“Without the sponsors, we wouldn’t have had The Games”

Summary response:

“Bovine excrement!”

This blogpost looks at how corporate interests nearly killed London 2012, and why the experience of the past few weeks and of the South Africa 2010 World Cup shows two massive holes: One in corporate governance and the other in accountability to the viewing public and supporters.

The basics

The statement of this blogpost implies that there was no choice – or rather that the choice was binary: a 1 or a 0. Either accept the sponsorship that we had, or no games. Nonsense. There were a huge number of political and financial choices that were made. One of the (understandable) choices that was made was to try and exploit ‘brand Olympics’ as much as was financially possible so as to nominally reduce the impact on the UK taxpayer.

Given what we know now, did the Government concede too much to the sponsors and corporate interests to the extent that it had a negative impact on the experience for those visiting and following the games beyond any financial benefit gained the other way? For example, what would have been the economic impact if the Government had refused to make the venues ‘sterile zones’ to keep out non-accredited providers? A greater level of employment and income for smaller independent firms, lower benefits payments and increased tax revenues compared with the payment from the sponsors? Who knows? But this was just one impact of the branding exercise.

Is the brand more important than the event?

One estimate for the value of the “Olympics” brand is put at $47.6billion. How much!?!?! At the same time, the value of that brand can only be as much as the laws that are in place to ‘protect’ it – along with enforcement. This may explain the draconian steps taken in the run-up to the Olympics to gain ‘maximum value’ from the brand. We were told this would help reduce the cost to the tax payer.

The UK had legislation in place to protect the Olympics brand long before London 2012 was even a twinkle in anyone’s eye. John Major’s government passed the Olympics Symbols etc (Protection) Act 1995. Brand value is dependent on the laws that protect them. Understandable if you’re the maker of a product and you don’t want to get ripped off by someone making a cheapo skanky version of your product, passing it off as yours, running off with the money and giving you a bad name. Yet I can’t help but feel that in this hyper-consumerist world we now live in, brands have become more important than the product, service or event they are supposed to be representing. My feeling with the Olympics is that too much effort and resource was diverted towards protecting the brand from otherwise non-existent or minimal threats, which could have been diverted elsewhere to make the whole thing much more fun for everyone concerned. But given that over 90% of marketing revenues came from broadcasting or sponsorship, the IOC inevitably becomes dependent on the paymasters.

Protecting the brand by killing the competition through the law rather than good products or services

This is exactly what happened in the London ExCel when I took Puffles to watch the judo. The same is the case for the Olympics Park. This led to farcical headlines with McDonalds. Rather than saying to McDonalds “You should be beating the competition by providing a better standard of chips produced to higher ethical standards sold by workers paid a decent wage at a price that beats all of the other competitors hands down” (which is how competition should work), they signed a sponsorship deal that banned all of the competition from the venues.

That, ladies and gentlemen is an anti-competitive practice and if pro-market politicians were serious enough about their beliefs, they would have been screaming blue murder about this in Parliament and beyond. As it was, the quality of the ‘fayre’ in the big bland box that is the London ExCel was so bland it made John Major’s dress sense look colourful. But the brand needed protecting even if it meant delivering an inferior product, service and experience to the paying fans and spectators.

Why protect the brand?

One of the reasons for the high estimated value of the Olympics’ brand is that people recognise the rings symbol. Given the corporate interests of the sponsors, there’s huge pressure to monetise this. If you’re a not-very-well-known sponsor that wants to break into a world market, why not pay that premium to get the Olympic rings stamped all over your products, or have your brand featured on all the global publicity?

Yet unlike other goods and services, the summer games only come round once every four years. It’s not like selling nik naks or pork pies – there are only certain times when you can squeeze the Olympics brand for all that it’s worth. As far as London 2012 is concerned, there’s not long to go at all. The other thing that differentiates the Olympics’ brand from the corporate world is ownership of the product or service – the sports themselves. In the mind of people worldwide, the International Olympics Committee does not ‘own’ the 100m any more than FIFA ‘owns’ football. They might like to pretend they do, and they have certainly put structures in place to do so – it’s just that no one has called their bluff. Yet.

Interestingly, those that claim to own such sporting events were called out in a very big way over the empty seats. See the top of page 12 of the 2009 Olympic Congress recommendations:

“Sport holds a mirror to society”

You bet it did there – and beautifully so. What was the likelihood of members of the ‘Olympic Family’ or corporate sponsors being ordinary people? This image of the swimming spoke volumes. The elites of the Olympics family were so greedy that they had reserved more of the best seats than they were able to fill – despite there being huge demand from elsewhere. This reflects the unequal distribution of wealth in society, where the super-rich cannot consume all the resources that they have acquired.

This catches the big business interests where they would not like to be caught. They can’t demand all of the best seats in the house, not use them and then moan about the lack of atmosphere in venues – which inevitably ruins the experience not just of those attending but to those viewing on TV and online too. This then damages ‘brand Olympics’ and the corporations associated with them. Who is going to be the person to tell these elites that they need to learn how to share?

So…who does own the Olympics – or football or any other sport for that matter?

“The people who are passionate about it” – the fans. This is what the organisers at the top of international sporting organisations have forgotten in their pursuit of the corporate dollar. I remember the days when football kits were really expensive – paying £40 for a boys football kit in 1989 prices. A joke – and that was before the first SkyTV deal. In economics terms, Murdoch took a huge gamble in judging that demand for televised top flight football would be strong enough that people would pay far more than they were at the time through terrestrial TV. He was right. He was able to use a new technology – encryption – to price discriminate in a manner not previously possible. Such is the political pressure around sporting events that the government has had to legislate to protect certain events from subscription and pay-per-view, such as the FA Cup Final, the World Cup and the Olympics – much as private companies (and top clubs too) would like to go down that route.

Rather than being ‘co-owners’ of sport, fans and spectators have become cash cows for corporate interests. It’s not just the pricing and branding that has reflected this: It’s the complete lack of accountability to ‘the people’ that is present within the IOC and FIFA. The International Olympic Committee is littered with royals – those noble bastions of democracy over the centuries. Looking at the recommendations from the 2009 Olympics Congress, I point you to paragraph 41.

The legitimacy and autonomy of the Olympic Movement depends on upholding the highest standards of ethical behaviour and good governance.
All members of the Olympic Movement should adopt, as their minimum standard, the Basic Universal Principles of Good Governance of the Olympic Movement, as proposed by the IOC. All members of the Olympic Movement must always demonstrate integrity, accountability and transparency, as well
as the highest level of management skills; and they must ensure that at all times their legal status is both fully consistent with their activities and responsibilities and wholly compliant with the laws of the land (applicable laws).

Accountability? I don’t recall any sports fans having a say on whether the Princess Royal or Sir Craig Reedie should represent the UK. This is not a point about whether they are any good at what they do, it’s simply asking the question of “How did you get your job?” For all we know, both may well have been pushing for improved governance within the IOC – but we don’t know this because the IOC lacks transparency. A symptom of this was the way that LOCOG was made exempt from the Freedom of Information Act 2000 – despite the huge amounts of public money handed over to it.

Hey Pooffles, this sounds like sport and politics mixing. This is not good.

When an international sporting event of that scale is hosted anywhere, especially when terms and conditions of hosting such an event require changes in the law, surely this is sport imposing itself on politics? Or rather, it’s big business using sport as a means to impose its will on the political process?

There are very good reasons to try and separate sport from politics in an international context. Not least because such sporting events have been used in the past as a means to provide legitimacy for despotic and authoritarian regimes worldwide. From the World Cup of 1934 (Mussolini), the infamous Berlin Olympics all the way through to the 1978 World Cup in Argentina to London’s predecessor in Beijing, which put a huge focus on human rights in China.

But then, sport and politics have always mixed in these modern times – whether it’s the sight of David Mellor and John Major watching Chelsea, Tony Blair playing head-tennis with Kevin Keegan to George Osborne going to watch the Champions League final with his German counterpart – a snapshot that none of us watching the final saw coming. “Yeah – there’s a bloke who looks like Gideon celebrating with John Terry!”

So…if sport and politics inevitably have to mix, then what?

As paragraph 41 says, international sporting organisations need to demonstrate through their structures & membership, a sound level of responsibility, transparency and accountability. Even better, how about adopting the seven principles of high standards in public life?

Sport has a huge power to unite people and help drive positive social change. Wouldn’t it be lovely if the structures of international sporting organisations could be changed so that those representing each nation in such bodies had to have the legitimacy of grassroots support, rather than being the political or royal appointee? It would mean a huge investment needed by FIFA and the IOC, but then it’s not as if they haven’t got the reserves with which to do so – as I set out in a previous blogpost.

Much as I’d like to see the reform coming through, I can’t see it happening. Not least because the cliques at the top of both organisations have a very strong vested self-interest in keeping each other where they are. Thus it is easier for them to put on a united front over any possible threat compared say with the EU – whose response to the financial crisis has been utterly woeful. In principle, the EU is an ideal institution to take on those vested interests in international sporting bodies, but the reality is that the EU has become so dysfunctional itself that it probably wouldn’t know where to start.

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