Verbruggen on IOC-USOC money flap: Never a serious proposition from USOC

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Over the past several months, I have blogged about the ongoing revenue-sharing dispute between the United States Olympic Committee and the International Olympic Committee.

Each time, I have taken the position that former USOC Chairman Peter Ueberroth was correct in taking a hard line about not reducing the USOC share. Sometimes, I have criticized the behavior of two people speaking out on the issue, former IOC member Hein Verbruggen of the Netherlands and current member Denis Oswald of Switzerland. (Oswald is one of three people negotiating for the IOC; the others are Gerhard Heiberg of Norway and Mario Vazquez Rana of Mexico.)

Not long ago, Verbruggen, who has called the USOC share ‘immoral,’’ e-mailed to object to my characterization of him (and Oswald) as ‘intemperate’’ and to contest my basic premise in all the Blogs: that the USOC is entitled to and needs the revenue it receives by contractual obligation from both the IOC’s global sponsorship (TOP) program (20 percent) and U.S. television rights (12.75 percent).

Verbruggen contended in his original e-mail that I had not given him adequate opportunity to explain his convictions in the issue. I wrote back that I had done so, immediately after his first ‘intemperate’ statements a year ago in Greece, but that he had not answered my questions.

That began a spirited exchange of e-mails, in which Verbruggen explained his point of view on several aspects of the revenue-sharing issue.

With his permission, I am reproducing nearly all of his most recent e-mail.

My statements are in plain type. His answers are italicized and preceded by [HV]. ++++++++++++++++++++++++++++

Mr. Verbruggen,

You may not remember this, but we talked at length about your convictions at SportAccord in Athens last year, when your remarks about USOC morality clearly were intemperate.

[HV] I do remember we talked but I never find one single mention of our arguments in your articles. It is just one way (read Peter Ueberroth) of thinking and reasoning.

I asked you if the U.S. should get some credit for all the athletes who train at U.S. universities (yes, I understand that the universities gain from their presence as well), and you dismissed that notion out of hand.

[HV] I still dismiss this as a criterion for the IOC to allocate funds to a National Olympic Committee. There is lots of self-interest of the universities (as you say yourself), and there is no credit whatsoever to USOC.

But if you insist on using the number of foreign athletes training in specific countries with scholarships as a criterion, well do it then in a fair way by also taking into account the size and the gross national products of these countries. I will bet you everything that the Cuban NOC would then qualify for a much greater allocation of IOC funds than they get now and you might find other countries (France; Great Britain?) that would come out way better than the USA . This just to demonstrate the total irrelevance of your argument for the allocation of funds by the IOC.

I asked if the Olympic Games gained by having a strong U.S. team, and you chose not to answer that but to say the Olympics need a strong German team and Chinese team and others (I can’t recall which other countries you cited).

[HV] My answer was and is a very clear ANSWER. How could the IOC ever defend that for financial reasons it would prefer the US team always to lead the medal tally?

It was clear that Peter Ueberroth and Gerhard Heiberg were negotiating in good faith, only to have deals Heiberg brought back rejected for reasons that never have been made clear.

Peter finally turned intemperate because he was tired of hearing you and Denis bash the United States and the USOC. For that, I cannot blame him.

[HV] Here again, your information is totally based upon one-way traffic. I have seen and witnessed myself that there has NEVER been any serious proposition from USOC. The one and only one that I heard of was already for ethical reasons unacceptable (USOC should support a number of NOC’s in underdeveloped countries……..!! Unbelievable one year before the 2016 Olympic host cityselection) .

USOC/PU (Ueberroth) have excelled in frustrating the negotiations, postponing and annulling meetings, up to the last moments before Denver (the recent SportAccord meeting).

Peter’s plan (for private financing of the 1984 Los Angeles Games) saved the Olympics, and the IOC debt for that will never end, no matter how much Peter’s vision and words infuriate you.

[HV] PU “saved” the Olympics and that makes the IOC eternally indebted, resulting into simply shutting up on everything USOC says and does…….!! Is that really what you mean?

To tell the truth, I do not find the revenue-sharing unfair. Even with a greater global diversity in TOP sponsors, the IOC still depends on U.S. companies and TV networks for more than 50 percent of its revenues. The rights paid by the European Broadcast Union (with a greater total audience than the USA) have been a joke. The rights fee China paid in 2008 was an even greater joke.

I know the IOC has chosen (finally) to maximize rights by going outside the EBU for 2014/16, and China (CCTV) will pay a larger (but still too low) rights fee for London & beyond.

[HV] Our arguments again:

1. What in heaven is the relevance of the sponsors’ nationality as a criterion for “rewarding” the NOC of the country. If the NOC would miss revenues because of that, then yes. But this is exactly what we wish to negotiate!! And why don’t we hear this from other NOC’s?? There were 5 or 6 non-American TOP sponsors.

2. It might be U.S. sponsors but the fees are paid BY MANY SUBSIDIARIES in many countries. Most U.S. sponsors invest in TOP for developing their foreign markets.

3. There is neither any relevance in TV fees paid by EBU or CCTV. The IOC has its reasons (which I don’t know) for every market when it comes to broadcasters’ fees. As a consequence, the argument that USOC deserves to get more money because the Americans pay a higher broadcast fee than, e.g., the Chinese, is totally out of order. NBC is not a charity; if the IOC has a “product” (read: Olympic Games) that is worth, e.g.. $2.1 billion in U.S. TV fees, then NBC is obviously willing to pay $2 billion and (one of) their objectives –profit!!- is fulfilled. Again, I do not grasp what credits ought to be given to USOC for that unless, again(!), USOC is waiving certain rights, but again, this is what we would like to negotiate. Also, I think you should consider stopping to exaggerate the importance of GNP and market size (“Mammon”) as criteria for IOC funds allocations; solidarity should be much more attractive (“Morality”; see below) for you.

I believe that PU (Ueberroth) knows the strength of our arguments very well and that that was the reason for not being very keen on meeting the Commission that was appointed by the IOC president. (Heiberg, Oswald and Vazquez Rana)

It is not the USOC’s fault that the U.S. system does not provide it government funding.

[HV] Yes it is because USOC was strongly promoting the Stevens Act (formerly the Amateur Act, which codified the USOC’s status), in which the U.S. government gave all rights for the use of Olympic logo’s and symbols to USOC in return of the guarantee of self-funding.

Firstly the government “gave” something it does not own and secondly it resulted in the fact that the richest country in the world is probably also the only country in the world with a government that spends zero money in its (elite) sport. The U.S. leaves this investment graciously up to the IOC and thus to foreign NOC’s (and their athletes who get less!!) and international sports federations.

The reality is the USOC badly needs its shared revenues to field good teams.

[HV] Yes I know but please stop defending that all kind of fake reasons (sponsor nationality; EBU pays less; U.S. market funds the IOC; American medals means IOC-revenue; etc. etc) are used to avoid recognizing that the BASIC problem is an Act from 1978 and a (excuse me) stupid contract from the 1980s as well as to avoid behaving as reasonable people and sit around a table and to negotiate a real (!!) fair deal.

Without such (strong U.S.) teams, the revenues produced by U.S. television rights and TOP sponsors would be far lower. So if the US took 6 percent of $500 million (rather than 12.75 of $1 billion) from U.S. TV, the share for the rest of the world still would be much smaller. The arguments for the U.S. to reduce its share are, in essence, cutting off your nose to spite your face.

[HV] See above. It is hard to hear and accept this from an intelligent person as you.

And it is hard for the IOC to argue morality after having awarded the Games to China, which a year later has become even more repressive than it was before the Olympics.

[HV] You want to throw this in as another argument to defend the USOC case?? Are you blaming ME for being intemperate or ill-tempered?

Mammon and morality are uncomfortable bedfellows – whether the USOC or the IOC is in the bed.

[HV] Send this to USOC and your government also, please.

-- Philip Hersh

Photo: Hein Verbruggen, who headed the IOC evaluation commission for the Beijing Olympics, and Chinese state councilor Chen Zhili unvil the 2008 Olympic torch.