Group Created with Sketch.
Volume 21 No. 30

Olympics

On the heels of the USA Gymnastics-Larry Nassar sexual abuse scandal, the U.S. Olympic Committee finds itself at a crossroads in terms of the independence of national governing bodies, protecting athletes and providing increased financial assistance to NGBs and top athletes.
Photo: Getty Images; photo illustration by Corey M. Edwards

In late 2016, retired Team USA table tennis athlete Han Xiao and a few friends active in sports politics ran for seats on the USOC Athletes’ Advisory Council, suspecting their four-year terms would be especially consequential.

Sure enough, not two years later, the U.S. Olympic movement faces a reckoning.

Xiao accurately predicted the USA Gymnastics sex abuse scandal, then already bubbling up, would eventually open the door to across-the-board reforms. It wasn’t just the scope of the Larry Nassar sex abuse case; it was the knowledge that neither Congress nor the U.S. Olympic Committee had seriously evaluated the Olympics’ governance framework since the early 2000s.

“Usually what happens is there’s some kind of scandal, outrage, then something happens,” Xiao said. “So we’re on this ugly cycle where every 20 years or so, we get some kind of scandal, or some kind of triggering event for big reforms.”

For more than a year now, the pressure has been building on the USOC to fix what went wrong in the gymnastics scandal, not to mention the less widespread but still alarming cases in taekwondo, swimming and other sports. The consensus is that while specific individuals may have been negligent — the law firm Ropes & Gray is investigating that point at the USOC’s expense — the sprawling, poorly defined and inconsistent bureaucracy that administers Olympic sports in the U.S. also hinders appropriate responses.

 

The ramifications have already hit hard, most notably CEO Scott Blackmun’s resignation in February. Also, the USOC has increased funding to the U.S. Center for SafeSport, demanded a top-to-bottom overhaul at USA Gymnastics, hired a new athlete safety point person at its Colorado Springs headquarters and commissioned the Ropes & Gray investigation.

None of those steps have prevented Congress from hauling USOC and national governing body leaders in for damaging committee testimony, and the threat of another congressional rewrite of the Amateur Sports Act, which grants the USOC a monopoly over Olympic sports, continues to hang over ongoing reform efforts.

“I think thus far both houses have basically been open to the notion that it may not necessarily require opening the act, but they do need to be absolutely assured that we’re making appropriate changes that do give us enough teeth to go out and protect athletes when we need to,” said acting CEO Susanne Lyons.

The USOC last week named Sarah Hirshland as its next CEO. Hirshland, chief commercial officer of the U.S. Golf Association, will assume the position by late August.

Her job will be to right the ship at a complicated moment. Reforms are likely coming that will curtail the independence of sports governing bodies and put more money into administration at a time when revenue is not likely to grow at past rates, and many athletes are vocally demanding a bigger chunk of the pie in direct aid.

But it’s anything but a total turnaround job. Finances are sound, the USOC is closer to the international sports community than it’s been in decades, and Los Angeles is hosting the Olympics in 10 years. Add it all up, and the USOC is facing a critical juncture, one that demands urgent, extraordinary reforms while not upsetting the progress that’s been made.

It’s likely to be unglamorous work. Hirshland will have a honeymoon period, but over the long term, she is likely to endure a tenure in which Congress and internal politics are likely to play dominant roles, rather than the commercial revenue growth and international relations victories that highlighted Blackmun’s tenure.

 

With a public image problem and numerous lawsuits pending, Hirshland’s most pressing task will be convincing Congress that the USOC can develop the tools and culture to aggressively protect athletes, even when those athletes are under the direct purview of the NGBs, as they are for almost their entire careers except for when they travel to the Olympics or Pan American Games.

The Olympic movement is deeply skeptical of Congress’ motivation and qualifications when it comes to a possible rewrite to the Amateur Sports Act, and it’s hard to make any firm predictions until the midterm elections settle partisan control of the Senate and House for two more years.

“We’re all speculating on what Congress is going to do,” said Tiger Shaw, CEO of U.S. Ski & Snowboard. “So far it’s holding hearings, grandstanding politically, leveraging the situation for the midterm elections. Now, post-November maybe it gets a little clearer and that’s when the staff will roll up their sleeves and ask how the organization should look.”

The Athletes’ Advisory Council wants Congress to rewrite the 1978 ASA, believing it is simply too archaic to accurately govern a movement that’s become professionalized on the field and a multibillion-dollar business since the law was first written, in spite of limited-purpose amendments in 1998 and in February (the latter officially enshrined the Center for SafeSport into law). In short, the athletes want more protection to challenge NGB and USOC decisions without jeopardizing their careers as well as a stronger ombudsman.

Max Cobb, CEO of U.S. Biathlon and chair of the NGB Council, which advocates for the individual sport governing bodies’ interests, said the governing bodies are on board with what’s been proposed so far, but rewriting the legislation would be “concerning.”

“I think that would introduce a level of unpredictability into this reform process that would be difficult,” Cobb said.

Three reasons why Sarah Hirshland makes sense

1. As chief commercial officer of the USGA, she oversees a wide range of the organization’s responsibilities, including its global content and media distribution, marketing and communications, content development, public relations, sponsorships, hospitality, and merchandise and licensing.

2. Prior to joining the USGA in 2011, she was senior vice president of strategic business development for Wasserman Media Group. Firm founder Casey Wasserman is also chair of the Los Angeles 2028 organizing committee and called Hirshland “exactly the right person” to lead the USOC.

3. A 2008 Sports Business Journal Forty Under 40 honoree, Hirshland was one of the first employees of OnSport before it was acquired by Wasserman and was a founding employee of Total Sports.

A new commission created by the USOC to evaluate the governance question will begin meeting by August. Chaired by WNBA President Lisa Borders, with membership that includes USOC board member Dan Doctoroff, the committee will be the main vessel for all major reform suggestions. It will be guided in part by an NGB needs assessment, produced in part by USOC sponsor Deloitte, and an athlete survey from this spring.

Nothing is off the table, Lyons said.

“Everything we find in all our other commissions are informative to this committee,” said Lyons, who turned down a board offer to make her the permanent CEO. “As they will make probably the most important decision, which at the end of the day is: Where is the line in the sand? How does the USOC intervene when something appears not to be in the interest of the athletes, and what is our authority to do so, and what are the tools to ensure the right behaviors occur?”

Of course, power and influence is at stake when the organization reconsiders the relationship between the USOC and the governing bodies, but it won’t be long before money becomes an issue, too.

The commission is likely to demand a significant increase in formal reporting from the governing bodies, a process that has already started with an effort to centralize all NGB lists of banned coaches. Also, the USOC will have to develop the capacity to compel NGB cooperation with whatever new rules come about, Lyons said.

“And that costs money, that means more time and energy spent at the NGB level, it means more compliance and audit people at the USOC level, so it will in a sense require some resource allocations,” Lyons said, acknowledging the “lightly staffed” NGBs will “really struggle” with the new rules. The USOC may try to develop more shared-services divisions that could help the mid- and small-sized NGBs with other tasks, to alleviate the workload problems.

Susanne Lyons (left), acting CEO of the USOC since Blackmun resigned, and Kerry Perry, president and CEO of USA Gymnastics, have been called to Washington, D.C., to discuss keeping athletes safe.
Photo: Getty Images

Lyons expressed confidence that increased spending on compliance and oversight could be accomplished even though revenue growth opportunities will be limited because Team USA’s commercial rights will soon be merged with Los Angeles ’28. “I think the pie is sufficiently large that we will figure out the right way to spend that money to ensure these activities are successful,” she said.

 

Preventing abuse is the driving force for the commission, but once the door is opened to NGB-level reform, the commission can count on hearing many different, possibly conflicting, demands.

Longtime NGB leaders like Cobb believe simple steps like standard USOC guidance on abuse prevention and better information sharing can solve many of the problems.

But others say there are more fundamental tensions posed by how NGBs are structured. They’re small central offices expected to oversee clubs and competitions in every corner of the country. They’re expected to be dynamic, commercially competitive enterprises while also pleasing influential volunteers who’ve spent a lifetime in the sport but don’t necessarily know modern media and marketing.

“I think everybody’s focused on safe sport, and that’s critically important to focus on it, but it’s a symptom of a larger issue that needs to be addressed, which is governance, accountability and oversight,” said Max Siegel, CEO of USA Track & Field.

Also, they vary greatly in financial wherewithal and competence at both the executive and board level. “Most athletes would agree that one thing you have to address is: How can we make the NGBs a little more consistent? Some are quite good,” Xiao said. Elana Meyers Taylor, a bobsled pilot who will serve on the reform commission chaired by Borders, said many athletes remain confused about a fundamental aspect of their careers: Who decides who qualifies for financial support, the NGB or the USOC?

“I’m not saying the NGBs have done that completely wrong, or completely right,” Taylor said, “I’m just saying there’s a lot of confusion from the athlete’s standpoint of who’s actually in charge of that.”

Outside of the NGB reform question, the USOC will have to confront a broader question of public opinion. Some victims have blamed the USOC’s laser-guided focus on winning Olympic medals for the lack of prompt action on reports of sex abuse. The priority on the top of the athlete pyramid was always justified by the calculation that medals are the most effective way to monetize niche Olympic sports and build a long-term talent pipeline.

That emphasis must continue even as they find ways to better oversee NGBs, said Dexter Paine, longtime board chairman of U.S. Ski & Snowboard. “Ultimately people want to root for winners,” Paine said.

Therein lies the challenge facing Hirshland and the USOC: Find a way to please the organization’s loudest critics, who believe the Nassar scandal justifies a total teardown and rebuild, while keeping the trust of insiders, who generally believe the USOC is otherwise performing at a high level.

“The research that we’ve done has shown that the Team USA brand has really not been impacted by what’s happening right now,” Lyons said. “The USOC brand, as a corporate brand, is a little less known and understood by the public, and certainly has been negatively impacted for those who do know who we are. And I think that is a challenge for the CEO, to rebuild the trust in the USOC brand.”

The USA Gymnastics-Larry Nassar sex abuse scandal has complicated sponsorship sales elsewhere in the U.S. Olympic sports business but has not turned off current and potential partners wholesale, top governing bodies say.

 

Nevertheless, the onus remains on the U.S. Olympic Committee and major governing bodies to prove they have acted to minimize the risk to brands.

 

“I think it’s caused some pauses in decision-making as everyone waits to see what happens with the USOC and Congress, and now it’s clear that’s going to be a long time before we know exactly the impact here,” said Tiger Shaw, CEO of U.S. Ski & Snowboard.

 

But, Shaw continued, the governing body has tried to assuage fears with its sponsors and potential sponsors by laying out its own abuse-prevention practices and emphasizing the renewed awareness on the issue, something other national governing bodies have done as well.

 

Mostly, other NGBs report, the issue has become a new part of the persuasion effort, but not a dominant one.

 

“I don’t recall this being a topic that was on the radar a couple of years ago,” said Jill Geer, chief marketing officer of USA Track & Field. “When it does come up in sponsor conversations, it’s usually something we bring up. We really do try to be proactive about this, both institutionally and talking about it with commercial partners.”

 

The epicenter of the scandal, USA Gymnastics, lost every nonendemic sponsor in late 2017. Outside of gymnastics, corporations with Olympic interests have stayed, though the quiet months after the Winter Games have allowed them to keep a low profile.

 

The USOC — also targeted by critics for its alleged failures to act more quickly on the Nassar allegations — has not seen any public disavowals. Surveyed at the end of the Winter Games, no USOC or International Olympic Committee sponsors said they had lost confidence in the USOC.

 

As far as new business is concerned, the market appears quiet but there are other factors at play, namely the development of Los Angeles 2028’s own marketing capabilities and its ambitious sales goals over the next decade.

 

The USOC hasn’t signed a new sponsor since Comcast in December 2016, and the IOC hasn’t signed any global deals since Intel joined in June 2017.

 

With the IOC demanding a clear selling field for Los Angeles ’28, the USOC hasn’t been able to sign deals that extend past the 2020 Tokyo Olympics anyway, and a joint venture of the USOC and LA28 will be in market for long-term deals starting in January.

 

Sources have said that governing bodies, even those not involved in the gymnastics scandal, could face hard questions because of a general fear that Olympic sports in general are not well overseen.

 

“There aren’t companies out there that aren’t taking a meeting, or aren’t taking a call,” said Matt Farrell, CMO of USA Swimming, which has endured allegations that it didn’t take abuse claims seriously in the past. “They certainly have questions about what we’re doing and our plan for the future. But [sponsor interest] didn’t come to a screeching halt.” 

Sarah Hirshland, shown in 2016, takes over an organization that made big gains internationally under former CEO Scott Blackmun but was left with challenges domestically.
Photo: getty images

The biggest storylines under Scott Blackmun’s tenure as CEO revolved around the IOC: namely, the effort to win a Summer Games and solving long-simmering U.S.-IOC disagreements. With those issues in the rearview mirror, Sarah Hirshland’s time will be spent on the USOC’s relationships at home: Congress, governing bodies, athletes and the general public.

Congressional relations

The USOC is a creature of the federal government, but for most of the last eight years that was true on paper more than in reality. That won’t be the case now. Lawmakers could rewrite the entire USOC framework if they want. With that possibility at least in play due to the Nassar scandal, Hirshland will have to be an elite lobbyist, quickly learning what motivates key members of both parties and what they’re likely to do next.

NGB relations

Arguably the single most important task is to figure out how the USOC can more effectively control sports governing bodies while still allowing them to manage their sports. It’s an unglamorous, insiders’ challenge that will require a delicate hand to balance many different interests at the grassroots of the Olympics. The new CEO will have to play bad cop, selling new policies that will curtail their independence and cost them money in the name of preventing another sex abuse case.

Athlete trust

The USOC has reeled from damning accusations by women gymnasts who just a few years ago were its biggest, brightest stars, like Aly Raisman and McKayla Maroney, both now suing the organization for its alleged failure to stop Larry Nassar. Further from the limelight, athletes in many sports continue to criticize the USOC for not supporting them more financially. “I think that is a challenge for the CEO to rebuild the trust in the USOC brand, and perhaps more with the athletes than with the public,” acting CEO Susanne Lyons said.

New revenue streams

When Blackmun was hired in 2010, the USOC needed to rebuild its recession-battered domestic sponsorship portfolio and decide whether to keep pursuing a controversial TV channel. Deals and revenue growth were major priorities. Now, the balance of power on the commercial side shifts to the Los Angeles 2028 organizing committee and Chair Casey Wasserman. But with sponsorship revenue mostly funding the 2028 Olympics over the next decade, instead of filling the USOC’s coffers, Hirshland, the former USGA chief commercial officer, will have to be more creative in finding revenue.

Expectations

Blackmun arrived after a period of tumult and turnover at the USOC, and there was a fair bit of low-hanging fruit in terms of simply stabilizing the organization. He left as a widely respected executive within the movement, if not on the outside. The new CEO will encounter much higher standards.

At the start of this decade, the U.S. Olympic Committee faced a situation that might sound similar to today at first glance: A transition at the CEO position and several high-profile problems waiting in the inbox.

 

But in fact, the challenges facing Team USA today are far different for one key reason: Los Angeles 2028.

 

Because of the ’28 Summer Games, the USOC’s commercial operations will mostly be folded into the Los Angeles organizing committee, making it harder for the USOC to innovate, grow its revenue and fund the additional costs sure to be generated by governance and oversight reforms made in light of the Larry Nassar sex abuse scandal.

 

Meanwhile, the committee’s most pressing concerns today are political, not financial: repairing relationships with Congress, sports leaders, athletes and the general public, and selling the coming changes to those groups.

 

Under International Olympic Committee rules, all Olympic intellectual property in the U.S. is turned over to a joint venture of the USOC and LA28 that will sell sponsorships to both Team USA and the two-week festival 10 years away, starting in 2019. This is done to ensure the funding of the ’28 Games doesn’t come at the expense of the USOC’s long-term solvency.

 

The JV, registered as U.S. Olympic and Paralympic Properties LLC, will give the USOC a predetermined distribution of its income, with most of the proceeds going to the organizing committee. The other major source of commercial revenue, media rights, is locked in until 2032 due to NBC’s long-term deal.

 

“I don’t see that you’re going to have enormous growth in revenues, so the question will be how does that listed amount of money get allocated and spent?” said Dexter Paine, chairman of U.S. Ski & Snowboard. “I’m a firm believer that if you’re open and transparent, people may not agree with you but at least they understand why you make those decisions.”

 

Terms of the deal with LA28 have not been released, but acting USOC CEO Susanne Lyons acknowledged the JV “puts all of the sponsorship capability in terms of developing revenue” with Los Angeles.

 

If we need to continue to provide for winning the overall medal count, we need to get really serious about generating more revenue.
Max Cobb
Longtime CEO of U.S. Biathlon

“However, that doesn’t mean we can’t think about new revenue sources, and think creatively about our fundraising and development activities,” Lyons said. “You look at some of the things like sports betting that are just coming out that could be future sources of revenue.”

 

USOC officials have high hopes for the U.S. Olympic and Paralympic Foundation, a philanthropic arm that is now in its first full quadrennial pursuing donations. From 2013 to 2016, the foundation secured gifts of about $78 million, and its leaders think there’s still ample growth opportunity.

 

Lyons did not elaborate on how gambling, another potential new revenue stream, might fund the USOC.

 

Even if the coming years are likely to see slower growth, the committee can’t simply accept that as a fait accompli without hurting Team USA’s chances to win at the Games, said Max Cobb, longtime CEO of U.S. Biathlon and chair of the NGB Council. Team USA is reeling from a surprisingly weak showing at the Pyeongchang Olympics, winning 23 medals when its goal reportedly was 37. 

 

“If we need to continue to provide for winning the overall medal count, we need to get really serious about generating more revenue,” Cobb said. “We benefit tremendously from the competitive advantage that Title IX created, but with every passing year that effect becomes less powerful. So, the fact that we are so totally outspent by countries like China, Russia, Great Britain, Germany in our high-performance programming is eventually going to catch up with us.” 

U.S. national governing bodies may be asked to give more money to the U.S. Center for SafeSport, now desperate for money and staff to handle a workload that’s growing by 20 to 30 new reports a week post-Larry Nassar’s sentencing.

 

USA Swimming CEO Tim Hinchey said his organization has already agreed to “more than doubling” its annual commitment after he confirmed in congressional testimony that swimming was giving only $43,000 under the original NGB funding agreement for the center. The U.S. Olympic Committee doubled its annual commitment to $3.1 million, the majority of the center’s $4.3 million annual budget.

 

The center’s five full-time staff can each handle 18 cases at a time, and there are currently 295 open cases with an average resolution time of 63 days, spokeswoman Kira Wilson said. “While we’re working on bringing on an additional four to five investigators this year, we absolutely need more funding,” she added.

 

Mandated NGB funding could be another flashpoint for controversy. The governing bodies vary widely by annual revenue, how many youth members they have and whether they compete with other groups for members.

In three of the last four Olympics, American women have won more medals than men, and increasingly, female athletes are carrying the heaviest load in marketing the Games and Team USA. That’s put an even bigger spotlight on national governing bodies amid recent abuse scandals.

 

“I would hope that any organization would take sexual abuse allegations seriously under any circumstances — it’s the right thing to do,” said Amy Stanton, founder and CEO of Stanton & Co., an agency that represents female athletes. 

 

“It’s worth noting that female athletes are winning more medals than ever and that many of the USOC and NGB sponsors are specifically leveraging the Olympics to reach a female audience. This likely motivates them — the USOC and NGBs — to take this situation seriously in an immediate and public way.”

This week, SBJ Executive Editor Abe Madkour and writers Ben Fischer and John Ourand discuss our top stories, including the changing of the guard at the USOC, as well as MLB ratings and the All-Star Game in Washington, D.C.