• Strategy
  • CFO Magazine

Olympic Trials

Fraser Bullock faces a world-class challenge: turn the scandal-plagued, debt-ridden 2002 Winter Games into a winner.

As Sydney shoots for the gold with the most expensive and elaborate Summer Olympics ever — carrying a price tag of $5 billion — a very different financial strategy is playing out for the next Winter Olympics, half a world away in Salt Lake City.

Nestled below the peaks of Utah’s picture-postcard Wasatch Range, the Salt Lake Organizing Committee (SLOC) has been working intensely to discover just what expenses are absolutely essential for the Games it will stage in February 2002. With that knowledge, it is prepared to produce a bare-bones event, if it must. “We’re not trying to put on the best Games ever,” says SLOC finance chief Fraser Bullock. “We’re just trying to put on the Games.”

Such austerity is a far cry from the spending frenzy that typically surrounds Olympiads. Nagano, Japan, for example, pumped out $2.7 billion for its 1998 extravaganza. That was twice the cost of the previous Winter Olympics, which are always much smaller than the Summer Games. But the budget for the Salt Lake City Olympics, originally budgeted at $1.55 billion, has been slashed to today, the number is down to $1.32 billion, and shrinking. Games were $379 million in the red when Bullock, who is also the SLOC’s chief operating officer, took over as part of a new management team in early 1999; he’s managed to slice $300 million from that deficit.

Why is SLOC settling for the bronze, so to speak? The main reason is the scandal that erupted in late 1998, after reports that members of the local group responsible for Salt Lake City’s Olympic bid had bribed International Olympic Committee (IOC) members in order to bring the Games to their community. As a result, the budget given to Bullock when he joined SLOC reflected millions of revenue dollars unlikely to materialize.

To put the Games back on track both ethically and financially, Bullock and SLOC president and CEO Mitt Romney began cutting back. Strictly controlling the cost side of the ledger and keeping the books wide open, they figured, would help restore the confidence of sponsors, who typically pay for half the Winter Games; the government, which provides funds for transportation and security; and the general public, which will purchase tickets beginning on October 10. And while the jury is still out on whether the next Olympics will measure up to past blockbusters, they are, at least, on track to break even. “You can always make the numbers work, if you have the right discipline and the right focus,” says Bullock.

The Long Road Back

Even on a tight budget, the world should still see an impressive Olympics, SLOC organizers insist. “Most of our expensive venues were built by God; they’re these breathtaking mountains,” says Romney, a 53-year-old Boston investment banker. The Utah capital, the largest city ever to host the Winter Games, already has much of the infrastructure in place to make things run smoothly in its magnificent natural setting.

Still, removing the taint of the bid-scandal won’t be easy. The Justice Department alleges that prior to the June 1995 selection of Salt Lake City, two top Olympics officials paid $1 million in cash and gifts to members of the IOC to secure the designation. The money funded U.S. college educations for some of the IOC delegates’ children. Other funds paid for their first-class travel or covered lavish gifts. The officials — Tom Welch, former president of the Salt Lake City Olympic Committee, and Dave Johnson, the ex-vice president — have denied any wrongdoing. But in August, the two were indicted on 15 felony conspiracy and fraud charges that carry a combined sentence of up to 75 years in prison.


Your email address will not be published. Required fields are marked *