IOC, NBC bet big together through 2032

IOC

The subject first came up last November. This was in New York. It was over dinner at DeGrezia, a small Italian restaurant on East 50th Street that features many private rooms.

The International Olympic Committee president, Thomas Bach, was in town to deliver a major political statement at the United Nations. While in New York, there was time for him — and a couple senior aides — to meet with a few top executives from the IOC’s longtime broadcast partner, NBC Universal. Thus this dinner.

NBC already held the rights to broadcast the rights to the Games in the United States through 2020. The IOC president knew this well.

What would you think, he said that evening, about the idea of a long-term partnership?

Brian L. Roberts, chairman and CEO of Comcast, and IOC president Thomas Bach, signing the $7.75 billion deal // photo courtesy IOC/Arnaud Meylan

Brian Roberts, chairman and CEO of Comcast, and IOC president Thomas Bach signing the $7.75 billion deal in Lausanne, Switzerland // photo courtesy IOC/Arnaud Meylan

This simple bet would launch a series of clandestine meetings — at The Olympic Club at the Sochi Games in February, and elsewhere — that culminated in Wednesday’s announcement of the $7.75 billion deal to extend NBC’s rights to the Games from 2021 through 2032.

That means six editions of the Olympics.

It is of course a financial play.

But it is so much more.

It is a fantastic triumph, professional and personal, for Bach.

It is a huge win for the entire Olympic movement, securing its financial future, in particular for the IOC and, too, for the U.S. Olympic Committee, which gets a share of the deal.

And it is a major coup for NBC, which secured the rights to the sports property that has for years, through ups and downs, given the network a consistent identity. The Olympics. no matter what, deliver ratings.

London 2012 was the most-watched television event in history, with 217 million viewers. Sochi 2014 was the “most-consumed” Winter Games ever. Even as technologies change, the Olympics drive numbers — whether in the broadcast or on emerging digital platforms — and, simply put, that’s why NBC was willing now to bet so much money into the future, the company’s executives said Wednesday.

Slightly more than half the viewers who watched Sochi 2014 on NBC also used a computer, a tablet device or a smartphone to get information about those Olympics while the TV was on, NBC has said.

It’s not just the IOC that is willing to make bets so far out into time. USA Track & Field three weeks ago announced a deal with Nike — believed to be worth about $500 million — through 2040.

And it’s not just NBC that is willing to pay big for live events.

ESPN has laid out $5.6 billion for Major League Baseball, $7.3 billion for a 12-year deal for the new college football playoff system, $15.2 billion for “Monday Night Football.”

CBS Sports and Turner Sports are paying $10.8 billion for 14 years — 2011 through 2024 — to show the NCAA men’s college basketball tournament.

Others, of course, have broadcast the Olympics — CBS, for instance, in the 1990s.

But over the years, only NBC — relying on its parent companies, first General Electric, now Comcast — has backed up its passionate commitment to the Olympics with really big money.

In two negotiations in 1995, it paid $3.5 billion for the rights to the Games from 2000 to 2008.

In 2000, for $2 billion, it bought the rights to the 2010 and 2012 Games. A GE sponsorship meant another $200 million.

In 2011, it paid $4.38 billion for 2014 through 2020.

The new deal, technically $7.65 billion for 2020-2032, includes a $100 million signing bonus to promote the Olympic movement from 2015 to 2020. Some significant chunk of that $100 million presumably will be used to help boost an Olympic channel that is now the subject of a feasibility study.

This new deal came together in a spirit evocative of the two 1995 deals — when Dick Ebersol headed NBC and Juan Antonio Samaranch the IOC, and it was all done quietly, without bids from other networks.

Here, too.

The 2011 process involved competitive bids, and for those tempted to ask why not this time, too, or to suggest that something might be amiss, there are realities that explain it elegantly.

Another thing Bach knew well is that in 2011 NBC outbid everyone else by a country mile. As a matter of fact, Fox was the only U.S. entity that even bid for four Games, the way NBC did. When NBC went big at $4.38 billion, Fox came in at $3.4 billion. ESPN opted only to bid for 2014 and 2016, and at $1.4 billion.

Accordingly, Bach knew to a certainty that in dealing with NBC he — that is, the IOC — was going to make money.

The new deal breaks down this way: $2.5 billion for 2022 and 2024. $2.55 billion for 2026 and 2028. $2.6 billion for 2030 and 2032.

On average, it represents a 15 percent increase per Games over the previous arrangement.

Really, though, that is not the deal point.

“This kind of deal is not only about money,” Bach said in a conference call with reporters.

“You know, you can maybe  — in one deal you can make one or the other dollar more and maybe have your product destroyed. We are thinking long-term in the IOC. We are here for 120 years, and we want to be there much longer. We want to leave a good legacy there to our successors.

“All these kind of strategic issues play a role. We have a responsibility. We are the trustees. We are the owners of the Olympic Games, yes, but we are the trustees of the Olympic movement. Therefore the balance has to be there between the protection of the Games, the promotion of our values and the financial consideration. There this deal reflects this consideration from our point of view in an excellent way.”

Going forward, it’s obvious — more than obvious — that this deal could in an excellent way boost the chances of a U.S. bid for the 2024 Summer Games. Indeed, Bach said Wednesday a “strong bid” from the U.S. would not only be “very much welcomed” but would be a “very strong competitor.”

To be super-obvious: if the principal broadcast partner of the IOC has put in more than $17 billion since those first deals were announced in 1995, has bankrolled the IOC with that kind of money, it will likely be made clear to everyone — particularly now that things are good again between the IOC and USOC — that the IOC would look favorably upon going to the United States, and for a Summer Games. In 2024.

Larry Probst, the USOC board chair and new IOC member, would only say Wednesday what he and Scott Blackmun, the USOC’s chief executive, have said for months — that the USOC is going through its process, and expects to have whittled down a list of potential applicant cities “sometime in the next few months.”

Los Angeles, Boston, Dallas and San Francisco are believed to be among cities under USOC scrutiny.

Other 2024 candidates from around the world are likely to include Paris but, frankly, it’s understood even in France that Paris could afford to run and lose. An American candidate would be in it to win, and win only, and there is a school of thought that announcing sooner in 2014 than later, particularly given this NBC deal, might well build up momentum that might be difficult indeed to beat.

The IOC will pick the 2024 winner in 2017.  It will pick a 2022 Winter Games site in 2015.

Bach, meanwhile, was elected president just last September, succeeding Jacques Rogge.

Since then, Bach has — at that United Nations appearance last November — outlined a clear vision for how sport and politics inhabit both separate but sometimes intertwined spheres of influence.

In February, he oversaw a Games in Sochi that — despite dire predictions from many beforehand and a $51 billion price tag — were generally an operational success.

He inherited roughly $900 million in reserves, a U.S. TV deal worth $4.38 billion and now has produced a new contract worth $7.75 billion. That means the IOC is and likely will be financially secure not only through his term, which presumably will run through 2025 but, incredibly, through 2032.

All this in but seven months since taking office.

Politically and financially, the IOC would now seem to be set for the next steps — all part of Bach’s big plan, aiming toward December and the IOC’s so-called “extraordinary session” in Monaco, when it will tackle the major issues that are part of what he has dubbed “Olympic Agenda 2020.”

In Sochi, the members floated 211 so-called “interventions” from the floor during their assembly. In Monaco, expect these major topics:

The Summer Games program; the bid process; autonomy and governance; and the structure of the IOC itself.

With this much cash now in hand, for instance, it’s plausible for the members to consider visits once again to cities bidding for the Games. If the IOC itself is paying for such visits, why not?

With this much cash in hand, for example, if the IOC is able to increase its outlay to an organizing committees for the Games to a level approaching or, better yet, over $1 million, isn’t it feasible to start considering a far more extensive use of temporary facilities? Bach has mentioned this notion many times over.

London got just over $750 million from the IOC in the 18 months ending Sept. 30, 2012, according to its March 2013 financial report. If an organizing committee got $250 or $500 million more, wouldn’t that directly translate into less money spent on capital costs? Wouldn’t that sensibly — logically and easily — be able to be explained to taxpayers, no matter where, that hundreds of thousands of dollars for a Games would be coming from the IOC, not from them?

“This is a happy day for the whole Olympic movement,” Bach said at the outset of that conference call, adding a moment later, without explanation, “We are happy for different reasons.”

You bet.

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