Making its bid: New York City looking to land Summer Games

On Sunday, the 123-member United States Olympic Committee chose New York to be the United States candidate city for the 2012 Summer Olympics, beating out San Francisco. Between now and 2005, the U.S. candidate must compete against a field that is likely to include Paris, Rome, Moscow, Rio de Janeiro, as well as potential cities in Spain and Germany. The International Olympic Committee will make its decision in three years, giving the winner seven years to prepare for the event. If New York wins, it will be the first Summer Olympics to be held in the U.S. in 16 years -- setting off a flurry of $3.5 billion worth of infrastructure activity, and creating renewed American interest in the Olympics.

In addition to the frenzy of activity that will be set off in New York over the next two years, the Olympic movement faces challenges for the 2004 Summer Games in Athens and the 2008 Games in Beijing. A recap of the business issues seems necessary.

The New York 2012 bid: Next steps

In the end, the United States Olympic Committee chose New York because it thought the region had the best chance of getting the Games to the United States as it takes on formidable international competition. In fact, New York has raised over $13 billion to create its bid package. Venues are centered in the city with none more than 14 miles from the Queens-based Olympic Village. All of the venues are accessible by train and ferry -- part of the bid was actually modeled around the Sydney centralized Olympic Park for the 2000 Summer Olympics.

The biggest challenge is building the public infrastructure necessary to complete the effort. For example, the New York bid requires the completion of a $1.5 biillon-$2 billion stadium on Manhattan’s West Side. The plan calls for the extension of the No. 7 subway line at a cost of at least $1.5 billion, construction of 4,300 apartments in an Olympic Village on the East River, plus a number of smaller sites like a velodrome, a white water canoeing course, and facilities for equestrian, archery, beach volleyball, and the like. New York Olympic founder Dan Doctoroff boasts that the plan would be "the largest single investment in recreational facilities in New York history." The facilities would be paid largely by tax and development revenues, with Doctoroff arguing that the Games generate $3.3 billion in revenues with no public funding required. Of that, $2.1 billion would be needed for the operating costs of the Games, and the remaining $1.2 billion would be invested in parks and recreational facilities.

The Jets have expressed interest in joining forces in building the stadium, along with expanded convention facilities and possible Super Bowls to boot. Backers are counting on a wellspring of positive sentiment after the USOC New York Olympic choice, along with favorable public feeling for the Olympics in general. After the Olympics in Salt Lake City, 83 percent of Utah residents expressed positive support of the Games, as well as the facilities they created.

Clearly, the persuasion effort is just beginning. Sept. 11 may have played a part in the initial selection. In fact, some say the IOC might view New York with a higher level of security concerns. Also, the Sept. 11-oriented sympathy may be much less prevalent in 2005.

On the other hand, supporters point to the $11 billion of economic impact and 135,000 jobs that a New York Olympics might create. The effort will also emphasize the intangible qualities of New York -- that it is "the world’s biggest stage, a perfect place for dreamers from every corner of the Earth." The campaign will no doubt increase significantly as time passes.

The upcoming Olympic challenges: 2004 in Athens and 2008 in Beijing

The largest financial key to future Olympic Games remains television. NBC has bid $2.3 billion for a three-Olympic package that includes $793 million for the 2004 Athens Summer Games, $613 million for the 2006 Winter Games in Turin, Italy, and $894 million for the 2008 Summer Games in Beijing. NBC is planning to televise 429 hours of the ’04 Athens Games, 12 hours less than aired for the Summer Games in Sydney four years ago. The network seems to focus on reducing its quantity of hours, while selling at a higher rate. The network is also attempting to creatively market by inserting other companies’ products into its own promotion for future Olympics. NBC remains buoyed by its $75 million Salt Lake City profit after grossing $20 million more than planned.

As for Athens specifically, the government is estimating a $6 billion Olympic tab, though the Athens Organizing Committee remains on track with its $1.7 billion revenue projection. Athens has asked the European Union for accelerated infrastructure funding, and the IOC has pledged $1.1 billion to the Athens Games. The committee has raised over $200 million from sponsors, well on the way toward its $500 million sponsorship goal.

As for Beijing, the $23 billion budget is more than seven times the size of budgets for Salt Lake City and Sydney, more than five times the projected spending for the 2004 Athens Games, and more than 32 times what Los Angeles spent for the 1984 Games. The Chinese government is attempting to spend consistent with their Olympic slogan: "New Beijing, Great Olympics." The government seeks to use Olympic spending to modernize Beijing and transform its airport, telecommunications links, roads, railroads, and otherwise. Their executive director believes organizers might be able to raise over $700 million from "highly motivated" corporate sponsors. The Chinese government will test its "motivational capabilities over the next few years."

A review of the Olympic governing bodies themselves: USOC and IOC

The USOC is rebounding from its $107 million deficit announced in 2001. The Salt Lake City Games generated more than $100 million in profits for the USOC and the Salt Lake Organizing Committee. Additionally, roughly $32 million in funding expanded various venues, and a $40 million endowment helped preserve the USOC legacy over time.

Corporately, the 2002 Salt Lake Games attracted a record $869 million in sponsorships. However, the USOC will be hard pressed to continue that momentum from Corporate America, as no Olympics will be coming to the United States for at least another decade. To make matters even more difficult, a Harris Interactive Poll reveals that only eight percent of American sports fans consider themselves "diehard" Olympic fans, as compared to at least four times that number for the NFL, NBA, and other sports. To combat this problem, the USOC has prepared a multi-million dollar ad campaign including a major push to sell Olympic goods during the holiday season (keyed to last year’s Winter Games success). It is also hoped that the activity surrounding the New York 2012 bid will help generate corporate interest in the coming years as well.

As for the International Olympic Committee, it is expected that its Nov. 26-29 meetings in Mexico City will focus on specific recommendations to cut the size of venues, bid expenses, and overall costs. For example, IOC President Jacques Rogge has noted that the number of credentials issued to athletes, officials, journalists, volunteers, and support staff grew from 130,000 in Barcelona in 1992 to over 185,000 for the Sydney Olympics (as compared to only 10,000 athletes who participated in the Games).

While the International Olympic Committee may attempt to downplay the scope of future Olympic Games, there is no doubt that the Olympics continue to dominate the worldwide sporting stage. Approximately 2.1 billion people watched "some or all" of the Salt Lake Games, and many more are expected to view the Summer Games approximately a year and a half from now in Athens. As the Olympic movement continues its unprecedented growth and development, New York seeks its place on this worldwide stage in the upcoming years.