The United States has the peculiar distinction of being the only major nation where the Olympic governing bodies do not receive governmental funding. This peculiar approach — necessitating the need for the United States Olympic & Paralympic Committee to find support from sponsorship agreements, the largesse from the International Olympic Committee and a portion of the Olympic broadcasting contracts — derives from the 1978 Amateur Sports Act, which created this privately funded system for the USOPC and the 39 governing bodies that work with it. The COVID-19 crisis should put an end to this approach.
From the USOPC’s ill-fated attempt to secure $200 million in federal aid to U.S. Track & Field laying off personnel (despite having the largest and possibly most lucrative sponsorship agreement in U.S. Olympic sports), this epidemic is creating an uncertain financial future that should serve as the catalyst for major changes in the organization and funding of Olympic sports in the United States.
But the reasons for change go far deeper. The present laissez-faire system served to make the USOPC and the governing bodies their own fiefdoms with little oversight, less than adequate transparency and limited athlete involvement. Witness the treatment of victims of sexual harassment, not only involving women’s gymnastics, but swimming, wrestling and figure skating. Witness the ongoing litigation resulting from these abuses. Witness the weakened oversight, potential conflicts and huge salaries received by many USOPC officials. Witness the lack of constitutional rights by athletes, who are precluded from claiming due process violations because the organizations are “private.”
The USOPC needs governance reform, new business models, greater athlete rights and secure methods of funding. Only with such efforts will the organs of the Olympic movement in the U.S. evolve into a more consistent and transparent financial and governance model in the third decade of the 21st century. The outbreak and consequences of the COVID-19 pandemic of 2020 should be a catalyst for the movement to address these issues, and for Congress to consider major amendments to the Amateur Sports Act (“Sports Act”).
It is high time to change the Act, last amended in 1998. The changes should be broad, taking into account the new realities of our time and the desperate need to reform the governance of Olympic sports. It is time to create a funding mechanism that is systematic, and a system that is far more transparent and subject to public scrutiny than what exists today. The major provisions of a 2020 Sports Act could include:
■ A system for the USOPC and all of the national governing bodies to receive federal funding. The funding mechanisms could include direct annual or biannual appropriation from Congress based on a formula that combines need, numbers of members and demonstrated success.
■ Alternatively, a federal tax return check-off (which is a tax credit for donations to the USOPC as opposed to a tax deduction).
■ A system of community-based grants such as those used for arts organizations by the National Endowment for the Arts could be utilized to help local or regional clubs in various Olympic sports to encourage young people to engage in these sports.
■ Grants for elite athletes seeking help to pay for their training. This may become more compelling if NCAA schools cut funding for gymnastics, swimming or track and field.
■ Enhance funding of the U.S. Center for SafeSport, which is woefully inadequate.
However, in return for the funding, the USOPC and NGBs would be subject to strict governance and transparency requirements, such as: public release of all sponsorship agreements as part of an annual report to Congress and posting these contracts on the organization’s website; accepting the jurisdiction of a congressionally appointed inspector general to review allegations of financial misappropriation and other violation of the above mandates; mandating the creation of an ethics board wholly independent of the directors of the USOPC and the NGBs; limitation of enhanced trademark rights granted by the Amateur Sports Act; and the right for athletes to be considered “state actors” and seek redress in the courts for constitutional violations, such as due process claims. Finally, it would create a Commission for Olympic and Paralympic Sports appointed by Congress, which will have the power to enact standards for ethics and transparency and appoint an athlete ombudsman independent of the USOPC and the NGBs.
Several federal appeals courts have given the USOPC and the governing bodies an antitrust exemption, a key legal defense given the nature of decision-making and control exercised by these organizations. Such an antitrust exemption should be granted in the legislation but on two conditions: the first being that the organization complies with the transparency and audit requirements, and the second, allowing elite athletes to form their own competitions and tours, as in the case of the ATP or WTA. While the USOPC and the governing bodies would exclusively deal with the Olympic qualifications and trials, these athletes could control their own competitions and attempt to monetize them. I don’t think many would do so at this time, but they should have the option and if an organization attempts to restrict those efforts, recourse in the courts should be allowed.
A new paradigm would ensure funding, lessen the dependence on sponsors and could create a better environment for Olympic sports to thrive in the U.S.
Mark Conrad is director of the sports business program and associate professor of law and ethics at the Gabelli School of Business at Fordham University.
Questions about OPED guidelines or letters to the editor? Email editor Jake Kyler at jkyler@sportsbusinessjournal.com
