NBC's Circle GameRick Horrow and Karla Swatek
From the beginning of time, it seems, Switzerland has worked hard to maintain its neutral status. Wars have torn apart the European continent for millennia, yet Switzerland has remained remarkably unscathed. In the sports realm, the country has also avoided any negative inference—it's known primarily for producing Roger Federer, the best tennis player to grace a court in our lifetimes, as well as some pretty darn good Alpine skiers.
In the past two weeks, however, Switzerland has been ground zero for two votes that will affect the global sports industry for at least another decade. Last week in Zurich, Swiss native Joseph "Sepp" Blatter, a top FIFA steward for the past 36 years, was reelected as FIFA president despite a tsunami of scandals. This week in Lausanne, NBC cemented its role as the primary curator of the Olympic Games in the U.S. when its $4.38 billion bid earned it the rights to broadcast the Games through 2020. With broadcast rights secured for an as-of-yet homeless contest in 2020, the U.S. Olympic Committee, which had decided to sit out the 2020 bidding process, is now under pressure to bid for the 2020 Games.
It might be the only time in which 2020 doesn't equal perfect vision.
Olympic TV Rights
While longtime NBC Sports head Dick Ebersol's abrupt resignation from NBC at first upended all assumptions about the future of the Olympics on TV, it was business as usual for the Peacock Network this week, as NBC won the rights to televise the Olympic Games in the U.S. 2014-20, for the tidy sum of $4.3 billion—an amount equal to the entire 2008 GDP of Fiji.
NBC's bid for four Games was almost $1 billion higher than the bid put forth by Fox, the runner up, yet Comcast (CMCSA) Chairman and Chief Executive Brian Roberts assured company shareholders that NBC's plan would be profitable. "It was strategically important for us to have a long-term relationship," Roberts told media assembled at the bid site. "To have four more Games, not just two more Olympics, was of great value to us and a big part of our strategy. … We're very, very comfortable where this ended up."
Roberts added that he envisioned NBC's Olympic investment could turn a profit by combining NBC's main broadcast platform and cable networks with Comcast's sports properties, comprising Versus, Golf Channel, and 11 regional sports networks. Analysts have noted that the Olympics deal could help make Versus a more powerful player in the sports universe, coupled with the cable concern's retention of NHL rights and adoption of such other NBC programming as Notre Dame football. (Regis Philbin as spokesman, anyone?)
The Olympic Games are estimated to cost NBC $775 million in 2014 (Winter Games in Sochi), $1.226 billion in 2016 (Rio de Janeiro), $963 million in 2018 (Winter, TBA July 6 of this year) and $1.448 billion in 2020 (Summer, also unsecured for now). This is the first time an American rights holder has committed to a multibillion-dollar rights fee without the USOC bidding to host the Games—in 2003, the last time the IOC auctioned off the rights, New York was in the running to host the 2012 Games, eventually won by London.
The potential repercussions of Ebersol's resignation were made apparent last week, when sources told SportsBusiness Journal that CBS (CBS) and Turner Sports started kicking around the idea of making a joint bid. CBS and Turner's decision to revisit Olympic rights marked a reversal from weeks earlier, when executives thought the price tag was too high. After Ebersol's resignation, CBS and Turner execs believed they had a better shot at winning, as did executives at ESPN and Fox Sports.
NBC's bid was largely based on the idea that it will maintain Ebersol's vision better than other networks, since most of his key Olympic staff are still important influencers at the network (including Gary Zenkel, the network's Olympics president, most of the producers and sales execs who have worked with the IOC, and anchor Bob Costas—for Americans, long the face and voice of the Games.
As Fox Sports' Brian Lowry noted, one issue front and center in NBC retaining the Games is that a "broadcast network has retained one of TV's preeminent sports showcases, denying ESPN's bid to acquire the Games, which would have meant shifting more coverage of another marquee event to cable."
While "'Free TV' might be a misnomer," Lowry added, "there's still a difference between a broadcast network, like NBC, and ESPN."
Further, as newly minted NBC Sports Group Chairman Mark Lazarus indicated on NBC's own Nightly News, the network makes a "strong business case for carrying the Games.
"We feel that our new company, NBC Universal with our parent at Comcast, is in a unique position to know the value of the Games," Lazarus said. "Not only that, we have more platforms and more ways to reach consumers." And when asked about NBC's plans to carry all or most Olympic events live in this day of 24/7 global Internet access, Lazarus responded, "We will make every event available on one platform or another live … including more streaming to the marketplace in real time."
But that doesn't mean NBC will cut back on Ebersol's established storytelling format, which featured the personal, and often heart-wrenching, stories of athletes almost as much as it did sanctioned Olympic events. Lazarus defended the NBC precedent and promised more of the same. "We've done a lot of learning over the years as NBC has broadcast the Olympics and many sports," he said. "I think you'll see that we'll start to provide more live coverage on multiple platforms, whether through broadband, through the tablets, through mobile devices. But we will still focus on telling broad stories about sports, broad stories about the athletes, broad stories about the trials and tribulations and how these great athletes come to the Games."
Will the U.S. Jump Back into the Ring(s)?
In the wake of NBC's Olympic bidding victory, USOC Chief Executive Scott Blackmun said he had talked informally to people in a few American cities, including Patrick Ryan, head of the failed Chicago 2016 bid, about throwing America's hat back into the Olympic rings for 2020. Blackmun stressed that the first order of business for America's Olympic governing body, however, is "resolving the long-standing dispute over the shares of U.S. TV rights [12.75 percent] and the IOC's global sponsorship program [20 percent] that the U.S. currently receives." With the IOC and USOC negotiating over the USOC's broadcast and marketing rights shares, IOC President Rogge said the new NBC deal figures to be a "positive factor" in the discussions.
Added Rogge of the likelihood of a U.S. bid: "If there is a bid coming for 2020 from the U.S.A., we would be very happy." Officials from several U.S. cities, including Dallas, Pittsburgh, Minneapolis/St. Paul, and Tulsa, "have made public expressions of interest in bidding for 2020." Interested countries have until Sept. 1 of this year to submit a formal application for the 2020 Games.
According to its most recent tax filings, thanks largely to a boost in Olympic TV rights fees, the USOC's total revenue is up 22 percent from 2006, contributing to total assets of more than $179 million as of 2010. During 2010, in which Team USA won the medal count at the Winter Games in Vancouver, the USOC generated $250 million in revenue, aided by sponsorship and licensing royalties of $72 million.
The Blatter Blotter
Despite the newest wave of scandals that began engulfing FIFA and soccer's universe last week, Joseph "Sepp" Blatter was reelected as FIFA president. But Blatter's attempt to bury soccer's latest vote-buying and World Cup bidding scandal, just as he had glossed over other allegations before, almost didn't go in his favor.
When the FIFA annual congress convened in Zurich, both the English and Scottish Football Associations tried to delay the presidential election because of vote-buying allegations made by Chuck Blazer, U.S. executive committee member. Blazer alleged that CONCACAF President and FIFA Vice-President Jack Warner "had conspired with Blatter's presidential challenger, Mohamed Bin Hammam, to bribe 25 Caribbean football associations with $40,000 each."
Germany's football federation also called for an investigation into how Qatar, clearly a dark-horse candidate, won the bidding for the 2022 World Cup. Serious questions about that process were raised in an e-mail produced by Warner.
As many people in sports and politics have quipped of late, this is just the end of the beginning for Blatter and FIFA. Since last week's vote, Blazer has dismissed claims that his allegations were part of an American conspiracy to reopen the questionable 2022 World Cup bidding process.