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Peter Ueberroth and the 1984 Los Angeles Olympic Games

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Peter Ueberroth and the 1984 Los Angeles Olympic Games Rings ofPower Peter Ueberroth and the 1984 Los Angeles Olympic Games By Claudia La Rocco The 41-year-old Ueberroth was the But he now faced a Herculean task: founder and head of First Travel Cor- organizing and financing an enormous On August 12, 1984, Peter Ueberroth poration, then the largest travel busi- event that he, along with a majority of stood in the Los Angeles Coliseum ness in North America save American Los Angeles citizens, had voted against during the Olympic closing cere- Express (he sold the company for $10.4 funding, amending the city’s charter monies, tears escaping his usually tight million nine months after joining the so that taxpayers would not be control as the 93,000-member audience Olympic committee). Used to challenges, responsible for the then-expected stood and cheered. Other honors he had paid his way through San Jose Olympic deficit. Los Angeles wasn’t would follow, including recognition State College with odd jobs and a happy to have the Olympics again (the from Time as the magazine’s Man of partial athletic scholarship in water city had hosted the games in 1932) the Year, over President Ronald Reagan. polo before rising quickly in the and the International Olympic Com- Neither an athlete nor a statesman nor business world. mittee (IOC), for its part, wasn’t par- a celebrity, Ueberroth was a middle- ticularly thrilled to be there. aged entrepreneur from Southern But beggars can’t be choosers. John California, a self-made man who had, Argue, a local lawyer and president of in large part, made the Games of the the Southern California Committee 23 Olympiad happen — and not only for the Olympic Games, had negoti- happen, but succeed on a spectacular ated with the IOC and the United level. In doing so, he changed many States Olympic Committee to bring of the financial rules by which the the games to the city. Soon after he Olympics had been played. “The organizers were able secured the deal, the city amended its On March 26, 1979, Ueberroth was to crow about the glories of charter; when the IOC demanded that chosen as president and general manager capitalism and the critics the city, and not the private sector, of the Los Angeles Olympic Organizing of the games were free to must be in charge of the games, Los Committee (LAOOC). One of two sermonize about the horrors of Angeles Mayor Tom Bradley responded finalists, along with Edwin Steidle, he quickly and unequivocally: Withdraw was selected when the board of direc- capitalism. For any television the bid. The IOC had to concede — no tors’ executive committee decided by a viewer who preferred sports other city, beside a half-hearted Tehran, vote of 9-8 not to give Steidle more time to hamburger commercials, had made a bid to serve as host. The to straighten out a contract dispute with the critics had a point.” IOC soon changed its charter so that a May Company Stores, of which he was — Allen Guttmann private group could run the show. then chairman. The reasons for this lack of interest Financial History ~ Spring 200410 www.financialhistory.org that in Canada, in Montreal, we will present the games in the true spirit of Olympism, very humble, with simplic- ity and dignity.” Anyone with knowledge of Dra- peau’s penchant for squandering tax- payer funds on extravagant building projects must have winced at his esti- mation that the games would cost only $125 million, particularly as the federal government offered no financial guar- antee. When all was said and done, Montreal, the official guarantor, was left with a bill of almost $2 billion, and a special tobacco tax to balance the deficit. The tab for each Montreal taxpayer was an estimated $700. Determined to make the games profitable for the first time in more than 50 years, Peter Ueberroth, along with his executive vice president, Henry Usher, turned toward the pri- vate sector.i Much of the LAOOC’s plan rested on securing a lucrative domestic television rights deal with one of the major networks. Ueberroth was after the then-laugh- able sum of $200 million. ABC even- tually purchased the rights for a record $225 million, almost half of what the LAOOC spent on the games. At the same time as the fledgling committee set its sights on future con- tracts, it was in desperate need of cash to continue daily operations. Instead of asking for a handout, Ueberroth asked for a deposit. In the spring of 1979, with the negotiations for U.S. s i b television rights just getting under r o C way, the LAOOC required all bidders 1960 Olympic gold medalist Rafer Johnson lights the Olympic rings to pay $500,000. Each deposit (along at the Opening Ceremonies of the 1984 Summer Olympics. with the additional $250,000 that the in the Olympics had to do partly with money. Holding the Olympics had final five bidders put down for formal the troubled politics of the times. A become increasingly burdensome, negotiations) was refundable, of massacre of student protesters before despite efforts to reduce their balloon- course — but, in the meantime, the the 1968 Mexico City Olympics and the ing scale and cost. As author Allen Los Angeles committee was free to live Palestinian slayings of Israeli athletes Guttmann notes, prior to the planning off the interest generated by these during the 1972 Munich Games had left of the 1976 games, Montreal Mayor hefty payments. potential host cities wary of violence Jean Drapeau declared that the city’s Just because the LAOOC had and terrorism. Boycotts had become a Olympics would be run with an eye money did not mean employees were concern, with 22 African nations stay- toward austerity. “The Olympics should free to spend. Ueberroth was deter- ing home from Montreal in 1976. not come as an astronomical enter- mined to keep the committee lean. The The bigger reason, though, was prise,” he pronounced. “We promise frugal millionaire eschewed his own www.financialhistory.org11 Financial History ~ Spring 2004 leader at the top. That’s what the Olympic committee had.” There is no doubting Ueberroth’s financial brilliance. The numbers speak for themselves, from ABC’s extraordi- nary bid (plus another $33 million from European and Japanese networks) to the revenue from corporate sponsors to $139.9 million in ticket sales for an “I believed then, as I do now, Olympics that Californians hadn’t even that there are many important wanted to host. programs much more deserving s Well aware that the 380 sponsors i b r of government support than a o of the 1980 Lake Placid Olympics C sports event, even one as spe- Peter Ueberroth was named Time magazine’s brought in only $9 million, Ueberroth Man of the Year for 1984. limited the number of corporate spon- cial as the Olympic Games.” sors to 30, banking on the lure of — Peter Ueberroth salary (though he was later granted a exclusivity to bring in larger bids. He controversial $475,000 bonus) and wasn’t disappointed. Los Angeles established symbolic practices such as raised a whopping $130 million from to individual citizens and corporate the “no limousines” rule. Some of his such companies as Anheuser-Busch, sponsors (AT&T ended up as official approaches, such as using or renovating Coca-Cola, M&M Mars (Snickers) sponsor, paying for all logistical existing buildings whenever possible and IBM. Another 43 companies were costs). The money would go to benefit instead of building expensive new sta- licensed to sell “official” Olympic local community athletic associations. diums, made good sense. At times, products, from McDonald’s Olympic Greece, in particular, objected to what however, Ueberroth’s penny pinching hamburger to Budweiser’s official they saw as the commercialization of ended up costing him. This was the domestic Olympic beer. In the end, the Olympic flame. case with a three-story administrative despite a Moscow-led boycott, the Ueberroth had no patience for such center the LAOOC built on the UCLA LAOOC turned a $215 million sur- qualms, particularly when he saw that campus; the $3 million building was plus — dwarfing the $15 million the economy of the town of Olympia meant to house a permanent staff of number the sly (some would say depended in large part on selling the 350, Ueberroth’s projected number of duplicitous) Ueberroth had floated as flame, from the “Olympic Flame how many people it would take to run a possible profit, and upsetting many Hotel” to gift shops selling little plastic the games. By the time he realized this business partners who felt they had torches. Further, as he (along with many figure was absurdly low (the committee been tricked into underselling their others) notes in his memoir, Made in eventually swelled to about 1,750), products by Ueberroth’s perennial America, the torch relay is hardly a it was too late. After a year, the com- lament of being broke. sacred, ancient Greek ritual, but a 20th- mittee outgrew the UCLA building. There were other critics, who century invention by the Nazi regime As Los Angeles Times reporter dubbed the games “the Hamburger during the 1936 Olympics in Berlin. As Kenneth Riech documents in his book Olympics” amid complaints of ram- editors Alan Tomlinson and Garry Making It Happen, Ueberroth’s need pant commercialism ruining the spirit Whannel write in their introduction to for financial control (Usher’s approval of the event. As Guttmann notes, when Five Ring Circus, the Olympics have was required for any expenditure over the United States Olympic Committee never been entirely divorced from eco- $1,000) also led to a good deal of objected to the Miller Brewing Com- nomic and political realities.
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