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BOA faces up to funding nightmare

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James Pearce | 15:47 UK time, Thursday, 3 March 2011

Now that everybody's had time to reflect on my revelation that the British Olympic Association doesn't have enough money to fund Team GB at the 2012 Olympics, it feels like the right time to try to answer the question that I've been asked over and over again during the past 24 hours.

How on earth has this happened?

The reaction from most people has been one of total surprise: "How is it possible that £9bn can be spent on the London Games, and yet we still can't afford to pay for the British team?"

However, you won't have seen any sports journalists falling off their chairs in shock at the news. We've known for several years that the BOA has been facing serious funding issues.

I told you back in June 2009 that the BOA had had to borrow £2m from Locog (the London Organising Committee) to keep the organisation afloat. Others have written similar stories since.


BOA chief Andy Hunt revealed the extent of the funding crisis

The BOA has changed a great deal since 2005 when London won the right to host the Olympics. The chairman, Sir Craig Reedie, and chief executive, Simon Clegg, have been replaced by Lord Moynihan and Andy Hunt.

The headquarters in south-west London have been sold (at a profit of several million pounds), and the organisation has moved to smart rented accommodation in the centre of the city. The ambitions of the BOA were always going to shift once a London bid had been successful.

It had suddenly become the National Olympic Committee of a host nation, and of course that brings new responsibilities. It also brought new opportunities - in particular, the chance to make the most of the higher profile that was bound to be given to British sport during the years leading up to the Games.

So, nobody would have been surprised, or even that concerned, when the BOA's new leadership team of Moynihan and Hunt first outlined plans to expand the organisation. The debate since, though, has been around the scale of their ambitions, and the cost.

The British Olympic Association actually has quite a limited role in the British sporting set-up. It's often described as a "glorified travel agent". That's because the organisation's main role only kicks in every two years. Its job is to send a team to an Olympic Games, kit them out, and to look after team members while they're there.

The reality is, that during the rest of the Olympic cycle, the BOA has little or no role at all, apart from attending the Youth Olympics and other smaller scale events.

That's because funding for elite athletes comes from UK Sport and not the BOA. Many other Olympic Committees around the world have far greater responsibilities than the BOA - many handle all the money that goes into elite sport.

That's not the case over here. The BOA doesn't get its hands on any lottery or government money. So in terms of power, UK Sport has far more than the BOA.

That's a source of tension. As soon as the BOA tries to expand, it finds itself treading on the toes of UK Sport. Take, for example, Sir Clive Woodward's much talked about coaching programme for the BOA.

UK Sport has never liked it. Why? Because it believes that that's its responsibility, and that its own programmes are absolutely fine without anybody else getting in the way.

Let's talk now about money. Normally, the BOA would raise cash by marketing the Olympic rings in its home territory. Those rights, though, have to be transferred to the organising committee if there's a "home" Olympics.

So currently the BOA doesn't have anything to sell. Before the London bid was successful a deal was agreed that Locog should pay the BOA about £30m over the seven years leading up to London 2012 in return for these marketing rights. Since 2005 those running the BOA have known that they had this guaranteed income.

The current BOA management have always claimed that that was a bad deal for the BOA. They say that it should have been worth much more. Whatever the rights and wrongs of that argument, one thing is for sure. The BOA has known for years that this was the case. When it started to spend more money, it did so in the knowledge of how much income it would be receiving from Locog.

And there HAS been a dramatic increase in the amount spent. For example, staff salaries have doubled to more than £4m. I understand that when last year's accounts are published in a few months time they will show yet another increase.

It doesn't take a mathematical genius to work out that if you have a guaranteed income of £30m over seven years and you spend £4m a year on wages, that doesn't leave a lot for much else.

The BOA does have other limited income sources. For example, it holds its charity Gold Ball every year. But the revenue from this is tiny compared to what's received from Locog.

The BOA will point to the fact that over the past two years the books have been balanced, but this is due to the millions that were raised from the sale of their headquarters and are now being spent on day-to-day operations.

Does all this really matter? It won't, as long as the BOA can fulfil its main commitment, which is to look after the British team at an Olympics - in particular, of course, the London Games. The BOA still believes that the money can be raised, but as I've hinted already, it doesn't have many friends in sporting circles.

There's a suspicion about empire building. That's why there's unlikely to be any cash coming the BOA's way from UK Sport or the government, and Locog believes that it's given enough already.

So it seems that if Team GB is to have the funding it wants at the 2012 Olympics then it's either going to have to be sponsors who step forward to assist, or the public. In the current economic climate that's not a particularly strong position to be in, especially as there's little incentive for sponsors to get involved when they're not allowed to use the prized logo of the Olympic rings.

Life will change for the BOA after 2012. It will get its rings back and will be able to take much more control over its financial affairs. The problem, though, is what happens before then.

The BOA's management is well aware that if the organisation is to retain any credibility at all then it simply has to find a way to fund the British team at its home Olympics. In times of trouble, though, you often find out who are your friends. If the BOA is feeling a little lonely, then those who believe that too much money has been spent on non-priority areas, will argue that it's getting what it deserves.

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  • 1. At 5:41pm on 03 Mar 2011, Quick_Single wrote:

    Good blog and yes, James, you're right when you say that the alarm bells have been ringing for some time, and absolutely right to point out that in effect, BOA has been living beyond its means.

    Back in 2006/7, there were already plenty of people wondering how £750m of private sector sponsorship was going to be found, when you have UK Sport, BOA, LOCOG, and all the National Governing Bodies, attempting to scrap each other for what's available, and that was before a global economic meltdown which has reduced sponsorship and CSR budgets the world over.

    As you rightly point out, the problem is that BOA doesn't have much of a product to sell - no guarantee of exposure, or being an 'official supplier' or the opportunity to plaster the 2012 (or is it ZION?) logo everywhere.

    The issue is about fiefdoms and short termism. As you insinuate, post 2012, BOA will go back to what it was before - a small operation in unassuming offices, doing not a huge amount until the Olympics or Winter Olympics roll around. The best course of action would probably be to roll up BOA operations and responsibilities as part of the UKS/Sport England merger, and streamline the whole thing.

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  • 2. At 5:57pm on 03 Mar 2011, Nicholas wrote:

    Excellent. Thanks for bringing me up to speed on a subject that could never have been front of mind. Why does everyone in the public sector think they have a god-given right to live the life of Reilly just because they are experiencing their own little 15 minutes of fame?

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  • 3. At 6:28pm on 03 Mar 2011, Graham Newsom wrote:

    An excellent summary of the position.

    Quick_Single and Nicholas - it is worth remembering (as the article points out) that the BOA is not in the public sector and receives no direct Government funding towards its operation. It has been fiercely independent and I fear that wrapping it up in the cosy world of our sporting quangos would be seriously damaging to our Olympic athletes - and would probably run counter to the Olympic Charter.

    I think it is fair to say that the price paid by LOCOG to acquire the marketing rights for the Olympic Rings was way below the going rate. However, this was down to the formula established by the International Olympic Committee rather than poor negotiating by the BOA. This formula is based upon the marketing worth of the rings in the years preceding the successful bid. Once we had won the bid these rights became much more valuable. This is an issue that has been raised by previous host National Olympic Committees and will surely be dealt with by the IOC after the London Games.

    Where the BOA have really failed, in my opinion, is their misguided belief that they would win the game of cash roulette that they have played over the past five years. As the piece flags up, they have always known that they would have a limited budget. But they have continued to pursue expensive programmes (Clive Woodward and others) on the assumption that more money would be squeezed out of LOCOG. They have cashed in on their historic home in Wandsworth and are now paying expensive (they would argue below market) property rentals in central London.

    These decisions have been profligate and the resulting damage to the organisation is now plain to see. My real concern is that we are about to see our NOC go bankrupt - if not before the Games, then shortly after it.

    The pity is that few people in British sport will weep if this happens. I believe a strong and independent BOA is healthy for Olympic sport in this country. Whether those responsible for guiding the ship to its current destination deserve that is another matter.

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  • 4. At 9:07pm on 03 Mar 2011, singerisland wrote:

    Why dont you ask West Ham Utd, to cough up a few quid...

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  • 5. At 9:23pm on 03 Mar 2011, Spaced Invader wrote:

    Whilst my first is scrap the BOA and let UK Sport takeover its role (talk about having agency's for agency's sake), I recognise that this close to the Olympics that's not a practical plan. In the private sector it would simply fail, as any business that plans badly deserves to. akabarrington - you allude to the 'cosy world of quangos' in a clearly sarcastic tone - so you think the current system of 'fierce indepedence' of an organisation that cannot manage a simply obtained (and fundamentally generous) budget is better??! How independent is an organisation that has to go cap in hand to the private sector for sponsorship?

    If beyond 2012 the BOA has more financial clout, surely the solution is to borrow against that clout to cover the short-term gap? Buying into the push for British medals will still be highly attractive for the private sector now, especially if they can expect longer-term exclusivity rights to medallists post 2012. I assume this cry for help from BOA's management (a typical 'it was someone else's fault bunch' if ever there was one) is aimed as much at the private sector as it is at putting pressure on politicians anyway.

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  • 6. At 10:51pm on 03 Mar 2011, Quick_Single wrote:

    Barrington - fair points - and I am not suggesting that the 'cosy world of the quangos' as we know it is necessarily the way to go - they're hardly shining beacons of best practice.

    However, on a more practical level, surely they could share offices, support staff etc etc?

    I'm not disputing the value of a strong, independent NOC, but you're right - they have been profligate - and that worries me. I suspect that the previous (and current?) administration got a bit 'kid in a sweetshop' with the 'windfall', and lost their focus - Woodward's crazy (and expensive) schemes being a prime example.

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  • 7. At 08:02am on 04 Mar 2011, Graham Newsom wrote:

    Quick_Single - good point about sharing back office facilities, although I doubt that the organisations involved would ever be prepared to go that far.

    Quick_Single - it is worth remembering that the BOA has always raised its funds through the marketing of the Olympic rings. This is what private sector companies want to get their hands on and it are these rights that currently belong to LOCOG to raise money to run the Games (as opposed to tax payers money to build the facilities).

    It is also worth remembering that Beijing was the most successful British performance for over 100 years. That success was down to many organisations and individuals. However,a major part of that success was down to the support provided by the BOA at the Macau preparation camp and in Beijing itself.

    And there's the rub. That's what the BOA is good at. It should have known that funds would be stretched leading up to 2012. Instead it went for jam today instead of jam tomorrow. A successful Games for Britain in 2012 will increase the value of the National Olympic Committee's commercial rights significantly. That would have been the time to begin to increase the organisations influence - when money begins to be turned off in the public sector. Instead the BOA will be saddled with paying off its debts. Not a great attraction for thoe potential private sector organisations who want some Olympic action - what a pity!

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  • 8. At 10:42am on 04 Mar 2011, alb1on wrote:

    If I presided over this fiasco as a Chairman or CEO of a company I would be dismissed. Failing to see the unexpected is excusable; ignoring known financial constraints is not. Moynihan and Hunt should go now, but we know this will not happen as Moynihans friends in government will make sure he is protected.

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  • 9. At 11:59am on 04 Mar 2011, Norman S wrote:

    Excellent blog, James, which confirms what anyone close to performance sport in the UK knows already, i.e. that the BOA have chosen to live way beyond their means since Moynihan took control.
    His desperation for the BOA to be involved in ALL aspects of sporting life in the UK, even those where they have no place such as school sport, is what has led to the current financial difficulties the BOA is facing.
    Any business (and we are told that Hunt is there on his inflated CEO salary because of his business acumen) must be run on a sound financial footing and not spend money it simply doesn't have, with no obvious solution to any overspend other than whining about a deal signed 6 years ago. A deal which is simply not going to change no matter how loud the whining becomes.
    The solution to properly funding a 550 strong Team GB in London is simple. The BOA should stop replicating those jobs already being done effectively by the sport governing bodies and UK Sport, starting with disbanding Woodward's team of 'performance specialists'. The money saved from that alone will ensure that the BOA can meet it's team obligations in London in 2012.
    The medals won by Team GB in London will come from sports who are already well funded with progress being monitored by UK Sport. Those sports are led by REAL performance specialists who have already demonstrated that they know what it takes to succeed at world and Olympic level.
    Woodward, on the other hand, has proved to be nothing more than an expensive embarrassment for the BOA, but the cost of having him on board seems to be increasing for zero return. Business acumen, Mr Hunt?

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  • 10. At 4:03pm on 09 Mar 2011, cynicalyorkie2 wrote:

    ok, so now I really don't understand the point of the BOA for a 'home' games....obtain hundreds of shirts and shorts for thin people from a kit supplier who will provide them for free? and dole out free National Express travel vouchers and London Underground passes?

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  • 11. At 5:07pm on 09 Mar 2011, maxmerit wrote:

    Hunt is incompetent and he is culpable along with Moynihan for this farcical situation. They should be both replaced without delay.

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  • 12. At 5:22pm on 09 Mar 2011, frogspawn_for_brains wrote:

    The BOA seem to have no business acumen whatsoever, and seem to think that because this is a 'home' games they should be bailed out, irrespective of what the overspend is. Well, they are wrong; people like Moynihan and Hunt should be ashamed of themselves, and Woodward should be dismissed forthwith (he is an extremely moderate coach who happened to get lucky and has been living off it ever since - time to get rid).

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  • 13. At 6:15pm on 09 Mar 2011, cardicam wrote:

    Why is no one questioning the BOA's apparent £4m a year wage bill?

    They are not building the venues, organising the Games, coaching the athletes or funding them. So what exactly is being done by the BOA that warrants quite this high a figure in staff costs?

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  • 14. At 6:35pm on 09 Mar 2011, winterviewer wrote:

    I hope that any surplus once the 2012 showpiece ends is passed back to the hard pressed tax payers who have been forced to pay for this colossal waste of money and who no doubt will be forced to continue to pay for the upkeep of a number of white elephants.

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  • 15. At 03:45am on 10 Mar 2011, maxmerit wrote:

    The very fact that staff salaries and expenses have more than doubled to £4.2 million pounds inside 2 years is shocking and cannot be justified. The BOA are in effect paying themselves over 80% of the present income. There will have to be a total overhaul of the BOA and Hunt and Moynihan with their grossly inflated salaries shown the exit door before the organisation finds itself bankrupt. Who dared suggest that people are getting rich on the back of the Olympics?

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