Auction kicks off for U.S. Olympic broadcast rights


London, shown May 30 during a test event for the Olympic marathon, will host the Summer Games next year, and American networks are currently bidding for the broadcast rights. (Bryn Lennon/GETTY IMAGES)
June 6, 2011

The financial and political well-being of the U.S. Olympic Committee rests in part on the price the International Olympic Committee can command for U.S. Olympic broadcast rights during a two-day auction that kicked off Monday in Lausanne, Switzerland.

The IOC is expected to award the rights for the 2014 and 2016 Olympics — and possibly the 2018 and 2020 Games — late Tuesday after NBC, ESPN and Fox submit sealed bids. Fox gave a presentation outlining a plan for four Games on Monday, a source with knowledge of the talks said; NBC and ESPN will present their proposals Tuesday.

A winning bid that significantly exceeds the $2 billion NBC paid for the 2010 and 2012 Games eight years ago would position the USOC to hand over long-sought international financial givebacks considered necessary to stem the anti-American sentiment that many believe doomed New York’s bid for the 2012 Olympics and Chicago’s for the 2016 Games.

Yet analysts say it’s unclear whether the post-recession bids will rise substantially — or at all — especially given that NBC announced $221 million in losses on the 2010 Games in Vancouver and has projected some $250 million in losses on the London Games next summer.

“I don’t anticipate any significant increase in rights fees for 2014 and 2016,” said Neal Pilson, a former CBS network executive who advised the IOC during the last U.S. television rights negotiation. “You just can’t get away from NBC’s possible half-billion [dollar] losses for Vancouver and London.”

Said Canadian IOC member Dick Pound, who led the organization’s broadcast team in previous years: “It’s generally acknowledged that NBC overpaid for the 2010-12 package.”

Pilson pointed out that the financial dynamic could change in bids for the next four Games, as networks’ long-term financial projections might be more promising. The IOC said it would accept bids for either all four Olympics or just the 2014 Winter Games in Sochi, Russia, and the 2016 Summer Games in Rio de Janeiro. The sites for the 2018 and 2020 Games have not yet been determined.

Pilson speculated that NBC, which was recently bought out by Comcast and has held Olympic rights since 2002, would have the edge in a two-Games bidding process, but that either Fox or ESPN/ABC likely could muster a better bid over a four-game stretch.

The USOC is not directly involved in deciding which network wins the Games, but a controversial 1996 contract with the IOC guarantees the USOC 12.75 percent of the U.S. broadcast rights fees. That percentage produced more than 40 percent of the USOC’s revenue for the current quadrennial.

It “is the single largest revenue source for the USOC on one line item,” said former USOC chief executive Jim Scherr, who runs the consulting company 776 Original Marketing.

That allotment, along with the 20 percent of the IOC’s top sponsorships that the USOC also receives via the ’96 deal, has grown increasingly controversial in the global sport community.

The USOC resumed what had been stalled talks this year over a renegotiation of the deal, but U.S. officials have been wary about agreeing to reduce their take without ensuring that U.S. broadcast rights increase and the overall revenue pot grows.

“If the pie shrinks, that will only put more pressure on the revenue-sharing issue between the IOC and USOC,” Scherr said. “If the pie expands, it’s obviously a much easier negotiation.”

The USOC officials have indicated they won’t bid for another Olympics until the revenue-sharing matter is resolved. Bids for the 2020 Summer Games are due this fall, and the USOC has not submitted a candidate.

The first sign of progress in the talks came last September when the USOC agreed to chip in about $18 million toward the administrative costs for the 2010 and 2012 Olympics.

Reaching a comprehensive deal, however, could take years. The timeline certainly won’t be hastened if the winning bid in Tuesday’s auction stays essentially flat or decreases from the last bid session in 2003.

“All of the networks are well aware of NBC’s losses in Vancouver and their projected losses in London,” Pilson said. “I don’t think any other network can sell the Olympics any better than NBC or substantially cut costs any better than NBC.”

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