Olympic organizers are $600 million short of what's needed to pay for the 2002 Winter Games, money that's going to be harder than ever to raise because of the ongoing bribery scandal.
That number represents more than 40 percent of the $1.45 billion budget and is much higher than previously suggested. But new Salt Lake Organizing Committee President Mitt Romney said there's no cause for alarm.Romney's confident he can come up with the money needed, especially since more than one-fourth of the $600 million is anticipated from the sale of Olympic tickets.
He's also taking on the job of chief fund-raiser for the Games, starting with one of the most critical Olympic sponsors that has yet to commit to 2002, a company that has labeled such deals "radioactive."
But Romney still has SLOC staff looking for ways to reduce the $1.45 billion budget that was approved last fall after an exhaustive -- and expensive -- review.
"We've got to make sure this is a financially successful venture for all involved, which means making sure revenues and costs are matched," he told the Deseret News.
That was a tough job even before Salt Lake City was accused of trying to buy the votes of International Olympic Committee members with more than $1 million in cash, gifts, scholarships and other inducements.
Long before the word "bribe" was associated with Salt Lake City's Olympics, organizers had hired a big-league consulting firm at a cost of $750,000 to overhaul the budget.
That firm, the San Francisco-based Bechtel Corp., balanced the books and came up with a bottom line that was nearly $200 million more than organizers thought they'd have to spend.
The new budget had been in place only a few months when the scandal began attracting worldwide attention. But it has not been the kind of publicity the companies being courted to sponsor the Games want to be associated with.
Salt Lake's bid for the 2002 Winter Games is the subject of at least a half-dozen investigations, including an ongoing criminal probe by the U.S. Department of Justice and other federal agencies.
The IOC has already implicated 14 members in the scandal; the SLOC Board of Ethics added 10 more names to the list. All could be ousted during a special IOC meeting next month that will make headlines around the globe.
It's in this atmosphere that Romney has to make up the budget gap. The Boston-based financier has only been on the job since Feb. 11, when he was named to replace SLOC Chief Executive Officer Frank Joklik.
His first hope is to find the money needed. The Games are supposed to be funded almost entirely through private sources, although $171 million is expected from the federal government to pay for security and other needs.
Romney said there might be more funds available from the federal government. But he declined to provide any details, saying he didn't want to "spook" SLOC's chances of getting additional revenue.
He is more sure of his success in getting corporate sponsors to sign on the dotted line. In the next week or so, he'll meet with David D'Alessandro, the outspoken head of John Hancock Financial Services.
D'Alessandro is so fed up he's written lengthy opinion pieces for the New York Times and other newspapers detailing why he's not spending $20 million budgeted for commercials on NBC during the 2000 Summer Games in Sydney.
He has used the word "radioactive" to describe sponsorships and called for radical reforms, saying the Swiss-based IOC isn't doing enough to clean up its act.
John Hancock is one of 11 international sponsors of the Olympics. It's the IOC that deals with those so-called "top" sponsors, not local organizing committees.
But Romney, who knows D'Alessandro from Boston, isn't waiting for the IOC to act. Romney said a meeting has already been set up for him with D'Alessandro through a mutual friend.
The IOC has signed only three sponsors for the 2002 Winter Games so far: Coca-Cola, Sports Illustrated and Sema, a French computer company that's taking over the slot held by IBM.
The U.S. Olympic Committee is doing better. A longer list of sponsors is already on board, including General Motors, Anheuser-Busch, Delta Airlines, Home Depot, Texaco, Seiko, York International, US WEST and NationsBank.
But US WEST was slow to make a $5 million payment due recently and NationsBank is starting to worry about whether SLOC is good for the $170 million credit line extended as part of its sponsorship.
Romney wants to play a bigger role in dealing with national sponsors. Right now, the USOC controls the Salt Lake-based joint marketing venture selling the 2002 Winter Games and the U.S. Olympic teams as a package.
The joint marketing venture caps Salt Lake City's share of national sponsorship revenues at about $250 million. That limit could be renegotiated in the future.
So could Salt Lake City's contract with the IOC. Gov. Mike Leavitt and others have suggested the IOC needs to step up and help Salt Lake City recover financially from the scandal.
The IOC gets a share of everything the organizing committee earns and controls the sale of broadcast rights and international sponsorships. Then there are the perks.
At least $10 million is in the budget for upgrading hotel rooms and providing drivers, catered meals and other luxuries for IOC members during the Games -- money that some believe should be spent elsewhere.
"There is nothing that is off-scrutiny," Romney said. "Sometimes people think (the Olympics) are about a chance to make money or get somebody else to pay for something."
And while SLOC may be contractually obligated to take care of the IOC members in the style to which they are accustomed, Romney said there's at least one option. "You can still make a stink."
But IOC Marketing Director Michael Payne said there should be plenty of money for the 2002 Winter Games without IOC concessions, given the size of SLOC's budget.
"Previous organizing committees have put on great Games for much, much less," Payne told the Deseret News. "Let's take a look at where all the expenses are. It's not possible to be that far off the mark."
Other organizing committees, though, did not have to budget for facilities construction and other expenses picked up by local, regional and national governments.
Utah taxpayers did contribute $59 million toward the construction of Olympic facilities along the Wasatch Front, including the bobsled and luge track near Park City.
But SLOC is obligated to pay that money back, along with another $40 million to cover the operating and maintenance costs of the facilities after the Games are over.
Romney said while that budget item won't be on the block, he is looking for expenses that aren't needed to actually put on the Games. For example, he said, volunteers might only get a coat from SLOC instead of a full outfit.
The contingency plans that SLOC staff is putting together should be ready in a few months, Romney said. He has already promised to bring the Games in on budget -- whatever the budget turns out to be.
"We will spend what we earn and no more. It is unacceptable to leave unpaid bills for taxpayers," Romney told SLOC trustees in his acceptance speech. "No shortfall is acceptable."
His bottom line, though, is that he expects to meet the existing budget. "I'm optimistic about revenues," Romney said. And if he's wrong? "I'd be surprised. But then, I've only been here a week."