Will analytics change U.S. Olympic funding?

In a move that could change how Olympic sports teams are funded, the U.S. Olympic Committee plans to hire a senior executive to bring data analytics to the table when deciding which sport investments are most likely to yield medals.

The USOC has retained Russell Reynolds Associates to lead a search for a chief business officer who will act as a data-aided strategist on divvying up grants among 47 national governing bodies, along with overseeing back-office functions such as human resources and finance. The new CBO will report directly to CEO Scott Blackmun.

“I wouldn’t look at it so much as what’s fair and what’s not fair. Think of the way a private equity investor, or a venture capital investor, looks at it. They’re not trying to make decisions based on what’s fair, they’re trying to make decisions based on what’s going to have the best results.” Scott Blackmun CEO, U.S. Olympic Committee

In the U.S. Olympic movement, the current data push continues to migrate the USOC away from a baseline funding approach to a philosophy that rewards sound business practices and efficiency in turning raw athletes into marketable gold — as Blackmun said, like a “venture capital investor.”

Team USA’s plans emerge as analytics, the use of large amounts of data to identify subtle trends and set long-term strategy, has spread across sports management. After first being used to gain competitive advantages on the field of play, many teams and leagues have hired executives to apply the concept across their operations.

Olympic sports governing body executives say they welcome more data, but the stakes are high. Governing body grants collectively are the USOC’s largest expense, accounting for $51 million in 2014, and many small governing bodies depend heavily on them.

Any reconsideration of how those grants are determined could trigger alarm, said Darrin Steele, CEO of USA Bobsled & Skeleton and a bronze medalist at the 2002 Winter Games.

“I do think the transparency and communication about how it’s being used is really important,” Steele said. “Just like it can help make smart investments, it could also scare the hell out of some of the NGBs if they’re afraid of it not being applied correctly, or if all the variables aren’t being included.”

The importance of the grants varies greatly, with the more popular and commercially successful sports needing them less. For instance, both USA Sailing and USA Gymnastics received about $1.9 million in direct USOC aid in 2014, but USA Sailing’s total budget was $9.2 million, while USA Gymnastics’ budget topped $23 million that year, according to tax filings.

Blackmun wants to bring an analytical eye to every part of the USOC’s business, and he sees the future CBO as an internal quality-control czar on all fronts. The hire would take on duties previously held by retiring CFO Walt Glover and Chief of Organizational Excellence Benita Fitzgerald Mosley, who recently announced she will become CEO of the Laureus Sport for Good Foundation USA.

In general, the USOC’s relationship with its sports governing bodies is nearing a historical high-water mark, said Rich Bender, executive director of USA Wrestling and chair of the NGB Council. Blackmun has earned praise for communicating more regularly with them, and steadily growing TV rights fees and sponsorship income lends a “rising tides lift all boats” dynamic to the data discussion.

Nevertheless, the grants are a sensitive topic. The USOC’s goal in funding sports teams is to solidify its place atop the Olympic medal chart — not to put all sports on equal footing, or to prop up struggling programs.

“I wouldn’t look at it so much as what’s fair and what’s not fair,” Blackmun said. “Think of the way a private equity investor, or a venture capital investor, looks at it. They’re not trying to make decisions based on what’s fair, they’re trying to make decisions based on what’s going to have the best results.”

USOC officials emphasize that the chief business officer will not have carte blanche to make decisions on sport grants. Chief of Sport Performance Alan Ashley will still be the primary driver of performance grant decisions, with the CBO advising.

Unlike single-sport major leagues and their franchises, the USOC’s attempts to leverage data will be complicated by the diversity of its interests, Blackmun said. A gold-medal gymnast is groomed and prepared from early childhood, but some members of the USA Rugby sevens team didn’t play the sport until adulthood. One sport’s prudent and necessary investment in a potential medalist could be a waste of money in another, and every sport has competitive nuances that can’t be applied generally.

“Some medals might cost more than other medals,” Bender said. “And from the USOC’s perspective, you want to have a strategy for where you’re making your investments, because ultimately, the USOC is putting a pretty high priority on winning medals, as they should.”

On a separate but related track, a task force committee also is considering a method to allow governing bodies to qualify for multiyear grants. Today, all funding decisions are made through annual “performance partnership agreements” that involve frank, sensitive negotiations about athletes’ prospects and long-term development goals.

If the task force’s ideas become policy, governing bodies could get USOC grants for up to entire quadrenniums if they demonstrate outstanding business practices and organizational stability. The task force hopes to make formal recommendations to the USOC within a few months, Bender said.

“There hasn’t been big swings, but I think most NGBs, in a pure and perfect world, would like to put programs in place that they feel like they could be under contract for four years, as opposed to annually,” Bender said.

Nada Usina, managing director and co-head of Russell Reynolds’ media, entertainment and sports practice, is leading the CBO search work.