AM
No Olympic marketing challenge is greater than the transition from a Summer Games to a Winter Games. Marketers have less than 18 months to develop and launch a campaign. Sandy Uridge, senior director of integrated consumer promotions at Kellogg Co., is putting the finishing touches on that brand’s efforts for the 2014 Sochi Games, with plans to launch the program next week.
With professional sports, it’s all about Q Scores. With Olympians, a lot of times consumers don’t know them at all. It’s more about the story than that they’re the most well-known. What’s charming about them is how consumers connect with the fact that these athletes have worked so hard to get to the Games. They connect with those personal stories, and that’s what we try to bring to consumers — that connection.
Winter vs. Summer: The “100 days out” occurs around Halloween, and the retail selling season is focused on many other things [before a Winter Games], like holidays, football and March Madness, whereas for a Summer Games, you start in April and have a much clearer window.
The best ideas: We have worked very hard to build an idea culture. The best testament to that is that our idea for our Olympic campaign actually came through a process called “pitch day.” That’s where anyone from innovation to marketing to our research team to any of our agencies can come in and pitch ideas to a panel of judges. … The whole idea of “From Great Starts Come Great Things” [the company’s Olympics campaign] came from our first pitch day.
Changes in Olympic marketing: Mostly, if you’re with a CPG company, that’s related to how we’re able to affect the situation with our retail customers. The USOC has been able to pull together CPG companies and drive scale at retail. It used to be retailers would say, “The Olympics are every two years. People are at home watching TV and not in my store. Why should I give you space?” The idea [USOC CMO] Lisa Baird and her team came up with to bring together P&G, Smucker’s and others at retail is making a huge difference.
Admirable brands: I really like Nike. They’re brave. They do some unexpected things. The TV spot from 2012 and “Find Your Greatness” was amazing. It was unexpected but so right for their brand.
February 5, 2014 09:43 AM
The U.S. Olympic Committee next year will offer a series of first-time hospitality experiences during the Sochi Games.
The organization plans to host domestic events for sponsors for the first time in four U.S. cities. It also secured a location in Sochi’s Olympic Park for its hospitality experience, known as USA House, during the Winter Games, marking the first time USA House has ever been inside the Olympic Park.
USOC chief marketer Lisa Baird said the organization’s marketing department came up with the idea to create mini, one-night-only USA House events in the U.S. after the London Games because staff recognized that many sponsor employees and customers can’t attend the Olympics. The travel challenges with Sochi, which requires multiple flights and can take as long as 20 hours to reach from the East Coast, means that fewer guests from the U.S. are expected to attend this Olympics than previous Winter Games in Vancouver and Turin, Italy.Between Feb. 7-23, the USOC will set up what it is calling Team USA Clubs for sponsors, donors and special guests in Los Angeles (Feb. 7); Vail, Colo. (Feb. 15); Chicago (Feb. 20 and 21); and New York City (Feb. 23). The invitation-only events are being held on the same days that the USOC’s experiential marketing program, the Road to Sochi tour, visits those cities.
The clubs will serve as NBC viewing parties with food and beverages and appearances by former Olympians. The events already are overbooked, and the USOC expects 300 to 400 guests at each gathering.
Baird said the costs of the clubs are covered by the incremental costs that 12 sponsors paid for the USOC’s Road to Sochi tour.
“It was really driven by the fact that there are sponsors that have [high-level] people that never go to a Games,” Baird said. “Our thinking was, ‘Try it for Winter because if it’s successful, we’ll expand it for Rio [in 2016]. Clearly, this is an element people are interested in.”
Tripp Mickle & Tom Stinson talk about the buildup to the Sochi Games
Louder is providing the temporary facility in Sochi.
Photo by:USOC WITH LOUDER
The USA House serves as a gathering place for members of the USOC, Team USA, corporate partners, sponsors, suppliers and licensees. The Sochi facility will be 7,000 square feet, which is roughly the same size as the USA House in Vancouver in 2010. Last year’s USA House in London was more than 10,000 square feet.
The 2014 version will have wood interiors, televisions and multiple rooms. There will be a courtyard where guests can talk outside, and Olympic venues will be within walking distance. The temporary facility, which has been used previously, will be coming from Austria and is being provided by the Finland-based company Louder. After the Games, the facility will be dismantled and used as a hospitality venue for European ski events.
Choosing to put the USA House inside the Olympic Park carries some risk for the USOC. To enter the park, people need spectator passes that are linked to tickets. Unless arrangements are made, that will limit the number of visitors to USA House to people with tickets for events. That’s a change from years past when people without tickets could go to the venue to watch the Games with fellow fans of Team USA.
The site’s location means the organization also needs to use approved vendors for its food and beverage services, which could lead to increased prices and costs for the venue.
Baird said that the USOC expects fewer guests than years past and costs won’t be a problem. She said the USOC spoke with Sochi organizers about the spectator pass system and is confident it will be able to accommodate last-minute guests interested in visiting USA House during the Games.
“At the end of the day, we thought the [Olympic] Park would be the best location,” Baird said. “We know a lot of VIP guests love the medal ceremony and seeing our athletes. We don’t want it to get tired as a concept. We want to bring something new. The idea of being in the park next to the venues will make it a different type of house. People will go to two or maybe three events a day, and they will drop in between events. That’s a nice thing to do.”
February 5, 2014 09:42 AM
Skeleton racer Noelle Pikus-Pace has signed deals with Deloitte, Kellogg’s, TD Ameritrade, Under Armour and others ahead of the Sochi Olympics. Each agreement includes the usual contractual obligations such as personal appearances, but they also spell out social media requirements that will see her mention some brands a minimum of 25 times on Twitter and six times on Facebook before the 2014 Games.
The requirements highlight a change in the way Olympic endorsement contracts are being written ahead of the Sochi Games. Before the London Games, agents said, companies included loose language about social media, but contracts for Sochi are more prescriptive, spelling out requirements about the number of times an athlete must tweet, make a Google chat room appearance or post to Facebook or Instagram.
Tripp Mickle & Tom Stinson talk about the buildup to the Sochi Games
Mancuso recently signed a deal with Jif that will be based almost entirely on social media.
Photo by:GETTY IMAGES
Social media has become so integral to sponsor activations ahead of the Sochi Games that some sponsors are even cutting deals that
“Sponsors might say, ‘I don’t need a service day. I can use stock photography, but I need a Google hangout and a Twitter chat. I need this many Instagrams. I need this many Facebook status updates,’” said CAA’s Lowell Taub, who works with Mancuso. “Now if they want social media, an agent can assign value to it.”
Taub said assigning value isn’t as simple as tabulating the number of Twitter followers an athlete has and charging sponsors 25 cents a follower, but he did say that followers and social media requirements become a central component in negotiations.
David Schwab, an Octagon senior vice president who helps companies select athletes for marketing campaigns, said that agents pitching athletes now include Facebook, Twitter and Instagram audience sizes in their submissions. It has become one of the first things companies evaluate.
“It is a quantifiable item that they didn’t have at their disposal just a few years ago,” Schwab said.
The social media demands also give agents and athletes something new to consider as they sign new deals. In the past, an athlete might be able to work with a half-dozen sponsors and appear in advertising for all of them without coming off as too commercial. Multiple tweets a month for that many sponsors, however, could turn their Twitter feed into an advertising page and cost an athlete followers, said Brandon Swibel, senior director with The Legacy Agency, which represents speedskater J.R. Celski.
“It’s a challenge for companies and athletes to find a happy medium,” Swibel said.
The increase in social media obligation is only one of the changes agents are seeing ahead of the Sochi Games. Agents also are seeing fewer non-Olympic sponsor deals than in years past and less demand for Olympic alumni appearances at the Winter Games.
The USOC has increased the number of sponsors that it has ahead of the Sochi Games compared with the 2010 Vancouver Games. Since then, it has added deals with BP, Chobani, USG, Smucker’s, Kellogg’s and others. That’s created more opportunities for athletes to work with sponsors, which typically rely on Olympians to be the face of their marketing programs.
But the opportunities with Olympic sponsors are being offset by a reduction in opportunities with non-Olympic sponsors in some cases. For example, the U.S. Ski and Snowboard Association requires its alpine skiers to sign a team agreement ahead of the Winter Games that includes an addendum preventing them from signing deals in select categories. New deals with Procter & Gamble, Kellogg’s and Diamond Nuts means the USSA is now protecting categories such as cereal, breakfast shakes, beauty and grooming, and nuts. Athletes could pursue deals in those categories prior to the Vancouver Games but can’t for the Sochi Games. As a result, Peter Carlisle, Octagon Olympic & Action Sports managing director, said there are fewer non-Olympic sponsors signing agreements than in the past.
Olympic endorsements with USOC sponsors tend to go for anywhere from $5,000 to $50,000 for one year, making them less lucrative in some cases than non-Olympic sponsorships, which often involve longer-term deals and pay more.
“Athletes have lost leverage,” said Carlisle, whose group represents snowboarders Seth Wescott and Hannah Teter. “It’s getting harder and harder to have [non-Olympic sponsors].”
Though the addition of new sponsors has closed off a few categories for athletes, USSA chief marketer Mike Jaquet said that the addition of P&G and Kellogg’s as sponsors has created an opportunity for athletes to work with Olympic sponsors who can feature them in advertising throughout the Olympics. (The International Olympic Committee’s Rule 40 clause prevents athletes from being featured in non-Olympic sponsors’ advertising immediately before, during and immediately after a Games.)
“I sympathize with the fact there might be non-Olympic opportunities that are difficult, but the Olympic opportunities are bigger because there’s more shared sponsors and the opportunity to use an athlete up to and through the Olympics is greater,” Jaquet said.
Another challenge agents are running into ahead of the Sochi Games is a reduction in demand for appearances. Because Sochi requires a 20-hour trip from the East Coast, many USOC sponsors have cut back on their hospitality programs from what they did at the 2006 Torino Games and 2010 Vancouver Games. That’s meant less demand for Olympians to make appearances at corporate events.
“Sochi is a tad leaner than Torino and Vancouver,” Taub said. “You hear a lot of chatter, especially as it comes to hospitality, that since it’s half a world away [there’s less interest than] Vancouver, which was a hop, skip and a jump away.”
February 5, 2014 09:41 AM
U.S. Figure Skating and IMG are partnering on a post-Olympics tour that will bring figure skaters from the Sochi Games to 25 to 30 cities next year.
The tour marks the first time U.S. Figure Skating and IMG have collaborated on a tour. IMG created its Stars on Ice in 1986 to promote its client, Scott Hamilton, and has run the tour independently since then. But the success of last year’s USA Gymnastics tour, which generated $15 million in revenue after the London Games, and the addition of a team figure skating competition to the Sochi Games made USFS and IMG representatives believe that working together would benefit both companies.“The team event changes the game a bit,” said USFS chief marketer Ramsey Baker. “The American public gets excited about something new and something new that the U.S. has a chance to win. You can only capitalize on that type of momentum once, and we wanted to be sure we worked in unison to do that.”
Byron Allen, IMG senior vice president, added, “Stars on Ice had been featuring past [figure skating] stars and we need to get the current crop of skaters to participate. This is the way to do it.”
USFS and IMG will share sponsorship, ticket and merchandising revenue from the tour.
Van Wagner, USFS’s agency of record, will oversee sponsorship sales and plans to look for a title sponsor as well as supporting sponsors. Existing USFS sponsors will be able to buy into the tour for an incremental fee.
IMG typically averages 8,000 to 10,000 spectators per stop on its Stars on Ice tour. It hopes the partnership with USFS helps it sell tickets to some of the organization’s 600 member clubs.
USFS plans to host free skate clinics in each market it visits. Those clinics will be run by USFS coaches and attended by Olympic figure skaters.
“It allows us to reinforce the U.S. Figure Skating brand and bring new people to the sport,” Baker said.
February 5, 2014 09:40 AM
The year Roger McCarthy spent designing the alpine resort for the 2014 Sochi Games was quintessentially Russian. It included taking cold showers in Moscow, passing through X-ray machines at an oligarch’s home, and celebrating the anniversary of the KGB with co-workers.
But the former co-president of Vail Resorts always begins the story of his year in Russia with the first trip he made to Sochi. He traveled there in 2007 to decide if he would take a consulting job on Rosa Khutor, the new alpine resort being developed along the Black Sea to host Olympic ski and snowboarding competitions.
“I jump in this car and ride up this road, which is like a paved goat track with tunnels and bridges,” McCarthy says. “You realize immediately, ‘They’re going to have to fix this.’ At that point, there was one hotel that had 25 rooms. Maybe another hotel with a dozen. That’s it. They had maps but no plans. Just concepts.”
Sochi began as little more than a concept. The city of 340,000 on the Black Sea didn’t even have an alpine resort when Russian President Vladimir Putin decided in the mid-2000s that it should bid for the 2014 Winter Games. Nonstop construction since then has transformed the area. Highways and a rail line have replaced the goat tracks. More than 40,000 new hotel rooms have been built. And a total of 15 new venues have been constructed.
The costs have been staggering. Russia spent more than $50 billion ahead of the Sochi Games, making it the most expensive Olympics in history.
McCarthy was there at the very beginning and his experience working on Rosa Khutor, which cost $2 billion, highlights the challenges the Russians ran into building an Olympic city from scratch. The country had never built a ski resort before, and its lack of expertise led to cost overruns and design mistakes that the world will see firsthand when the Games begin in February.
“It was a unique opportunity that was extraordinarily frustrating,” says McCarthy, who today runs his own resort management and development consultancy. “They had lots of experience in commercial buildings, but it had nothing to do with building in the mountains. Where is the snow coming off the roof? How are the entryways designed? How do you build a resort? It was difficult.”
McCarthy, 63, began working on Rosa Khutor in 2007. The Kiwi had more than two decades of experience in the ski industry and had overseen more than $100 million of development by IntraWest at Whistler in British Columbia. He always wanted to design a resort from scratch, to put ribbons on the trees, cut the runs and pick the best spot for a restaurant.
Sochi provided an opportunity to do that. An old friend, Paul Mathews, who runs the global ski resort consultancy EcoSign, had been hired to develop a new resort there. The developer, a Russian oligarch named Vladimir Potanin, who is worth more than $50 billion, wanted an experienced ski resort executive to join his team full time, and Mathews suggested McCarthy.
“This wasn’t a job for normal people,” Mathews said. “That’s why he was qualified. He could take the punches and roll with it.”
When McCarthy joined the Rosa Khutor development team as strategy and production director in 2007, the budget for the resort was $165 million. McCarthy helped a staff of 20 determine where gondolas would be placed and what the mountain’s avalanche control plan would be. He worked on the layout of trails, where restaurants would be located and — once Russia decided to bid for the 2014 Olympics — he helped design a 2.2-mile downhill course with International Ski Federation alpine course adviser Bernhard Russi.
Throughout the process, McCarthy said he struggled to explain to his Russian colleagues, architects and developers what design elements were needed to make a ski resort work.
Photo by:GETTY IMAGES
Photo by:COURTESY OF ROGER MCCARTHY
“The architecture is very Russian,” McCarthy said. “There’s not much you can do about that.”
James Brooke, a friend of McCarthy’s and the
Photo by:COURTESY OF ROGER MCCARTHY
Costs spun out of control quickly. Rosa Khutor went from a $165 million project to $2 billion. The increase was representative of the soaring costs of the Sochi Games, which were expected to cost $12 billion in 2007 but will be
In helping Russia build a ski resort, McCarthy had to help determine everything from where to build the roads (while navigating the muddy mess that came before them) to placing gondolas.
Photo by:GETTY IMAGES
A study by Boris Nemtsov, Russia’s former deputy prime minister, says that $26 billion of the money spent on the Sochi Games went to kickbacks and embezzlement. Nemtsov wrote in a report, “It has become increasingly clear that the Sochi Olympics are an unprecedented thieves’ caper.”
McCarthy said he stayed out of the financial decisions for Rosa Khutor, but the business practices were enough to make EcoSign executives uncomfortable.
“The whole thing morphs into a Russian system,” said Mathews, whose company lost its contract to work on Rosa Khutor in 2011. “There are all these kickbacks. People would ask us to pay or offer to pay me. I would say, ‘We don’t know how to do that.’ That’s probably why they didn’t keep us around. It’s sort of a gong show.”
Mathews pointed to the mountain’s snowmaking system as the perfect example of potential corruption. He said Rosa Khutor spent $100 million on a snowmaking system that would cost most resorts just $20 million. The costs rose further when the lighting system was installed a year later and the snowmaking system was dug up in the process, requiring it to be repaired.
“It’s an Olympic project,” Mathews said. “That [type of costly mistake] probably happened in Beijing, London and Greece.”
McCarthy’s contract to work on Rosa Khutor ended in 2008, and he returned to his home in Whistler. He hasn’t been back to Sochi since he left, and doesn’t plan to attend the Games, but he expects Rosa Khutor to be a great Olympic resort. He believes it will have plenty of snow and the downhill will test the world’s best skiers. His only concern is whether the staff, which has little to no resort experience, will be able to manage so many international guests.
“If it all comes together, it will be fabulous,” McCarthy says. “It will be a great place to go and ski. It’s the human piece that will be a challenge. The human piece really has no experience. But if the sun shines, the snow stays where it’s supposed to stay, and TV is happy, boom, it will be fabulous.”
February 5, 2014 09:39 AM
Coca-Cola’s longtime global sports and entertainment executive Scott McCune is leaving the company after the Sochi Olympics.
Scott McCune oversees Coke’s global marketing around the Olympics and FIFA World Cup.
Photo by:DAVID DUROCHIK
“Among his many accomplishments, Scott and his teams were responsible for transforming how the Company leverages Strategic Partnerships like the Olympic Games and FIFA World Cup into Global Platforms that drive our business around the world,” wrote Wendy Clark, Coke’s senior vice president, integrated marketing and communications, in an internal memo distributed to staff last week.
Emmanuel Seuge, Coca-Cola’s vice president global alliances and ventures, will succeed McCune in overseeing the company’s Olympic and FIFA World Cup marketing efforts.
McCune, 56, plans to start his own consulting business that will advise properties and brands on expanding their businesses, serving clients and engaging consumers worldwide. He will continue to serve on the boards of Gannett Co., the College Football Hall of Fame and the Chick-fil-A Bowl. He plans to remain in Atlanta.
“I think of this as my fourth chapter,” said McCune, who began his career in sports as a high school basketball coach, joined a startup media venture co-owned by Anheuser-Busch and worked in marketing at Anheuser-Busch before joining Coca-Cola in 1993. “I want to take the coaching, the startup experience and the experience with big brands and follow my passions in the sports and entertainment world in more of an entrepreneurial way.”
At Coke, McCune earned a reputation as an advocate for the company’s marketing interests and a champion of creating new ways for sponsors to promote their connection with a property. Prior to the London Games, he pushed the International Olympic Committee to allow sponsors to film digital content from the athletes’ village and post it to company websites, a right that had been reserved for Olympic rights holders. It’s something he would still like to see the IOC allow.
“Scott’s been a leader in providing feedback to all of us about things that would make the sponsorship more valuable for Coca-Cola, and he’s done it in a respectful way that everyone in the Olympic movement respects him for,” said U.S. Olympic Committee CEO Scott Blackmun. “You look at what he’s done, and he managed the partnership between two iconic and powerful brands [Coke and the Olympics] well and managed to grow both those brands.”
Seuge, who will succeed McCune, joined Coke’s global sports marketing group in 2006 and oversaw soccer marketing. He was promoted to head of global sports and entertainment marketing in 2009 and spent the last few years concentrating on improving Coke’s music-related marketing. The 38-year-old has made the Forty Under 40 lists for both SportsBusiness Journal/Daily and Billboard.
Peter Franklin, group director, worldwide sports and event management; Ann Boone, global marketing director of the Olympics; and Arnab Roy, global football marketing director, will report to Seuge, who sat beside Coca-Cola CEO Muhtar Kent at the opening ceremony of the 125th IOC session in Buenos Aires, Argentina, in early September.
Coca-Cola plans to tap different executives to assume McCune’s oversight of Coke’s licensing business and its World of Coca-Cola theme park.