"Hello, partner": USOC, IOC resolve financial differences

QUEBEC CITY, Canada -- It was about an hour after the U.S. Olympic Committee and International Olympic Committee had announced they had signed the agreement that had ended seven years of talks over how to split certain key revenues, and USOC board chairman Larry Probst was standing in the hall of the sprawling convention center here when up came Thomas Bach. An IOC vice president, the president of the German Olympic committee, Bach is one of the most influential senior officials in the movement.

As he approached Probst, Bach had a big smile on his face. He said, simply, "Hello, partner."

Such a remark would have been literally unthinkable a few years ago -- as recently as October, 2009, when Chicago was unceremoniously booted out of the voting in Copenhagen for the 2016 Summer Games, won by Rio de Janeiro.

But not Friday. Bach wasn't the only one seeking out Probst and, as well, Scott Blackmun, the chief executive of the USOC. Here was Rene Fasel, the Swiss president of the international ice hockey federation, sliding up to Probst to talk up the Stanley Cup finals and to inquire whether Probst -- who lives in Northern California -- might be around because Fasel was for sure going to be down in L.A. to catch the Kings.

It has been said many times before when explaining the way the Olympic movement really works but on the occasion of the deal signed Friday that re-arranged the financial ties between the USOC and IOC it bears repeating: relationships are everything.

The USOC and IOC jointly announced Friday that they had signed a new revenue sharing agreement between them that runs from 2020 until 2040.

The deal resolves a longstanding dispute over the USOC's share of television and marketing revenues that had undermined the American committee's standing in the Olympic movement and played a key role in sinking Chicago's 2016 and New York's 2012 bids.

Now the USOC will weigh whether to bid for the 2022 Winter or 2024 Summer Games.

New York and San Francisco would seem to top 2024 possibilities, with Chicago of course under consideration as well, maybe even Los Angeles. Though Dallas and Houston have floated interest, there's little to no suggestion they can win internationally.

Denver, Reno-Tahoe, Salt Lake City and Bozeman, Mont., have indicated 2022 interest.

There are arguments to be made for 2022 or 2024. That said, it's plain the Summer Games are, and always have been, the IOC's big prize.

The USOC board intends to meet next month in the Bay Area, and the bid game figures to be a big topic. "Our strategy is to develop a strategy at this point," chief executive Scott Blackmun said at the  news conference announcing the revenue deal.

Rogge was at that conference, too. He said, "This is a very happy moment for the IOC as well as for the USOC. This agreement will definitely strengthen both sides."

The genesis of Friday's announcement is a deal that was signed in 1996 designed to run for -- honestly -- forever. It gives the USOC a 12.75 percent share of U.S. broadcast revenues and a 20 percent cut of Olympic top-tier marketing revenues. Over time, key IOC officials came to believe the USOC share was excessive. That led first to resentment and then outright hostility.

Talks aimed at striking a new deal began in 2005.

In reality, this deal started on Oct. 3, 2009, the day after Chicago got smacked down in Copenhagen, and Probst was left to figure out how the situation had gotten this bad, why no one on the American side had seen a first-round exit and, maybe worst of all, why the president of the United States had been invited to stump for Chicago in person, President Obama's hometown, only to have the IOC reward the Americans with a mere 18 votes. Four years before, New York had gotten 19.

Probst vowed to become more engaged, and did. He hired Blackmun. The two said they would work at the relationship thing. They did. Big-time. They traveled the world. They didn't ask for anything special. They played it humble and low-key and said the USOC was simply trying to be one NOC among many, just another member of the Olympic family.

It took some time, naturally, for Blackmun and Christophe de Kepper, now the IOC director-general, to get to know and trust each other. They emerged as the point people on the deal, which essentially got done in a marathon session in recent days.

The deal essentially features three component parts:

- The USOC will pay a share of what's called Games costs;

- The USOC will take a lower share of incremental revenues for top-tier marketing revenues, 10 percent, according to the Associated Press, which first reported the figure.

- Same for TV, 7 percent, according to AP.

A working example:

Let's say the baseline television revenues for the four-year Olympic period, which in Games-speak is called a quadrennium, are $250 million. Let's also say inflation bumps that up to $270 million. The USOC will take its usual 12.75 percent share up to that $270 million. That would equal $34.425 million.

If, however, revenues for the quad actually end up being $300 million, the USOC will take that lower percentage, 7 percent, of the difference, the $30 million. That would equal $2.1 million.

Total (again, these numbers are totally made up): $36.525 million.

What isn't made up is that NBC paid $4.38 billion to broadcast the Games from 2014 to 2020. The USOC gets 12.75 percent of that. Do the math.

This is critically important to understand: the USOC is the only Olympic committee in the world that is self-sufficient. Everywhere else, the Olympic committee gets government funding. Not the USOC. Through the 1978 law that set it up, Congress said the USOC must be self-sufficient. That's why the USOC can't -- and couldn't -- give up its broadcast or marketing revenues.

Philosophically, the IOC understood all along that the USOC is a leading contributor to the Olympic scene. It also understood that NBC agreed to pay $4.38 billion in part because the U.S. team wins a boatload of medals and because the likes of Michael Phelps and Ryan Lochte and Lindsey Vonn and Shaun White plant viewers in front of television screens. That's inarguable.

At the same time, the IOC might now go about and make deals in emerging market -- China, India, Brazil. It's fair for the USOC to give on those deals.

The obvious question: why did it take seven years to get to Friday?

Because Probst and Blackmun inherited ill will and, as Blackmun put it, "It's all about relationships, and you can't build relationships overnight."

Probst on Friday recalled his first meeting with Puerto Rico's Richard Carrion, who along with Gerhard Heiberg of Norway and de Kepper formed the IOC's negotiating team. This was at the Vancouver 2010 Olympics. "More of a lecture," Probst said, laughing, saying that since then he and Carrion -- and their wives -- have become genuine friends: "It's all about friendship, partnership, relationship."

"In Copenhagen," Probst said, "I was a deer in the headlights. Things have changed."

In Copenhagen, many of the words directed at and about the Americans were unpleasant. Things have changed.

Another IOC vice president, Singapore's Ser Miang Ng, called Friday's announcement a "historic moment," saying it was the "start of a new relationship between the USOC and the Olympic family, not only the financial aspect but the goodwill it is creating and the opportunities it is creating for everybody."

Denis Oswald, a Swiss lawyer who is on the 15-person IOC executive board, declared, "It's very important. It was our wish that the USOC comes back as a full member of the family and understands they have to be a part of it. I think it's a good solution."

"It's a real milestone," Bach said.

"It's a win-win situation. For everybody. For the IOC, for the USOC, for everybody. It's a great success for Jacques Rogge," Bach said, adding a moment later, "For him personally, it's a great day. Now the way is free for many things."