Thursday, November 23, 2006

London 2012 Budget Bashing Right On Schedule

There comes a time in the life of every Olympic organizing committee when suddenly everyone, especially the press, discovers that things aren't going exactly as planned in the original Olympic bid proposal. Now it's London's turn.

This happens every two years - coinciding with the frequency of Olympic bids elected by the International Olympic Committee. But it always seems so "new" and "unique" each time it happens because it is being observed for the first time by that city organizing the Games.

With the organization of every new Olympic Games comes a new set of media personnel, a new group of critics and a whole new population trying to make sense of it all. Olympic preparations are generally only news to the local country and those who are in the industry (and a niche group of Olympic fanatics - you know who you are), so Londoners have had little exposure to Olympic preparations past, and most people outside the U.K. don't really know or care what's going on now.

So, to the point - the escalating costs of the London 2012 Games is not really news, and not really a big surprise.

Without being too specific about the recent developments of London's Olympic preparations, it's easy to point out some very significant misconceptions.

If you're organizing an Olympics to make a profit - you're in the wrong business (unless, of course, you're the IOC - but that's another story). There are many benefits from holding an Olympic Games; national pride, increased tourism, a legacy of venues and infrastructure, an increase of interest in sports and physical fitness and more. And while there are financial benenfits such as increased tax revenues and Games revenues from ticket sales, sponsorships and licensing - these are generally used to offset the costs involved and won't necessarily help turn a profit.

When reported on, Olympic organizing costs are often bundled with capital development costs such as venues, roads, housing etc. This is very deceptive and not a true measure.

For instance, airport upgrades, highway improvements and additional support infrastructure might be part of the bid proposal - but it's unreasonable to attribute the entire capital expense to the Olympics. The new assets will be of benefit to the City well beyond the Olympic closing ceremonies. So when there are increases in these budgets, they may well have occurred anyways - but under someone elses portfolio.

The biggest misconception when observing the organization of an Olympic Games is believing that the bid documents used to win the host city honours are an accurate representation of how everything will play out. Simply, it isn't.

The real purpose of these documents and the budgets within is to win the bid in a highly competitive race. Accordingly, the bid committee is faced with unreasonable and conflicting expectations from the public and the IOC.

It's arguable that organizing an Olympic Games is the largest and most complex project that can be undertaken. The original plans are drawn up in a time spanning from six to 24 months. There is often "scope-creep" - the IOC will change sports events and other requirements during the process and after the budget is "finalized", and other local interests might try to "piggyback" their projects on the Olympic project. Compound this with the fact that the completion of these plans is about 8 years away and at the mercy of changing economies, exchange rates, governments, and other priorities and you'll understand that estimating such a budget is a guessing game at best.

Then consider that during the budgeting process the information is made public and falls under the scrutiny of the very taxpayers who might be on the hook for the final bill. While the IOC wants to see that the bid will have access to deep pockets and be able to deliver a high quality plan - they also want to see that the public is solidly behind the plans and will support the organization of the Games. They'll even commission polls to test this.

If this isn't already enough to make the organizers sick to their stomachs, the final and most important aspect of the bid is that it must compete against others to win - and the pressure to achieve a victory is huge. So while there is a necessity to propose a costly plan, there is an unreasonably extreme pressure to keep the cost estimates low.

But as I've already explained, this bid proposal is simply a means to an end - an attractive and feasible story designed to win the competition and created by people who won't necessarily be around to deliver it. When the Organizing Committee is formed, they receive the bid book as a legacy from the bidding process - then they go back to the drawing board and figure out how to deliver - and at what price.

London's 2012 budget surprise isn't news, it's a milestone that's often coupled with an increase to the public relations budget.

Monday, November 13, 2006

San Francisco's Deja Vu Could Quash America's Dreams For 2016

I wasn't there, but I could practically hear the frustrated sighs emanating from the United States Olympic Committee (USOC) headquarters in Colorado Springs last week. The deja vu of disappointment was unmistakable when the San Francisco 49ers decided to pull out of any possible deal with an Olympic bid and take its business to Santa Clara instead.

Less than two years ago, New York 2012 - perhaps the most high profile bid ever presented by the USOC - lost its marquee venue, a West-end Manhattan Olympic Stadium and future home to the New York Jets football team just weeks before the International Olympic Committee was to choose a host city. This effectively killed any chances the city may have had to win the bid, but with nothing further to lose the bid committee concocted a backup plan that saw the Olympic Stadium move to Queens and what would be the eventual new home of the New York Mets baseball team. Unfortunately this did nothing to save face on the international scene and the bid went down with a whimper.

To make the most of this embarrassment, the USOC went through a "lessons learned" process and totally revamped the internal site selection process for a possible 2016 bid. Rather than a competition, it was to be a consultative process where the USOC would work closely with the bidding cities to prepare a proposal worthy of international competition. If one was found, the USOC would take it under its wing and move forward.

Surely a critical element was a locked-down venue plan, including the Olympic Stadium, and several other guarantees.

But San Francisco's bid leaders claimed they were "in shock" when the 49ers made their surprise announcement and denied the bid their marquee venue - one that apparently was only a possible solution at best according to a letter released by team officials last week.

"There is still a significant hurdle to overcome", John York, co-owner of the 49ers wrote to the San Francisco Mayor in a letter written September 14.

With the facts in place, back-up plan or not, the San Francisco bid leaders made the correct political decision to withdraw which could spare the USOC further headaches on the matter. But is the damage already done? Has the USOC gained a reputation that it may not be able to deliver on its promises, and will they now insist that venues already be in place?

Enter Chicago and Los Angeles, the remaining bid hopefuls.

Los Angeles already has an Olympic Stadium. In fact, it has already been used for the Olympics twice so they can pretty much guarantee a stadium without risk. Chicago has planned a new stadium in Washington Park, and while nobody can be sure that it is guaranteed at this point, at least we can be certain that there is no football team prerequisite.

So now you're thinking Los Angeles has to be the safe bet for the USOC. Well, think again. This stadium battle has already been played out on the international scene when Paris faced London in the bid for 2012.

Flashback to 2012:

Paris presented a pre-existing venue, the Stade de France - an economical, guaranteed facility that was already a legacy of the 1998 Soccer World Cup.

London boasted a brand new stadium plan that was to become the centrepiece of an entirely new Olympic venue complex in London's Lower Lea Valley. The stadium is to be scaled back after the Games to become a more manageable and useful legacy - similar to Chicago's current plan.

London won the battle and will host the 2012 Games after IOC members applauded the exciting new venue concept, preferring it to the second-hand Paris offering. It's clear that IOC members want guarantees without sacrificing the glamour of the Olympic Games - they want it all.

During that 2012 campaign Paris followed the rules, played it safe and gave the IOC what they asked for. London tested the rules, worked aggressively and gave the IOC what they really wanted. In 18 months the London bid managed to erode a perceptually huge Paris lead. USOC - take note.

Back to 2016:

I've been reading reports this morning that Los Angeles is the new favorite in the U.S. race, contradicting the observations above. L.A. boasts completed venues and guarantees - but lacks the Hollywood sizzle and excitement that the IOC wants. The USOC really needs to work with Chicago to produce a compelling, innovative bid that not only instills confidence but also spoils the IOC in a way they've become accustomed to. If they don't accomplish this they might as well pass on 2016 and regroup for a later bid.

San Francisco 2016 - Part 2?

I still get this odd feeling that the San Francisco bid hasn't completely given up. While they've officially announced that they've withdrawn - they still haven't wrapped up their media machine. The new Website is still being updated with press releases; the press releases continue to boast how great the plan is, and how much money has been raised; and this morning they've posted all of their bid documentation for the world to inspect. To me, it seems like the kind of damage control that happens when a bid is still in the works.

Yesterday SF2016 Managing Director Scott Givens announced the bid's demise, but also suggested a couple of feasible backup plans that included a scaled-down venue for Candlestick Point without the 49ers or possibly continuing negotiations with the team in order to lure it back to San Francisco.

He stressed that the bid's cancellation was due to a "perceptual gap" - that the bid was caught off-guard and couldn't effectively respond to the events as they unfolded.

Is it possible that the USOC and SF2016 have engineered the withdrawal to give time for the bid to regroup, re-plan and then re-emerge stronger than ever? I doubt it, but the USOC is often full of surprises. After all, the purpose of the internal site selection process is to create a winning bid, not run a fair competition.

Friday, November 10, 2006

Now That's What I'm Talking About

It's been over eight years since I launched*, a Website designed to take an unbiased and informative look at the Olympic bid process. That was shortly before the Salt Lake City vote-buying scandal and years before the Internet popularized YouTube, podcasting and even blogging.

In that time the Olympic bid landscape has changed almost as much as cyberspace - and the dry, matter-of-factual reporting on has become a little outdated. It's still a very necessary and invaluable service for those in the industry and we're not going to change it - but as you've already discovered - I've launched our first-ever blog.

When we launched in 1998, I began to moderate a small off-site discussion forum geared to those interested in discussing Olympic bids and other geographical issues. Along with, the forum grew like wildfire and it was soon incorporated into the main Website to become The Forums of with thousands of members and hundreds of thousands of posts. A core group of forumers have debated bid-related issues over the years while I, in my moderator role, stood aside and held my tongue. You can't imagine how frustrating it has been.

Meanwhile, when called upon, I give candid commentary about the current Olympic bid situation to external media outlets - and I enjoy it.

I'll post Weekly-ish and cover topics you may not find on GB. Feel free to respond and debate the issues with me, I hope this becomes a truly interactive experience for us all.
So now it's time for me to open my mind and let my fingers fly; not on, not in the forums, but here - the BidBlog.

* then known as with a focus primarily on Toronto's 2008 bid