Bad publicity is one thing. Bad finances is something else.
Beyond the tarnish of Salt Lake City's image -- in the wake the largest scandal in the modern history of the International Olympic movement, lies the real danger.Money.
And the scandal is, in fact, hurting Olympic finances. Consider:
-- The timetable for raising the money has been pushed back a full year. So even if all the money is raised, Games organizers will get it later than expected.
-- Sponsors already on board are starting to wonder if they've been overcharged -- if the value of their sponsorship has dropped.
-- And future sponsors are wondering if the price of signing up is dropping. At least one sponsor believes the cost of being a low-end sponsor -- currently requiring a $3 million to $6 million in-kind contribution -- might fall to as low as $750,000.
And, while Salt Lake Games organizers assert they will not spend money they don't have, Utah taxpayers want to ensure that they receive a cash return on their $59 million pre-Games investment.
The $59 million was used to build a bobsled and luge run, and other facilities, near Park City. In addition, SLOC is also committed to coming up with $40 million that will be turned over to a private foundation to keep the facilities up and running after the Games -- so they won't be a burden to taxpayers.
That's a total of $99 million -- in cash -- that taxpayers have been promised by Olympic organizers. That doesn't include the deals SLOC has made to use the University of Utah and other public facilities.
Salt Lake's budget for the 2002 Games is $1.45 billion. Much has already been secured. But most of what's still needed must come from increasingly jittery corporate sponsors.
The 2002 Winter Games are being sold as a package with U.S. Olympic teams through the 2004 Summer Games in Athens, Greece, by a joint marketing venture headed up by the U.S. Olympic Committee.
"The Games are going to be based on the support of our sponsors. It's a very fragile relationship. Their brand, their product, their service is tied very closely to what they put their name on," said USOC Deputy Secretary General John Krimsky.
He said he hopes the bribery scandal, now the subject of four investigations including an FBI probe, can be resolved by the end of February to calm nervous sponsors. "I don't want their patience to wear thin."
Price is negotiable
But while Krimsky said the scandal won't reduce the price of a sponsorship, an official of one of the companies helping to underwrite the Games said that's already happening.
"Like everything else in the Olympics, it's negotiable," the official said of what sponsors would end up paying.
The official, who spoke to the Deseret News on the condition neither he nor his company would be named, said he wouldn't be surprised if some sponsors decide they've been overcharged.
"There's some people who've already overpaid and they know it," the official said. Now the scandal is giving them leverage to force Olympic officials to renegotiate their deals.
US WEST may well be one of those companies. The regional telephone company put up a total of $60 million in cash and services to sponsor the 2002 Games as well as the U.S. Olympic teams.
Fueling that possibility was a story circulated last week that US WEST missed a deadline for making a $5 million payment on the sponsorship and might not continue as a sponsor.
That's something US WEST officials have yet to decide.
"We are not in violation of our contract. We have some time to submit our payment, and we're re-evaluating some things," Randy Lynch, US WEST vice president of Olympic programs, said.
The scandal is cutting prices for future sponsors, especially local companies signed as suppliers, according to the official. Suppliers are supposed to contribute $3 million to $6 million, mainly in goods and services.
That price is likely to drop as low as $750,000, the official predicted. "Your image has been indelibly tarnished in the marketplace. Our ability to get value out of being associated with the Games has been tarnished."
A wait and see attitude
Krimsky said that won't happen. Sponsors, though, seem to be taking a wait-and-see approach.
"At this point, we're just taking a back seat and trying to stay out of the middle of it. It's not anything we'd want to get involved in," said Julie Turner Davis, vice president of Nationsbank.
The North Carolina-based bank, which is in the midst of a merger with Bank America, is not only a sponsor but has extended a multi-million dollar line of credit to the organizing committee.
"What we have invested in is the reputation of the Olympic movement. We certainly don't want to see that tarnished. That's why we hope this is resolved sooner rather than later," Davis said.
A spokesman for a potential Utah-based supplier said his company isn't trying to take advantage of the scandal.
"We don't look at it in a manipulative way. We don't want to exploit it," said Greg Link, vice president of corporate communications for Franklin Covey Co.
"We have not arrived at what the contributions will be," Link said. Those contributions, he said, "will not be based upon whatever challenges or problems they have."
The national sponsors are no doubt watching carefully to see what happens at the international level. The worldwide rights to advertise as a sponsor of the Olympics are sold by the IOC.
Many of the international-level sponsors who have yet to sign up through the 2002 Winter Games and beyond are also awaiting the results of the investigation.
"It's a factor," said Susan Rosenberg of UPS. "We don't want to be judge and jury until we know all facts and circumstances and what's being done as far as correction and enforcement."
The worldwide delivery service signed up as an international sponsor for the 1998 Winter Games in Nagano, Japan, and is committed to stay on only through the 2000 Summer Games in Sydney, Australia.
"From a UPS perspective, ethics and integrity is everything to us," Rosenberg said. "What we buy as a sponsor and what we buy into is the Olympic brand.
"That is not only the Games but the Olympic movement, the values and the ideals of what the Olympics stand for," she said. "For us there can't be a disconnect."
Coca-Cola, a Games sponsor since 1928, is also concerned.
"If not handled properly, this could have significant negative impact on our involvement with the Games as well as that of other sponsors," Coca-Cola Olympic marketing spokesman Ben Deutch told the Atlanta Journal Constitution.
Damage control
Krimsky, who's spending much of his time in Salt Lake City these days, has sent out letters to hundreds of sponsors and would-be sponsors trying to reassure them that the scandal won't devalue their investment.
A copy of his Dec. 19 letter obtained by the Deseret News acknowledges allegations of "incidents of impropriety involving certain people within the Olympic host city selection process."
The letter thanks sponsors and would-be sponsors for their continued support, and passes along a pledge by the IOC that "all measures will be taken to protect the integrity of the Olympic movement."
Another letter updating them on the latest developments was expected to be sent out Monday.