Saturday March 7th, 2009

Jim Scherr's abrupt resignation as Chief Executive Officer of the U.S. Olympic Committee leaves several questions: Why is he out, what does it mean for the USOC and could his resignation affect Chicago's chances to land the 2016 Olympics when the IOC awards those Games in October? Is an organization that had righted its ship after years of dysfunction now setting itself up for another era of wayward management or merely adjusting its priorities in a tough economy?

Scherr, an Olympic wrestler in 1988, quit Thursday after an emergency meeting of the USOC board. Stephanie Streeter, a former Chairman and CEO of Banta Corp. and a USOC board member since 2004, will take over at the end of the month. In praising Scherr's leadership, Streeter pointed to the committee's challenges in confronting the recession and said: "a different set of skills (read: financial and operational ones) are needed."

In the past year, the USOC has lost three major sponsors: Kellogg's, General Motors and Home Depot, which had a unique job-opportunities arrangement with the committee that allowed numerous athletes to work for them for flexible part-time hours with fulltime pay. Scherr announced last month that the committee would need to cut its $142 million budget by $7 million and trim staff in the coming months by 15 percent.

While Scherr has an MBA from Northwestern's Kellogg Graduate school of Management and Streeter was a four-year starter on the Stanford basketball team, he saw things with an athlete's eye first; she looked at them as a manager. Each had supporters. In essence, the board traded what Scherr brought to the table (stability, integrity, athletic sensitivities) for someone who, they hope can coax old sponsors back into the fray, recruit new ones, look for creative ways to expand revenues and trim expenses; someone with an athlete's sensitivity for performance at heart to a savvy businesswoman. By all accounts, Scherr wasn't forced out, but neither were his priorities universally supported.

Scherr was an athlete advocate because he had been one himself, a wrestler who won three world medals and later ran USA Wrestling. He became the first athlete ever chosen to head to USOC's day-to-day operations. His greatest successes were in strong-arming some of the financially struggling national governing bodies under the IOC umbrella to streamline their management structures and become more accountable to athletes and their general membership. Nobody questioned the integrity and stability he brought to an organization that badly needed both.

Here's a quick history of the revolving doors in Colorado Springs: CEO Dick Schultz resigned in 1999 when he could not see eye-to-eye with former USOC President Bill Hybl. Then Norm Blake came in as CEO with guns drawn in over 2000. Blake streamlined the board and budget, but demeaned several sports teams he described as underperformers while cutting resources to improve them. He resigned after nine months and was replaced by Sandy Baldwin, who quit in the middle of her term after admitting to inaccuracies on her resume. Scott Blackmun then served briefly on an interim role.

The committee hired Lloyd Ward as CEO in 2001, but Ward resigned under fire after 16 months because of various charges of ethical violations. The former Maytag Chair had remodeled his office, sent his wife on unauthorized trips and tried to help a company with ties to his brother land contracts relating to the Pan-Am Games.

USOC President Marty Mankamyer resigned as well after charges surfaced that she had exaggerated Ward's ethics violations and leaked news of closed-door meetings. U.S. Senators Ted Stevens and Ben Nighthorse Campbell summoned USOC officials to Washington to explain themselves.

Scherr took over as interim CEO in 2003 and was promoted to the post full-time in 2005. Since then, U.S. teams have led the medal count at each Olympics, as usual. The USOC has forced struggling federations (fencing, boxing, track & field, bobsled & skeleton) to clean up their operational acts and has decertified modern pentathlon, taekwondo and team handball outright. It has started revamping its dwindling influence within the international sports community and maintained the gold standard in anti-drug testing policies to which sports like baseball are measured.

Now, with Chicago bidding for the 2016 Olympics, any perceived holes in the USOC ship could damage that bid if the holes aren't fixed. Just ask people in New York.

Flash back to 2005, when New York was bidding for the rights to host the 2012 Summer Games that will be in London. New York's bid, while technically strong on many levels, had several strikes against it. The strongest may have been the worldwide anti-U.S. sentiment that, as one IOC member noted, "trumped every other consideration." The abrupt 11th-hour change in venues for the main the bid's main stadium was another, but the underestimated poor relationship between the NYC-2012 group and the USOC had simply disastrous effects.

At the time the New York group started the candidacy process, the USOC was in a state of revolving-door dysfunction. When a potential sponsor, IOC member, fellow national governing body member or other so-called Olympic partner wanted to meet with the USOC head, regardless of title, they were unable to build relationships with the right person because they didn't know how long he or she was in charge or who was in charge at all. Just how could any one constituency get clarification about whether their sport could get the USOC's help in landing a world championship, how their brand could partner with the Olympics, and what the committee's long-term budget plans might be? The leadership changed, the philosophy changed, the rhetoric changed. The scandals and instability spooked the NYC 2012 leadership into distancing itself from the USOC as much as possible.

But by 2005 Scherr was in place as CEO and Peter Ueberroth, architect of the financially transformative Los Angeles Olympics, was in as Chairman. Ueberroth had great cache with the IOC leadership, but NYC2012 rarely called on him. In 2005, when Ueberroth arrived at the bid's disposal for the IOC Session in Singapore, where London was chosen as 2012 host, he expected to have a full slate of one-on-one meetings with IOC swing voters set up for him. Instead, there were none, so he mingled and fended for himself. By contrast, London organizers arranged face-to-face meetings for any IOC member who requested them with Tony Blair, who showed up on the eve of the G-8 Summit and swung at least three confirmed votes to cement his city's candidacy.

Last fall, Ueberroth retired, as expected, soon after the Beijing Games, and was replaced by Larry Probst. In January, Lisa Baird, a former NFL executive, replaced Rick Burton as the USOC's chief marketing officer. Burton had been in place for just one year. The USOC has still not replaced Steve Roush, the committee's chief performance officer who resigned in December. Though he speculated that Scherr's departure would not hurt Chicago's bid, Chicago 2016 Chairman Pat Ryan did say: "I don't think it helps in any way." NBC owns the rights to the Olympics through 2012. There is no set date for the IOC to accept a network bid for what would likely be a package for the rights to the 2014 Games in Sochi and the 2016 Games. The USOC currently pockets 12.75 percent of money from the existing $2.2 billion TV contract. Assuming the next contract will be settled after the IOC chooses the 2016 host this fall in Copenhagen, the USOC stands to lose a small fortune if either Rio, Tokyo or Madrid should get the Games instead of Chicago. The city has a strong bid that they hope will be bolstered by an on-site appeal from Barack Obama. Now the USOC has seven months to stabilize a foundation that once again has a lot of moving parts.

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