Since being named the interim CEO of the U.S. Olympic Committee in 2003, Jim Scherr has been credited with bringing stability to the organization. He’s been at the helm during a massive transformation that saw the organization reshape its board, cut staff from 600 employees to 284 and more strategically funnel money to national governing bodies. He sat down with SportsBusiness Journal writer Tripp Mickle prior to the Beijing Olympics to discuss the state and future of the USOC.

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How would you describe the health of the Olympic movement in the United States?
Scherr: Overall, it’s incredibly strong. The broadcast rights fees for the next two Games, the amount of sponsorship the TOP program is generating, and the interest that the public has in the movement — those are all at an all-time high. Relevance is something we’re concerned about, whether or not 8 to 17 and 17 to 35 — those age groups — we can continue to get them to consume the Olympic Games and monetize how they consume the Games.

Going forward long term I think we’re very strong. … There are just so many things out there now that it feels like maybe it’s not the central, sole thing it used to be every four years. But when you look at the interest and the number of hours being broadcast — NBC will broadcast more hours this summer than any other Games combined — I think it’s strong. Athletically we’re positioned well. There are a lot of challenges but when we look at it today, the strength of our organization, the strength of our team competitively, we’re in a good position.

When you look at it from a business and future growth perspective, what challenges exist beyond 2008?
Scherr: We’ve been focused a lot on the Olympic Network and strengthening our brand. We’ve been focused on participation and continuing to strengthen that around the country. When we look at how we monetize that participation and the value we bring to society, we look at the traditional revenue streams — the TOP program, domestic sponsorship program, licensing program, direct mail and private donor fundraising — we need to continue to grow across those areas.

As a business challenge, we ask: How do we sustain growth and diversify those sources of revenue so that it’s more balanced? We’re still at 85 percent-plus from the rights fee and TOP program and domestic sponsorship. We’d like to diversify that going forward.

How do you plan to do that?
Scherr: We’re building a new management team for our development program. Direct mail continues to grow. It’s gone through a bit of a holding pattern while we’ve reorganized. The private donor fundraising program we’ll begin to pursue very heavily. We’ll also try to expand licensing and turn what we do online into more of a revenue stream than an expense. We’d like to lighten up a little of the load on rights fees and sponsorship fees.

When you look at other nonprofit causes, like Red Cross and Special Olympics, the majority of them are private donor fundraisers. Obviously our brand is incredibly strong and we’re pleased with that. We’d like to see private-donor fundraising a little higher. In the past, it wasn’t as strong as it should have been because we weren’t as organized to do it as we should have been. We had some dislocation and change with the government reform process that slowed it down.

There’s still some perception in the public that we either receive government (funding) — we don’t — or that sponsors pay for the funding of our Olympic team and they don’t have to contribute to it. It’s a matter of getting our message out there. While we’re not crying poverty in terms of our funding compared to other Olympic committees around the world, we’re probably not in the top 10, so if we want to continue to create the value we are for society, we need individuals to support us.

What percentage of revenue is private-donor fundraising currently?
Scherr: Counting direct mail it’s about 7 percent.

Do you target a percentage you’d like to see fundraising at by the end of the next quadrennial?
Scherr: It’s a little hard to say, but certainly between 10 and 15 percent.

What about relevance? What are the problems there and some of the indicators that suggest that needs to be addressed?
Scherr: When we look at the broadcasts and the Games broadcasts, there are certain demographic age groups where we are incredibly strong, but the younger demographic age groups are … less strong on a comparative basis. That caused us to ask if the Olympic movement, for young people, was still top of mind and relevant in this country.

The good news for us is it is. It’s still incredibly important. People still connect and identify with our athletes. The parameter we were missing is: Are we putting it in front of them in a media they can consume and are we putting it where they can find on a media that they’re on? NBC has worked with us and we’ve done a number of studies to find out how we can connect better with young people through different vehicles. As we move forward, with the Olympic network, with the relaunch of our Web site and getting our content out there with different media and getting our athletes and the movement out there on a daily basis, we’ll hopefully make an impact on that issue.

Monetizing your Web site is not something you all have focused on in the past. What’s going to be different now?
Scherr: We have to balance that with our mission, which is to get our information out about our athletes to the public, so we’re not going to get too much of it behind a premium site with content on demand or some subscription where you have to pay to access premium content. The greatest way to create value on our Web site is to have it linked to our domestic sponsorship platform. We want our domestic sponsors to get more value for what they’re paying us or pay us more for increasing the value they’re already receiving from us. There will be other ways in terms of licensed products that people can purchase and support the movement.

How does the Olympic network fit into long-term revenue projections for the Olympic movement?
Scherr: If we’re successful in launching a network, the base asset value will be a huge asset for the movement to have. For the network to be in 60 million homes, depending on the number of it we own — all of it or part — it would be a significant value base for the movement. Probably equal to or greater than what we have in our Olympic foundation today. Second, the value on a daily basis to communicate the message of our brand makes the value of what we’re selling on a daily basis to our sponsors much more worthwhile.

Then you have a number of ancillary benefits. One, you can attract more international competitions to the United States because before you bring in an international event, the international federation says I have to have television, I have to have media for nine days and the event organizer has to pay a production fee. A lot of events won’t come to the United States because no broadcaster will provide that. If it’s not state supported, the market doesn’t support it in terms of sponsorship value to foot the bill towards expenses and rights fees and what the (international federation) requires. Not that the network can do it, but this presents the opportunity for a much less expensive way for an international federation to put their event on television than currently exists. There’s a value to our national governing bodies and our athletes for those events to come to the United States.
Second, the shoulders of the Games and the Games themselves can extend beyond 45 days. It’s not that we go dark, but in terms of appointment (viewing), it’s almost impossible. NBC does a good job with the (Olympic) trials and a select few events, but then the national governing bodies are out there on their own. We can build the value of what we’re giving our sponsors as a brand beyond the 40 to 45 days every two years on the Games and shoulders of the Games.

Is that something you’ve heard sponsors ask for?
Scherr: Absolutely. One of the key issues that sponsors have is: How do I justify what I’m getting in terms of a return on investment when I’m only getting this specific lift on my product sales every two years? We don’t have them specifically asking for a network, though some of them have, but we have them asking — are there ways to create opportunity through the course of the quadrennial, not just every two years? The network will help us create some of those ancillary properties and sell them.

How do the NGBs you serve benefit from this?
Scherr: I think what you can do is reach the audiences that already exist for them and help build their audiences because they’re really limited on getting their content out now. It’s almost economically impossible for them to efficiently reach their memberships, so that’s the real value for them in this.

How do you get an Olympic network on television when the NFL Network is having such carriage problems?
Scherr: The NFL is a brand that’s incredibly strong, but we feel we have a brand that’s one of the strongest in the marketplace and is perhaps the strongest. Second, you can get content from the other properties pretty much anywhere. You can’t get what we have today, or it’s very hard to find, so I think we can aggregate an audience a little more easily than they can. Let’s just say the fishing channel, if they have their own network and I can find fishing any other Saturday for six hours on some other channel, I’m not necessarily going to be driven to go to their channel.

How do you know that appetite exists?
Scherr: I think the appetite is very strong, and the mix of footage for us, we have some incredible archival footage, and then we’ve got 45 sports that have live-action events. If there’s a wrestling international event somewhere, it’s going to be hard to find if it’s on at 2 a.m. on ESPN2. But if the wrestling community, which is pretty big, knows there’s a network out there with the five rings on there and it’s showing that wrestling event at 5 p.m. on Saturday, they’re going to find it. I think if we keep our production costs low, aggregate content relatively cheaply, we can find an audience for it.

How will that work from a revenue perspective?
Scherr: We’ve done some sophisticated business models on what kind of advertising would be available, how much we’ll be able to sell against our expected audiences, what sponsorship opportunities with the site would be. Suffice it to say, anyone can be optimistic about their projections, but we feel pretty good about ours. We also feel that without it we’re limited in achieving our mission — which is on one hand to help athletes achieve their dream but on the other hand to get that story out to the public.

What are the USOC’s goals for these Games?
Scherr: It’s pretty specific. First is that the entire delegation goes safely, stays safely and comes home safely. Second is that the experience for team members is a positive experience because most athletes have only one chance to go to the Games, so we want this to be the experience of a lifetime. Third is that our team represents the United States with honor, pride and dignity. Part of that is that it’s a clean team with no major incidents and that they represent the positive aspects of this country. Fourth, we’d like to maximize the medal opportunities that exist. … We also want to meet the needs of our sponsors and their hospitality programs, we service media internationally and from the U.S. so that the stories of athletes can be told around the world, that donors have a positive experience, and that we interface with NBC and support their broadcasts.