[Senate Hearing 108-895]
[From the U.S. Government Publishing Office]
S. Hrg. 108-895
UNITED STATES OLYMPIC COMMITTEE (USOC) REFORM
=======================================================================
HEARING
before the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
FEBRUARY 13, 2003
__________
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Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana DANIEL K. INOUYE, Hawaii
TRENT LOTT, Mississippi JOHN D. ROCKEFELLER IV, West
KAY BAILEY HUTCHISON, Texas Virginia
OLYMPIA J. SNOWE, Maine JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas JOHN B. BREAUX, Louisiana
GORDON SMITH, Oregon BYRON L. DORGAN, North Dakota
PETER G. FITZGERALD, Illinois RON WYDEN, Oregon
JOHN ENSIGN, Nevada BARBARA BOXER, California
GEORGE ALLEN, Virginia BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire MARIA CANTWELL, Washington
FRANK LAUTENBERG, New Jersey
Jeanne Bumpus, Republican Staff Director and General Counsel
Robert W. Chamberlin, Republican Chief Counsel
Kevin D. Kayes, Democratic Staff Director and Chief Counsel
Gregg Elias, Democratic General Counsel
C O N T E N T S
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Page
Hearing held on February 13, 2003................................ 1
Statement of Senator Boxer....................................... 45
Article dated September 1, 2002, from The San Francisco
Chronicle, entitled Could Grudge Foil San Francisco's Bid?. 46
Statement of Senator Burns....................................... 3
Statement of Senator McCain...................................... 1
Statement of Senator Stevens..................................... 2
Witnesses
Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado........ 4
D'Alessandro, David F., Chairman and CEO, John Hancock Financial
Services, Inc.................................................. 23
Prepared statement........................................... 25
DeFrantz, Anita L., Olympic Medalist; Executive Board Member,
U.S. Olympic Committee; Vice President, International Rowing
Federation; Member, International Olympic Committee............ 33
Prepared statement........................................... 35
de Varona, Donna, Olympian and Sports Commentator; Co-Chair,
Government Relations Committee, U.S. Olympic Committee......... 15
Prepared statement........................................... 19
Fehr, Donald, Executive Director, Major League Baseball Players
Association; Public Sector Member, U.S. Olympic Committee...... 38
Prepared statement........................................... 41
Fielding, Fred F., Partner, Wiley, Rein & Fielding............... 6
Prepared statement........................................... 9
Schiller, Harvey W., President and CEO, Assante U.S.; Former
Executive Director, U.S. Olympic Committee; Chairman,
Management Committee for NYC 2012.............................. 28
Prepared statement........................................... 30
Appendix
Lautenberg, Frank, U.S. Senator from New Jersey, prepared
statement...................................................... 55
Moore, Jr., Charles H., Executive Director, Committee to
Encourage Corporate Philanthropy, prepared statement........... 55
UNITED STATES OLYMPIC COMMITTEE (USOC) REFORM
----------
THURSDAY, FEBRUARY 13, 2003
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Committee met, pursuant to notice, at 9:30 a.m. in room
SR-253, Russell Senate Office Building, Hon. John McCain,
Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. JOHN McCAIN,
U.S. SENATOR FROM ARIZONA
The Chairman. The Committee will come to order. I welcome
the witnesses who are appearing before the Committee today, and
thank those who made special arrangements to be here. I would
like to reiterate my appreciation for the efforts and support
of Senators Stevens and Campbell.
The purpose of this hearing is to begin the process of
examining the current organizational structure and culture of
the United States Olympic Committee and consider what
legislative reforms are needed to ensure that the USOC operates
more effectively and efficiently. It is important that the
organization functions in a manner that places emphasis on
athletes rather than personal and organizational interests, as
intended by the 1978 Amateur Sports Act.
The Committee held a hearing 2 weeks ago to examine the
turmoil among USOC leaders that ultimately led to congressional
intervention. Since that time, the USOC president and the chief
marketing officer have both resigned, and the USOC Executive
Committee has formed an internal governance and ethics review
task force that is expected to provide its report and
recommendations to the USOC board of directors in April.
While I do not oppose any effort by the USOC to conduct an
internal review--in fact, I encourage it--I feel that the
proposed task force will amount to possibly nothing more than a
reshuffling of chairs on the deck of the Titanic. I believe
that in order to better ensure the future credibility of the
USOC movement an independent and objective analysis of the
current organizational structure and culture is necessary.
The Olympic movement is not about people who attach
themselves to the organization for their own benefit. It is a
movement that is driven by athletes who pour their souls into
improving their God-given talents with the hope of some day
realizing their Olympic dreams. The American people have
entrusted the USOC with the privilege of serving as the
custodian of the athletes' dreams, but time and again the USOC
has breached that trust.
The athletes appear to be nothing more than an after-
thought in the eyes of this ever-growing behemoth of an
organization. Recent comments by highly respected corporate
sponsors, reporters, and international Olympic officials,
referring to the USOC as dysfunctional, cannibalistic, and a
nincompoop, have been embarrassing and destructive to the
credibility of the USOC. We must restore faith in this
organization in the eyes of our athletes, the American people
and the international sports community.
To do this, we must first be sure that the structure of the
organization is in line with the USOC mission to ``preserve and
promote the Olympic ideal as an effective, positive model that
inspires all Americans.''
The Commerce Committee oversees Olympic issues, and has a
responsibility to ensure that the USOC operates effectively. I
hope that the USOC will cooperate with this Committee and be
mindful that its charter is a privilege bestowed upon it, and
that the charter can be easily revoked and placed in the hands
of those who may be better qualified to preserve its trust.
I thank the witnesses again for being here, and I look
forward to your testimony.
Senator Stevens.
STATEMENT OF HON TED STEVENS,
U.S. SENATOR FROM ALASKA
Senator Stevens. Mr. Chairman, thank you very much for
holding this hearing.
I think we should state at the beginning, for the people
who are here, or listening to this, that at the time we are
talking now there is a briefing going on by Governor Ridge, or
Secretary Ridge on the security matters that affect our
country. The four of us happen to serve on two committees that
receive those briefings on a classified basis anyway, so I am
pleased we are able to be here and conduct this hearing that
you have scheduled so that there will not be another disruption
in this process.
I thank you for holding the hearing. Senator Campbell and I
look forward to working with you on it.
During the last hearing, Mr. Chairman, you and Senator
Campbell and I mentioned how disappointed we were that the
focus of the articles that were appearing at that time in the
newspapers were about failures of governance and not about
athletes. It really saddens me to note that athletes have
finally come into this picture, but the stories and the
articles are about athletes who are now facing the problem of
not having the funds that they were counting upon because the
USOC has decided to use those funds for internal restructuring.
That internal restructuring, I assume, must be done, but I
am disturbed that a fund that was set aside and dedicated to
athletes was allocated for that purpose. I personally want to
put the USOC on notice that that is not acceptable.
We are intent upon trying to save what is left of the USOC
emphasis on athletes, and it certainly is not conducive to
coming to an agreement with this panel, in my opinion, to
remove funds from those allocated for athletes to--and this is
a little harsh, perhaps, but to use those to save the little
fiefdoms that have been created in the USOC which were not
intended by this law.
Now, I am hopeful that I will be able to stay with you, Mr.
Chairman. Unfortunately, we have just finished this enormous
appropriations bill, and I think I am going to be called away.
I can think of nothing that I am more proud of in my career
than having worked with the Ford Commission and with the USOC
over the years. It was just a matter of a few years that the
USOC, which was hardly efficient at all, turned into one of
the, if not the most important Olympic organization in the
world, and I am saddened to see it slip so hard, so deeply, and
I hope that working together, we may find a way to refashion
this law so that that cannot--first it will be restructured
properly, and that cannot happen again.
Again, I thank you for this, and I look forward to the trip
we are going to make to Colorado Springs to talk to some of the
athletes and the people involved in the administration of this
concept, the USOC, that is, who are not really on an advisory
level and not one of an enormous board of directors, but the
people who work daily to try to try to assure that these
athletes can achieve their dreams. We have a very broad
spectrum of people on this panel now, and I think they are all
dedicated to the future of the USOC.
I want to take a moment to welcome my good friend Donna de
Varona. I do not know of anyone who has been through this
process more than she has. Senator Magnuson, Mr. Chairman,
hired--well, I do not know if hired is a good word, but
retained her services to consult with us as an athlete at the
time we considered this legislation in the first instance. She
was on the Ford Commission, and has worked throughout her life
to try to improve the conditions for athletes who follow in her
distinguished record in the Olympics.
So I look forward to listening to all of these witnesses,
Mr. Chairman, but I am a little uptight, because I do not like
to see a program that we put together and gave sound footing
unravel because of personalities and personal ambitions. I hope
that day is over.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Stevens, and again I want
to reiterate my appreciation for your long involvement in this
issue. I do believe that it needs fundamental restructuring,
and I believe that you and I and Senator Campbell and other
Members of this Committee can see this thing through to a
conclusion, and I thank you, and I know you may have to leave
to steward one of my favorite bills through the Congress here
very soon.
[Laughter.]
Senator Stevens. I am looking forward to more of your
statements, Mr. Chairman.
The Chairman. Senator Burns.
Senator Burns. I think Senator Campbell was here first.
The Chairman. Senator Campbell, go ahead.
Senator Campbell. I would yield to Senator Burns.
STATEMENT OF HON. CONRAD BURNS,
U.S. SENATOR FROM MONTANA
Senator Burns. My statement will be very, very brief. I
have to go to the briefing, too. We are involved in the same
issue in appropriations, but we hear this great thing, it is
great to be in public service, and I think we miss the
definition of that is, we serve the public. And as in a
government bureaucracy who tend to forget why they are there,
as sort of happened to the USOC, but I think for those of us
who have not been that involved with the Olympics, I will tell
you that the American people are only concerned about two
things, and that is accountability and credibility, or you will
lose your public support, and when you lose your public
support, we will lose the real meaning of the Olympics.
You are not there for self-serving, you are there to serve,
and I just want to--just two words I want you to remember are
accountability and credibility, and that is what is at stake
here. If you have neither, you will not have an organization
that can contribute anything to a greater life for any of us.
Thank you very much, Mr. Chairman, for holding this
hearing. Thank you for the involvement of Senator Campbell and
yourself and Senator Stevens, who has been around this
subject--we accompanied Senator Stevens to Athens one time and
had a wonderful experience out there, and especially his work
with Special Olympics, and that should be noted for the record,
because he has been a champion, but he is also concerned about
these two words right here. They are very small words, but boy,
do they pack a lot of meaning and power with the American
public.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Burns. Senator Campbell.
STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL,
U.S. SENATOR FROM COLORADO
Senator Campbell. Thank you, Mr. Chairman. First let me
associate myself with the words of Senator Stevens about our
friend, Donna de Varona. Donna and I were team mates in 1964,
but just by chance, I think I met her for the first time when
she was 16, swimming at the Santa Clara Swim Club in
California, and I was a student at San Jose State University,
right across town, and I used to go over and watch them train
in swimming. George Haynes was her coach in those days, and he
was, I mean, breaking all kinds of new training methods and
turning out champions like you would not believe, and Donna was
one of the really great ones in the pool, and we certainly
welcome her.
I would also like, before I make my statement, Mr.
Chairman, to clarify the record. I was reading, a story in Roll
Call that I stated took Mr. Ward to task last time about his
membership in the Augusta Golf Club, but the story implied that
I somehow do not think it is wrong for Senators to belong to
the same kinds of clubs, and I would like the record to reflect
I do not care who they are, Senators or not, they should not
belong to a club or a group that discriminates against women or
minorities or racial differences or gender differences or
anything else. It is just as wrong for Senators, it is wrong
for private citizens, and I wanted the record to reflect that.
At our last hearing regarding the problems faced by the
USOC, I also stated that the ongoing internal fights within the
USOC structure could only hurt the athletes, and according to a
story that was in Tuesday's USA Today, I think Senator Stevens
alluded to that, that is already happening.
This story said that the USOC is going to set aside $2.5
million in their budget for two purposes, $1.5 million for the
restructuring of their committees to confirm to congressional
demands, and $1 million to repair the damaged public relations
image. The article went on to say that that allocation had
delayed the decision by the USOC officials to give an extra
$3.5 million to the athletes and their national governing
bodies. Clearly, that money should have gone to helping the
athletes, there is no question about it.
There is a big wrestler out there in Colorado Springs now
training named Rulon Gardner, who I have met several times. He
came out of Wyoming. He was the 2000 gold medalist in Greco-
Roman wrestling, who defeated the previously undefeated three-
time gold medal winner from Russia named Alexander Karelin. You
may have read that story. This guy had not been defeated in 14
years of international competition. He is like a wrestling god
in most of Europe.
And Rulon I think said it best when he said, why can't they
figure out where they can take it out of their budget? It
should not affect the athletes, because the athletes did not
create the problem, and Rulon is absolutely right. And he, like
many other young Americans, are doing their best to represent
this Nation with honor and dignity, and they are doing it in
spite of a sometimes self-serving bureaucracy.
To be clear, the vast majority of athletes, coaches,
trainers, officials, are doing what I think is an admirable job
trying to get the USOC back on track, but there is no question
in my mind that it is not going to be easy, and it is going to
require some downsizing and some streamlining.
When Ms. Mankamyer resigned, she said there was no
possibility of peace unless she did resign, and I think that is
probably a fair statement to make. I would like to also note
that yet another high-ranking USOC staffer has resigned, too,
according to the press, Toby Wong, who had only worked for the
USOC for 10 months. She was the chief marketing officer. She
was just hired last April, and her exit was just made a few
days ago, and it just reinforces my belief that a partial
housecleaning is not going to cure the problems.
We have received three calls in our office, because I
represent Colorado in Colorado Springs, three calls in our
office from employees of the USOC, and I know this hearing is
supposed to deal with structure and not personalities, but I
think I need to put this in the record. These calls all said
basically the same thing, that Ms. Wong had hired an attorney,
and was about to file a sexual harassment suit against a top-
level USOC official, whose name I will not mention, but I do
not know if those calls are partly wrong, or all wrong, or
partly right, or all right, or what, but in my view, we should
find out.
If that is a common practice--the reported severance
package after 10 months was a six-figure package in addition to
a salary. I would like to know if that is a common practice for
the USOC, or if that was, in lieu of a better term, some kind
of hush money for her not to proceed with a lawsuit, and I
would just ask you if there is a possibility of having Ms. Wong
come before this Committee and telling us why she resigned and
what happened.
And with that, I have a number of other quiet and refined
comments that I would like to make as we move along through the
hearing.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Our first witness is Mr. Fred Fielding, if he would come
forward. Welcome, Mr. Fielding. Please proceed with your
opening statement.
STATEMENT OF FRED F. FIELDING, PARTNER,
WILEY, REIN & FIELDING
Mr. Fielding. Thank you, Mr. Chairman, distinguished
Members of this Committee.
Senator Stevens. Would you pull that mike toward you, Mr.
Fielding?
Mr. Fielding. Is that better, sir?
At the outset, I would again like to express my apologies
to this Committee for not being present at your last hearing.
Although I did have a prior engagement out of town, I am
really, truly sorry for any inconvenience I may have caused the
Committee in your deliberations, and I want to assure you that
by my absence, I did not intend in any way to mean any
disrespect to the Committee or to the importance of what the
Committee is looking into.
Mr. Chairman, after a meeting of the Ethics Oversight
Committee of the USOC on October 24, 2002, I was retained by
its chairman, Kenneth Duberstein, to conduct an independent
internal investigation in regard to allegations that were
presented to that committee by the chief ethics officer of the
USOC, Mr. Patrick Rodgers, concerning certain conduct of the
CEO, Mr. Lloyd Ward.
Mr. Rodgers briefed me on this assignment and provided the
facts and materials he had gathered, and I was specifically
directed to obtain any additional information basically on two
areas, first, since he had not interviewed Mr. Ward, to find
out if Mr. Ward had a financial interest in his brother's
companies and, second, whether there were any other related
communications between Lloyd Ward, his brother, and a Mr.
Hernando Madronero, who was, in fact, the gentleman in question
later on, and that information was to be determined by me in an
interview with Mr. Madronero, with the results provided to the
committee before the committee would proceed further.
I was also advised the oversight committee would reconvene
upon the completion of my preliminary investigation.
When I undertook this assignment, I suggested and was
granted permission to expand my charter to permit direct
interviews of others potentially having knowledge of this
incident beyond Mr. Madronero.
By way of process, I reviewed all the documents that were
provided to me by Mr. Rodgers, as well as the relevant USOC
policies and notes of the Ethics Committee meetings related to
this charge. I also checked indices, public resources in regard
to EMT, which was the company that Mr. Ward's brother was
involved with, and its parent company, West Bank Holdings, and
compared notes with Mr. Rodgers in this regard, as he has done
the same thing, and advised me he had.
I then conducted a series of interviews with the
individuals that I determined as a result of information
brought to my attention, and in some instances, I had followup
interviews with these people, and each of my interviews was
conducted telephonically, which is not my preferred method of
interviewing, but is an effective method, and certainly much
more economical, and the method that was requested by Mr.
Rodgers.
Upon completion of my interviews, and the fact-finding, and
in anticipation of the oversight committee's meeting, on
November 21, I had a briefing and a telephonic oral report of
my findings to Chairman Duberstein and to Mr. Rodgers. At that
time, they decided that they would not proceed with a telephone
hearing, and on the next day, I was advised by the chairman
that I should provide a written summary of my determinations
and my findings so that everyone on the committee would have
the same access to the same information.
At or about that time, I was also advised by Chairman
Duberstein and by Mr. Rodgers that Mr. Rodgers had agreed to
recuse himself from further participation since he had been
factually involved, and also, it had come out, and was told to
me by Mr. Duberstein and Mr. Rodgers that Rodgers and Ward had
had some disagreements over Mr. Rodgers' work performance.
In early December, Mr. Rodgers advised me that he had
discovered additional documents in Mr. Madronero's office,
including a presentation made by EMT to the Pan Am Organizing
Committee, and he was going to review that presentation to
determine whether it had any unique information that was
exclusively USOC property, or had been derived from USOC
documents, and he later advised me that that review was not
conclusive.
Subsequently, in December, Mr. Rodgers advised me that
President Mankamyer had been discussing the EMT proposal with
officials in Santo Domingo, and had determined that those
discussions were still ongoing, and I did not attempt to
interview the president on any of this, and I so advised the
oversight committee, as it was already clear that discussions
had occurred through my interview with Mr. Madronero.
And at that time, I did question Mr. Rodgers as to whether
he had counseled the president on the propriety of her
conducting an ethics investigation and also discussing the
charges about Mr. Ward outside of the oversight committee's
purview with others, and he said that President Mankamyer had
told him that was part of her management review of Mr. Ward,
and she was preparing for the January board meeting, at which
time his compensation would be discussed.
On December 16, I submitted my written internal
investigation report to Chairman Duberstein. Now, questions
have been raised as to why my report, or the oversight
committee's report had no recommendations. In simple response
in regard to my report and this assignment, as had been in
prior assignments for the USOC, I was asked to merely provide a
factual report to the committee, and actually it was phrased, a
preliminary report, in the written instructions that I
received. I was further told that the committee, the Ethics
Committee had been specifically directed by the president to
provide no recommendations to the Executive Committee, but only
to report its conclusions.
The oversight committee did meet telephonically on December
23 and again on January 8 to discuss the results of my
investigation as well as other information that had been
developed and was in its possession, and at the latter meeting
to also carefully review the wording of its report to the
Executive Committee.
I was invited to attend both those meetings, and so I can
advise this Committee that the meetings were lengthy,
thoughtful discussions. They reached the following conclusions,
and I should add that these conclusions were unanimous.
First, that Mr. Ward's actions created the appearance of a
conflict of interest, and he later failed to make a written
disclosure of this relationship with his brother, both actions
clearly contrary to the ethics code.
Second, that there was a serious lack of sensitivity by Mr.
Rodgers, the ethics officer, in enforcing the ethics code,
which could have corrected Mr. Ward's conduct at the time it
initially occurred, and would have prevented his further
conduct and his further violations.
And there were actions by the president, this was the last
conclusion, by the president and other USOC officials,
especially in leaking of information, which violated the ethics
code and abused the ethics oversight process.
By information sent to the committee, not to me, but to the
committee, the president also attempted to introduce a charge
of alleged bribery by EMT into the committee's debate, and the
committee discussed this at some length, and it was the
unanimous conclusion that that information was not relevant to
the deliberations on the conduct of Mr. Ward. Although I was
not asked for my recommendations--specifically as to what to
do--by the oversight committee, at the first meeting one of the
members did ask if I had any other observations for them as a
result of my interviews.
I responded that this ethics program, like any ethics
program, can survive only, and can really work only if it is
viewed by everyone as fair, equitable, has bright lines of
acceptable conduct, and is not marred and is totally
independent of politics, personalities, workplace issues.
Unfortunately, from my interviews, I advised them, it was clear
that there was a very unhealthy atmosphere within this
organization.
There was open hostility between the CEO and the president.
It was known to everyone. There was a history of spying on each
other. There was a history of feuding openly. Worse still,
there was a feeling among some of those interviewed that the
ethics officer himself had taken sides in the case and should
have recused himself from the probe from the beginning.
The discussions and the deliberations of the Ethics
Committee were thorough and candid, they were detailed, and
they were careful. The precise wording of the final report was
cleared after that meeting with every member, not by me, but by
the vice chairman, I believe. Further, after some questions by
one or two members who had already agreed to attend, it was
decided unanimously that no one from the Ethics Committee would
attend the Executive Committee meeting, that the report would
speak for the Ethics Oversight Committee, and after precautions
were made by the oversight committee to mitigate the
possibility of leaks, it was distributed, along with my
investigative report, to all the members of the Executive
Committee and also to Mr. Ward.
That would conclude my testimony, Mr. Chairman.
[The prepared statement of Mr. Fielding follows:]
Prepared Statement of Fred F. Fielding, Partner, Wiley, Rein & Fielding
Mr. Chairman and other distinguished Members of the Committee:
At the outset, I would like to again express my sincere apologies
for not being present at your last hearing. Although I did have a prior
commitment out of the city, I am truly sorry for any inconvenience my
absence caused and I want to assure the Chair and the Members that by
my absence I meant no disrespect to the Committee or to the importance
of its investigation.
I am advised that I have been released from my obligation to
preserve the attorney-client privilege and relationship in regard to
this matter, so I am prepared to provide any information I can.
Mr. Chairman, after a meeting of the Ethics Oversight Committee of
the USOC on October 24, 2002, I was retained as counsel by its
Chairman, Kenneth Duberstein, to conduct an independent internal
investigation in regard to allegations presented to the Committee by
the USOC Chief Ethics Compliance Officer, Mr. Patrick Rodgers,
regarding certain conduct of USOC CEO Lloyd Ward.
Mr. Rodgers briefed me on this assignment and the facts and
materials he had gathered, and I was specifically directed as follows
to obtain any additional information concerning:
``The financial interest of Lloyd Ward in his brother's
company Energy Management Technologies (EMT) and its parent
company West Bank Holdings, LLC.
Whether or not there were other related communications
between Lloyd Ward, Hernando Madronero, Rubert Ward and other
USOC staff (information to be determined by interview with
Hernando Madronero with results provided to Ethics Oversight
Committee before preceding (sic) further).''
I was advised that the Oversight Committee would reconvene upon
completion of my preliminary investigation.
Upon undertaking this assignment, I suggested and was granted
permission to expand my charter to permit interviews of others
potentially having knowledge of this incident beyond Mr. Madronero.
By way of process, I reviewed all documents provided to me by Mr.
Rodgers, as well as the relevant USOC policies and notes of the Ethics
Committee meeting related to this charge. I also checked relevant
indices and public sources in regard to EMT and its parent company,
West Bank Holdings, LLC, and compared notes with Mr. Rodgers in this
regard as he had done the same. I then conducted a series of interviews
with individuals determined by me as the result of information brought
to my attention, and in some instances, I had follow-up interviews.
Each of my interviews was conducted telephonically, which is not my
preferred method of interviewing, but is an effective method and
certainly much more economical, and was the method requested by Mr.
Rodgers.
Upon completion of my interviews and fact-finding, and in
anticipation of an Oversight Committee meeting, on November 21 I made a
brief telephonic oral report of my findings to Chairman Duberstein and
Mr. Rodgers. The next day, I was advised by the Chairman that I should
prepare a written summary of my fact-finding, so all members of the
Committee would have complete access to the information. At or about
this time I was advised by both Chairman Duberstein and Mr. Rodgers
that Mr. Rodgers had agreed to recuse himself from further
participation since he was factually involved and also he and Mr. Ward
had disagreed over Mr. Rodgers' work performance.
In early December, Mr. Rodgers advised me that he had discovered
additional documents in Mr. Madronero's office, including a
Presentation made by EMT to the Pan Am Organizing Committee. He was
going to review the Presentation to determine whether it contained
information that would have been derived exclusively from USOC
documents; he later advised me that his review could not conclusively
determine that. Subsequently in December, Mr. Rodgers advised me that
President Mankamyer had been discussing the EMT proposal and the probe
with officials in Santo Domingo, and had determined that discussions
were still ``on-going.'' I did not attempt to interview President
Mankamyer on any of this (and so advised the Oversight Committee) as it
was already clear that such discussions had occurred, through the
interview of Mr. Madronero. At that time I did question whether Mr.
Rodgers had counseled the President as to the propriety of her
conducting an ``ethics investigation'' and discussing the charges about
Mr. Ward with others; he said Ms. Mankamyer had told him that this was
part of her management review of Mr. Ward in preparation for the
January Board meeting to discuss his compensation.
On December 16, I submitted my written Internal Investigation
report to Chairman Duberstein. Questions have been raised as to why my
report or the Oversight Committee's Report had no recommendations. In
simple response, in this assignment, as in prior ones for the USOC, I
was asked to merely provide a factual report to the Committee. I was
further told that the Committee had been specifically directed by the
President to provide no recommendations to the Executive Committee, but
only to report its conclusions.
The Oversight Committee met telephonically on December 23 and
January 8 to discuss the results of my investigation, as well as other
information in its possession, and at the latter meeting to also
carefully review the wording of its Report to the Executive Committee.
I was invited to attend both meetings, and so can advise you that the
Committee had lengthy and thoughtful discussions, and reached the
following conclusions, unanimously:
Mr. Ward's actions created the appearance of a conflict and
he later failed to make a written disclosure of this
relationship (both actions clearly contrary to the Ethics
Code).
There was a serious lack of sensitivity by Mr. Rodgers in
enforcing the Ethics Code, which could have corrected Mr.
Ward's conduct at the time it initially occurred and prevented
his further conduct and violations.
There were actions by the President and other USOC
officials, especially in leaking information, which violated
the Ethics Code and abused the ethics oversight process.
By information sent to Committee members, but not to me, the
President attempted to introduce a charge of alleged bribery by EMT
into the Committee's debate; it was discussed fully and the unanimous
conclusion was that that information was not relevant to its
deliberations on the conduct of Mr. Ward. Although I was not asked for
my recommendations by the Oversight Committee, at the first meeting one
of the members asked if I had any other observations from my review. I
responded that this Ethics program, or any such program, can only
survive and really work if it is viewed by all as fair and equitable,
has bright lines of acceptable conduct and is independent of politics,
personalities and work place issues. Unfortunately, from my interviews
it was clear there was a ``very unhealthy atmosphere'' within the USOC,
where the open hostility between the CEO and the President was known to
all, with a history of spying and feuding. Worse still, there was a
feeling among some interviewed that the Ethics Officer had taken sides
in this case and should have recused himself from any probe.
The discussions and deliberations of the Ethics Committee were
thorough, careful, detailed and candid. The precise wording of its
final Report was cleared with every member.
Further, after some questions by one or two members who had already
agreed to attend, it was the unanimous decision of the Ethics Committee
that no member of the Committee would attend the Executive Committee
meeting--their Report would speak for the Ethics Committee.
After precautions were taken by the Oversight Committee and the
General Counsel to prevent the premature disclosure of the Report, it
was distributed along with my investigative report to the Executive
Committee and to Mr. Ward.
The Chairman. Thank you, Mr. Fielding.
Your investigation was clearly the basis upon which the
Ethics Committee acted. Do you believe that to be the case?
Mr. Fielding. It certainly was the basis upon which they
concluded what they did as far as Mr. Ward, with the addition
of the other information that had come to them subsequent to
the completion of my investigation, yes, sir.
The Chairman. And although they did not make a
recommendation, which was in violation of the bylaws of the
mission describing the duties of the Ethics Committee, which
clearly calls for recommendations to be made, if you had been
asked for recommendations as to what disposition should have
been made in this case, what would have been your
recommendation?
Mr. Fielding. Well, Senator, there was clearly a violation
of the ethics code. There was more than one violation of the
ethics code by Mr. Ward, and I assume you mean exclusively as
to Mr. Ward, my recommendation. At that point, the governing
authority, the executive of any entity has to make the decision
as to whether they have a zero tolerance, or whether they have
a policy which mitigates for performance and that sort of
thing, so it is difficult for me to step in. But I must say to
you there were clearly violations of the code, and there was
clearly a very bad management situation abounding. I do not
know how else I can embellish on that answer, sir.
The Chairman. So you do not want to answer my question,
which is, what recommendation would you have made, which is
your right to do, if you do not choose to make----
Mr. Fielding. My recommendation would be to treat this
person as you would treat other people in your organization,
according to your executive mandates as you see them. Most
entities have a zero tolerance, and if this entity has a zero
tolerance, he should have been dismissed.
If they were looking at the entirety of the circumstances
and concluded that there were mitigating circumstances, and
that was the executive policy, then that is what they should
do.
The Chairman. How many hours did you spend in your review,
Mr. Fielding?
Mr. Fielding. The review, the initial review, up to----
The Chairman. Your entire work. How many hours did it take
you?
Mr. Fielding. I would have to check that, sir.
The total billing for the matter up through November, the
end of November, which was really my initial assignment, was a
little in excess of $15,000, and my billing rate to this
organization is $500 an hour, so whatever the mathematics would
work out to.
Some of that was not exclusively with this, but I would
consider that that was within the ballpark, and my budget for
this was $20,000, but it has exceeded that with the additional
work and the preparation of a written report, so that I think
through the end of December, it was in excess of, I would say,
$22,000, but that also included additional work outside of the
direct assignment.
The Chairman. Did you receive any instructions from the
USOC when you were retained as counsel?
Mr. Fielding. In what regard, sir?
The Chairman. As to whether you should make recommendations
or not.
Mr. Fielding. Yes. My instructions were written, and
initial instructions were to interview Mr. Ward to determine if
he had a financial interest, and to interview Mr. Madronero to
see if he had talked with anybody else, and to report back to
the committee, and then, the committee would make the
decisions.
I was only to make a fact-finding to the committee. I asked
that it be expanded so that I could interview other people,
because I did not think it would be complete without at least
the interviews. But my function, as I understood it and as it
was written, was strictly a fact-finding function.
The Chairman. Well, I thank you, Mr. Fielding, and I find
it interesting that you can conduct an investigation and get
$22,000 for it, and then not find time to appear before this
Committee when you were requested.
Senator Stevens.
Senator Stevens. Mr. Fielding, just to get this in focus,
the chairman at that time, of the USOC, really--I take it she
was then the president--was not compensated, right? She was
volunteer?
Mr. Fielding. Yes. The president--as I understand the USOC,
the president--I am sorry, the president is not compensated.
The CEO is compensated. There is a dichotomy of the staffing.
Senator Stevens. And to make sure we all understand this
now, the CEO is Mr. Ward, right?
Mr. Fielding. That is correct, sir.
Senator Stevens. And he is full-time?
Mr. Fielding. It is my understanding he is full-time, full
compensation plus options.
Senator Stevens. Is Mr. Rodgers a full-time ethics
compliance officer?
Mr. Fielding. He was, sir.
Senator Stevens. Responsible to the CEO?
Mr. Fielding. Responsible to the CEO, and from my reading
of the documents, he is responsible to the Ethics Oversight
Board as well.
Senator Stevens. Now, what was the role of Mr. Madronero?
Mr. Fielding. Madronero. His role was--I believe he was in
charge of the international section, whatever--however they
divvy it up, and part of the problem that Mr. Ward was having
with him, as Mr. Ward told me, and as he told me, was that
there was a dispute as to whose jurisdiction was international,
whether it was the president, the voluntary president, or the
CEO, who was the paid staff.
Senator Stevens. Was Madronero, was he a permanent
employee?
Mr. Fielding. Yes, sir.
Senator Stevens. An employee of the USOC?
Mr. Fielding. A paid employee, yes, sir.
Senator Stevens. Did you have a hand in writing the ethics
code?
Mr. Fielding. No, I did not.
Senator Stevens. That was there before you were retained?
Mr. Fielding. That is right, sir.
Senator Stevens. Have you made other ethics investigations
for the USOC?
Mr. Fielding. No. The only related type of work I have done
for the USOC was, I conducted the vetting, if you will, for the
president, and for then the vice president, two separate
assignments.
Senator Stevens. Who retained the CEO? Was that done by the
board, or by the president herself?
Mr. Fielding. I do not now. I believe it was by the board,
but I do not know.
Senator Stevens. It does seem to be sort of a strange
relationship here, and particularly in terms of the EMT
reference. Did you ever get called on to discuss the
relationship to EMT and that accusation of bribery?
Mr. Fielding. The EMT accusation came up late, really after
I had finished my investigation, but when I was preparing the
documents for the committee. We discussed it at some length at
the first oversight committee meeting, at the time I was in--
December 23, and the decision was not to go forward with it
because it really did not relate to Mr. Ward, per se, as to his
conduct, and Mr. Duberstein was going to advise the president
that although we had received this information from her, that
we did not feel this was in the purview of the oversight
committee at this juncture.
There was some concern expressed as to whether this was a
violation of the Foreign Corrupt Practices Act. There was some
discussion as to whether we, having received this information,
that the president had an affirmative obligation to do
something in response. But, the decision of the committee was
to refer it back to her, and advise her that we were not
considering that an aspect of Mr. Ward's conduct.
Senator Stevens. Well, my staff counsel tells me that the
board can hire and fire the CEO. The president does not have
that power. Did you realize that?
Mr. Fielding. I guess I assumed that. I did not realize
that.
Senator Stevens. That leads me to have a question--we have
to know a little bit more about what the role of the Executive
Committee here from the board is.
Mr. Fielding. Right.
Senator Stevens. You were meeting with the Executive
Committee of the board, were you not?
Mr. Fielding. No, sir, I did not meet with them at all. I
was working exclusively with the oversight committee which
reported to the Executive Committee.
Senator Stevens. I see. I gathered from your statement that
there was unanimous consent of the Ethics Committee that no
member of the committee would attend the Executive Committee
meeting. Their report would speak for the ethics committee. You
did not attend that meeting?
Mr. Fielding. The Executive Committee?
Senator Stevens. Yes.
Mr. Fielding. No, sir.
Senator Stevens. Having been chairman of our Ethics
Committee here, I, too, share the chairman's wonderment at
having hired a counsel to make the report, but specifically
directing counsel not to have any recommendations.
Mr. Fielding. That is right, sir.
Senator Stevens. Well, I respect your right not to answer
that question, but I----
Mr. Fielding. Well, I--excuse me. I will answer any
question as best I can.
Senator Stevens. Not you, but I mean, the chairman asked
you, would you state your opinion now, but if you were not
hired to make those recommendations, I do not know why we
should go into it further right now. I just find it strange
also that your directions were not to do that.
Mr. Fielding. Yes, sir.
Senator Stevens. Thank you very much.
The Chairman. Thank you. Senator Campbell.
Senator Campbell. Just maybe a short question or two, Mr.
Chairman.
Mr. Fielding, in your interviews and your fact-finding, did
you feel at the time that there was a pattern of behavior,
because in the last hearing we also heard of Mr. Ward's, what
he was accused of, of directing contracts toward his daughter,
or daughters before the EMT problem.
Mr. Fielding. I had no information in that regard, nor did
the ethics officer provide that to me, sir.
Senator Campbell. Well, the Olympic Committee met--the
Executive Board, I guess it was. I am not sure if the whole
board met in Chicago last week. They decided to give what I
thought was a light reprimand to Mr. Ward, and by the way, Mr.
Chairman, we got a call about that, too, from a lady who works
at the USOC, angrier than the dickens.
She said that taking away his bonus, his bonus was more,
she said, than she had earned in 10 years working for the
United States Olympic Committee, and she was pretty upset about
that. I just pass that on for you.
Do you think that they came to any conclusions that they
are going to really move ahead, whether there should have been
a light reprimand for Mr. Ward or, even more important, the
commission that they have talked about to study how to
restructure, do you think that is going to do any good? I would
like to know your recommendations, perhaps, on that, and what
your personal view is on the reprimand, too, if you have one.
Mr. Fielding. Well, I can give you my personal view.
Senator Campbell. That is good enough.
Mr. Fielding. That is all I can give you.
Senator Campbell. Fine.
Mr. Fielding. My personal view is that this committee as it
is currently structured is in just total disarray. I do not
want to use the word dysfunctional, because everybody has been
using it, but it happens to be very apt, and when I said that
there is an unhealthy atmosphere, that is all I can say. I
mean, you cannot have good ethics programs, you cannot have
good management if you have this kind of internal strife and
the pressures that I have observed, and I have only observed
them in this limited sense.
Senator Campbell. Thank you.
Mr. Chairman, in a little while I will have some
comparative charts I would like to put up a little later in the
hearing to just show that dysfunctionalization, or whatever
word you want to use for it, but thanks very much for appearing
here. I have no further questions.
The Chairman. Mr. Fielding, you would agree this
organization cries out for reorganization?
Mr. Fielding. Yes, I would, sir.
The Chairman. Thank you very much, Mr. Fielding.
Mr. Fielding. Thank you, and again my apologies to the
Committee.
The Chairman. Thank you very much.
The next panel is Mr. Donald Fehr, executive director of
the Major League Baseball Players Association, Ms. Anita
DeFrantz, senior member of the IOC and board member of the
USOC, vice president of the International Rowing Federation,
Mr. Harvey Schiller, president and CEO, Assante U.S., former
executive director of the U.S. Olympic Committee, Mr. David
D'Alessandro, chairman and CEO of John Hancock Financial
Services, and Ms. Donna de Varona, Olympian and sports
commentator, member of the International Relations Committee of
the U.S. Olympic Committee.
Ms. de Varona, we will begin with you.
STATEMENT OF DONNA de VARONA, OLYMPIAN AND SPORTS COMMENTATOR;
CO-CHAIR, GOVERNMENT RELATIONS
COMMITTEE, U.S. OLYMPIC COMMITTEE
Ms. de Varona. First of all, I would like to correct that.
I am not a member of the International Relations Committee. I
resigned from that post after Sandy Baldwin left office.
The Chairman. The record stands corrected.
Ms. de Varona. But I am currently a lame duck cochair, and
that has been very confusing, of the Government Relations
Committee.
The Chairman. Let the record show.
Ms. de Varona. I want to say it has been a privilege to be
back here. I wish I was here under better circumstances,
because 30 years ago--and I do feel like it is Groundhog Day--
we went to a lot of work to try to set this organization
straight, and I think for many years it has functioned
brilliantly, but as with all organizations it has suffered from
very big growing pains.
I want to thank you Senator McCain, for chairing these
meetings, Senator Stevens for always being there and, of
course, my good friend Senator Campbell, my teammate from the
1964 Olympics. I remember the days when we used to work in
inner cities with kids. Some day I would like these programs to
reach those kids again, because they were very successful.
I am here today as a representative of some 6,000
registered Olympic alumni in this country who are willing and
eager to help make America's Olympic movement what it should
be. I am also here today to help redirect the U.S. Olympic
movement so that the inspirational achievements of a Bode
Miller, who won some gold medals, the best ever, yesterday for
the United States, or a Sarah Hughes and the many, many others
who have achieved success since the Salt Lake Winter Olympic
Games, are not eclipsed by the conflicts that have erupted
within our Olympic movement.
For many of us who have seen the Olympics through boycotts,
organizational disputes, bid scandals, doping issues, and even
terrorism, we encourage Congress to exert its oversight powers
in the most vigorous possible manner.
It is so sad, as we celebrate the 1-year anniversary of the
incredibly successful Salt Lake City Olympic and Paralympic
Games which brought such renewed confidence in America's
Olympic movement post the Salt Lake City scandals, that the
United States Olympic Committee has brought scandal upon itself
once again, and in so doing, has overshadowed its own triumphs
as well as the accomplishments of those who stand to suffer the
consequences of an Olympic Committee in disarray.
I am referring, of course, to the American athletes who won
an unprecedented 34 Winter Olympic medals, who will lose a
major part of their funding for 2004, as well as those who,
after the horrific events of 9/11, organized a winter
celebration which did so much to lift the spirits of a Nation
in mourning and a world eager to find common ground.
For athletes in minor sports, the Olympics are their only
Super Bowl. That is why it is so disheartening to witness the
festering issues within the United States that has threatened
to compromise their effectiveness in a broad range of areas.
Given the steady departure of executives armed with
reportedly generous buyouts and severance pays, escalating
staff salaries, ethics violations, and the financial burden of
hosting large board of directors' meetings which drain the
United States Olympics coffers to the tune of millions of
dollars per quadrennium, as well as fundraising inefficiencies
which have led to a negative rating by Forbes in its year-end
review of foundations, this kind of dysfunction can only lead
to more crisis.
With the Pan American Games scheduled to take place this
summer, and the Olympic Games in Athens, Greece, just 18 months
away, those involved in sorting out how to make the USOC more
effective need to act quickly, as you are today. In this
regard, I recommend the Senate Commerce Committee, when
considering this option to reorganize the Olympic Committee,
take an approach similar to one taken subsequent to the 1972
Munich Olympics, when Congress intervened to end disputes and
jurisdictional battles among the AU, the NCAA, as well as to
investigate why the United States Olympic Committee had failed
to provide American athletes with the kind of administrative
support they needed during those games.
It was apparent then, as it is now, that America's sporting
community needed outside help to change. Eventually, after many
congressional hearings and legislative initiatives to try to
solve the problems, President Ford appointed a commission. It
is instructive to note that the commission included eight
Members of Congress as well as athletes and prominent public
sector members from business, education, and the media.
It is significant that not one commissioner was directly or
actively affiliated with the NCAA, the USOC, or an NGB. These
organizations, however, were invited to make recommendations
and address the group during open town hall meetings.
President Ford's Commission on Olympic Sports, in summary,
did the following things, and they did it while the U.S.
Olympic Committee, because they were under pressure,
restructured itself. While the act for very good reasons was
designed as an amendment to the original charter of 1950, it
went far beyond its intent of that time, and not only redefined
USOC's purposes, but it expanded the role and scope of the
organization.
It also developed criteria, duties, and authorities for
national sports governing bodies, provided a mechanism to
guarantee the right of an athlete to compete in certain types
of competitions, supported the notion that athletes should be
included in governance. However, compromises during the
legislative process both in Washington and within the Olympic
sporting community left business, as recommended by the Ford
Commission, unfinished, and I believe that unfinished business,
in most part, is why we are here today.
Since the passage of the Amateur Sports Act in 1978, now
renamed the Ted Stevens Olympic and Amateur Sports Act, which
was further revised in 1998, the USOC has not only been faced
with new and emerging issues, but it has evolved into a
cumbersome, as we know, a multitiered, two-track structure, one
of which is a 123-member unwieldy and unfocused volunteer board
of directors headed by, as we know, a volunteer president and a
21-member Executive Committee.
The other track is a large professional staff of nearly 500
people headed by a paid CEO. The two tracks often operate
independently, at best, and cross purposes at worst. Like the
geometric principle of two parallel lines meeting only at one
point of infinity, it often seems the same principle applies to
the two branches of the United States Olympic Committee.
As we have seen, this perpetual organizational flaw has led
to confusion, frustration, power struggles, and squabbling. No
one knows who should report to whom and who is responsible for
what. Lost in this disorder is the USOC's primary mission to
identify and support programs to benefit America's athletes.
Endlessly caught up in this environment, which excludes rather
than encourages inclusion of outside leadership and resources,
the USOC has failed to reach its full potential, most lately.
Recommendations. I recommend that you on the Senate
Commerce Committee, appoint a small working group to look at
changes to the operating structure of the United States Olympic
Committee, as well as to identify obstacles which have
prevented the Olympic family from serving America's athletes.
Appointed individuals should have either a working knowledge of
ethics, well-run nonprofit organizations, corporate boards, or
have experience working with the Olympic community as a
prerequisite to address the unique challenges the Olympic
movement presents in the following areas.
Governance. We all recognize, at least we can all agree on
this, that the governance of the United States Olympic
Committee has to be streamlined. In that regard, section
2205(2) of the Amateur Sports Act pertaining to membership
should be closely examined based on that report of the
President's Commission on Olympic Sports.
The commission recommended then that the United States
Olympic Committee should have both a smaller board of directors
and Executive Committee to permit the United States Olympic
Committee to be governed more efficiently and be more
responsive to the athletes.
Therefore, I propose the act be amended in at least two
ways, require the USOC board to become comprised of a
membership of not more than 22, or some such number, with 51
percent participation of national federations. This is an IOC
rule, and if we do not follow that rule, we would have to get a
waiver from the International Olympic Committee. That is my
understanding.
Public sector members, which would be individuals skilled
in outside areas of sport, such as the late Bill Simon was,
who, as president of the USOC from 1980 through 1984, brought
his unchallenged leadership skills and concern for all parts of
the committee.
Mandate--this is the second one--that the United States
Olympic Committee larger body, whether it is called a council,
or assembly, or congress, be comprised of NGB's. This would
only streamline the organization, but it would encourage an
implementation of a vertical structure, a fundamental
organizational concept proposed in the 1978 Amateur Sports Act
and the commission report, but unimplemented so far.
However, in changing governance, the United States Olympic
Committee should continue to host a gathering of all interested
constituents during a Congress or national sports assembly
which would encourage participation by members of the different
organizations that provide strength to the Olympic movement in
the United States. During these yearly gatherings, new
leadership could be identified, emerging issues could be
addressed, and athletes, volunteers, and sponsors could be
recognized.
Always problematic, the size of the USOC board has been,
and is a product of its own making. The USOC is free to reduce
the size of its board by revising its own constitution and
bylaws.
With these changes in place, the recent flap over the
conduct of the ethics inquiry most likely could have been
avoided. Under a revised Olympic structure, the Ethics
Committee would be a committee of the board, as it is in all
well-managed corporations, smaller in number and comprised of
the board members elected from internal constituents, and those
elected from outside the internal constituents.
Instead, under the current model, the USOC has to
completely externalize its ethics reviews to nonboard members,
because its current 123 board members are potentially the very
persons whose ethics might be scrutinized. Reporting on ethics
matters under the model would be more streamlined and
confidential, and be solely to the other board members, whose
ethics would have been previously vetted in order to serve on
the board.
Finally, if the USOC is going to be fully reexamined in the
light of the Ted Stevens Olympic and Amateur Sports Act, we
should also revisit not only the new amendments and the other
parts of the act, but also current interpretations of the act
by the USOC. As one who has just completed work on the
Opportunity in Athletics Commission, I can attest that
tinkering in one area of legislation could have a profound
impact in other areas.
The role of the volunteer versus staff must also be
examined. Perhaps we could look at the International Olympic
Committee, where they do have special committees and they bring
in people from the outside. They include IOC members and staff.
International relations, as we know, has been a breeding ground
for the United States for trouble. Clear lines of authority and
responsibility must be drawn in this area.
Since the IOC movement depends on volunteers, National
Olympic Committee presidents are recognized as the official
voice of authority when international sports protocol is
observed. However, when business is conducted, overlapping
areas of responsibility often create friction between the
president and the CEO. Therefore, in areas of Olympic protocol,
the president should take the lead, and in business dealings
the CEO should have the responsibility.
In order to get a handle on the financial situation of the
United States Olympic Committee and its attendant programs
initiative, the United States Olympic Committee must be willing
to account for all funds raised and donated, be they in the
form of cash or VIK, how moneys are spent and allocated and to
whom or for what purpose should be documented to Congress on a
yearly basis.
Ideally, if the USOC finds the will and the way to respond
to change, discussions with the NCAA, the high school
community, and the President's Council on Physical Fitness in
Sports on how to find ways to support each other's programs,
i.e., men's minor sports, and share resources, will result in
even more Olympic participation opportunities for America's
youth.
In conclusion, I know the USOC is going through a
troublesome and embarrassing period. Nevertheless, as one who
has been part of this movement for most of my life, I believe
that it serves a very important function, and that there are
many good and passionate people involved, and want to be
involved. Ideally, a restructured USOC would attract America's
brightest and most dedicated, the kind of people who seek out
dreams and help those who dare to reach for them, the kind of
people who work for nonprofits because the bonus they get from
it is a smile on the faces of those who dare to reach for
excellence.
As we seek to make this committee a more streamlined and
responsible organization, we must not lose sight or abandon
that which is good. Ultimately the USOC exists to serve not
only the athletes, but the American people.
Thank you for giving me this time to speak.
[The prepared statement of Ms. de Varona follows:]
Prepared Statement of Donna de Varona, Olympian and Sports
Commentator, Co-Chair, Government Relations Committee,
U.S. Olympic Committee
Good morning Mr. Chairman and Members of the Committee. I am Donna
de Varona a former member of President Ford's Commission on Olympic
Sports, a consultant to the United States Senate during the passage of
the 1978 Amateur Sports Act, a former member of the United States
Olympic Committee Board of Directors and, most important, one who cares
deeply and personally about America's Olympic Movement. I am here today
in that latter role, and as a representative of some 6,000 registered
Olympic alumni in this country who are willing and eager to help make
America's Olympic Movement what it should be.
I am also here today to help redirect the U.S. Olympic movement so
that the inspirational achievements of a Bode Miller or a Sarah Hughes
and the many, many others who have achieved success since the Salt Lake
Winter Olympic Games are not eclipsed by the conflicts that have
erupted within our Olympic movement. For many of us who have seen the
Olympics through boycotts, organizational disputes, bid scandals,
doping issues and even terrorism, we are supportive of the changes
required to help our Olympic Committee reach its full potential.
It is so sad, as we celebrate the one-year anniversary of the
incredibly successful Salt Lake City Olympic and Paralympic Winter
Games which brought such renewed confidence in America's Olympic
Movement, that the USOC has brought scandal upon itself once again,
and, in so doing, has overshadowed its own triumphs as well as the
accomplishments of those who stand to suffer the consequences of an
Olympic Committee in disarray. I am referring, of course, to the
American athletes who won an unprecedented 34 winter Olympic medals, as
well as those who, after the horrific events of 9/11, organized a
winter celebration which did so much to lift the spirits of a nation in
mourning and a world eager to find common ground.
I would not be here if I were not devoted to what the Olympic
Movement offers to this nation and to the world. Over the years it has
not only inspired the notable accomplishments of elite athletes but it
has given birth to other noble undertakings, such as the Paralympics
and the Special Olympics, and motivated youngsters to seek the Olympic
dream which celebrates the triumph of the human spirit.
For athletes in minor sports, the Olympics are their only Super
Bowl. That is why it is so disheartening, especially given the
outstanding accomplishments of our Olympic and Paralympic athletes in
both the Sydney and Salt Lake Games, that festering issues within the
USOC threaten to compromise its effectiveness in a broad range of
areas. Given the steady departure of executives armed with reportedly
generous buyouts, escalating staff salaries, ethics violations, the
financial burden of hosting large board of directors meetings which
drain USOC coffers to the tune of 6 million dollars per quadrennium, as
well as fund raising inefficiencies which lead to a negative rating by
Forbes in its year end review of Foundations, this kind of dysfunction
can only lead to more crisis which will continue to have a negative
impact on future Olympic efforts both on and off the field of
competition.
With the Pan American Games scheduled to take place this summer and
the Olympic Games in Athens, Greece, just 18 months away, those
involved in sorting out how to make the USOC more effective need to act
quickly.
In this regard, I just hope that this time around those involved in
the process of reforming the USOC will consider recommendations which
were originally offered by President Ford's Commission on Olympic
Sports, recommendations which were not adopted but would have helped
this organization avoid the predicament it finds itself in today.
History of the USOC
The United States Olympic Committee began its existence in 1896,
the year of the first Olympic Games of the modern era. In 1950, as with
numerous other corporations concerned with the public good, it received
a federal charter, the most important aspect of which was the first
statutory protection of the Olympic trademarks to assist the USOC in
its corporate and other fundraising efforts. Since its inception in
1896 and through 1976, the USOC was little more than a travel agency
which functioned once every 4 years to send Olympic teams to the sites
of the games.
Through the years of the American Olympic movement, there were both
successes and failures. The successes may be summarized by a quick
examination of the achievements of the some 6,000 Olympians. People
like our alumni President John Naber and Mark Spitz, wrestlers Rulon
Gardner and Brandon Slay, decathletes Rafer Johnson and Congressman Bob
Mathias, miler Jim Ryun, Senators Bill Bradley and Ben Nighthorse
Campbell, Statesmen Jesse Owens and Muhammad Ali, Olympic gold
medalists such as Wilma Rudolf, Marion Jones, Janet Evans and the
Williams sisters as well as many others who succeeded in becoming
household names to whom our youth looked up as role models.
Many of these athletes succeeded despite the U.S. Olympic
Movement's failures as embodied in huge disputes among organizations
that comprised it. In the 1950s and early 1960s, as college and Olympic
sports became more popular and prominent, three competing sports
organizations began to fight over athlete jurisdiction; the AAU, then
the national governing body (NGB) for 10 Olympic sports: the school/
college sports community; and the ``independent'' NGBs which conducted
their programs apart from the AAU and did not have school/college
participation in their sports.
The consequences were (1) our best athletes often were left off of
or denied the opportunity to compete in certain major international
competitions, resulting in losses the United States would otherwise
have won; (2) athletes were denied the opportunity to compete as a
result of jurisdictional disputes: (3) no mechanism existed in our
American Olympic system to solve or address these and other such
problems.
Eventually, because of the absence of a unified organization in
charge of amateur sports in the United States, and troubled by
internecine squabbling which threatened to compromise U.S. athletes,
Congress held oversight hearings and President Ford's Commission on
Olympic Sports was established.
President Ford's Commission on Olympic Sports
In 1975 President Gerald Ford established the Commission on Olympic
Sports:
1. To recommend an organizational blueprint for how Olympic
sports activities should be structured in this country so that
certain types of disputes could be resolved, including an
athletes right to compete, and
2. To find better ways to finance Olympic sport in America.
After a two-year comprehensive study in which all interested
parties were invited to participate, the Commission issued its
final report in January, 1977. It, called for a totally
reorganized USOC which would assume the leadership for all
Olympic sports in the United States while addressing the issues
that had plagued the U.S. Olympic movement for years.
It directed the USOC to:
1. Create a mechanism to settle disputes.
2. Facilitate the establishment of independent National
Governing Bodies.
3. Ensure athletes rights to compete.
4. Be responsible for fund raising efforts.
5. Provide fair and equitable opportunities for minorities,
those with special needs, and women athletes.
To its credit, the former USOC, in response to the Commission
report, voluntarily reorganized itself in 1977 and 1978,
ridding itself of a far more unwieldy structure than even
exists today. And, it set out on new fundraising/marketing
efforts that resulted in more funds being raised than in all of
its previous years of existence combined! It was during that
quadrennial period that U.S. Olympic programs we now take for
granted came to life such as the creation of the Olympic
Training Center, financial support for NGBs and travel and
training grants for developing athletes.
Meanwhile, Congress was enacting the Amateur Sports Act of 1978
which was based on the Ford Commission Report. The Act was, for
very good reasons, designed as an amendment to the USOC
original charter of 1950. The Act did several things.
1. It redefined USOC purposes, expanding the USOC s scope of
assigned activity.
2. It developed criteria, duties and authorities for national
sports governing bodies (NGBs) that an NGB had to meet in order
to be recognized by the USOC.
3. It provided procedures for resolving disputes using the NGB
criteria and duties as standards.
4. It provided a mechanism to guarantee the right of an athlete
to compete in certain types of competitions, most notably when
a national team was involved.
5. It supported the notion that athletes should be included in
governance on all sporting boards within the USOC structure.
Current Situation
However, since the passage of the Amateur Sports Act in 1978, now
renamed the ``Ted Stevens Olympic and Amateur Sports Act,'' which was
further revised in 1998, the USOC has not only been faced with new and
emerging issues but it has evolved into a cumbersome, multi-tiered,
two-track structure, one of which is a 123-member, unwieldy and
unfocused volunteer Board of Directors headed by a Volunteer President,
and a 21-member Executive Board. The other track is a large
professional staff of nearly 500 people headed by a paid CEO. The two
tracks often operate independently at best and cross-purposes at the
worst. Like the geometric principle of two parallel lines meeting only
at the point of infinity, it often seems that the same principle
applies to the two branches of the USOC.
As we have seen, this perpetual organizational flaw has lead to
confusion, frustration, power struggles and squabbling. No one knows
who should report to whom and who is responsible for what. Lost in this
disorder is the USOCs primary mission to identify and support programs
to benefit Americas athletes. Endlessly caught up in an environment
which excludes rather than encourages inclusion of outside leadership
and resources, the USOC has failed to reach its full potential.
Recommendations
1. Working Group
Senators Ted Stevens, John McCain and Ben Nighthorse Campbell
SHOULD appoint a small working group to recommend changes to the
operating structure of the USOC as well as identify obstacles which
have prevented the Olympic committee from fully serving America's
athletes. Appointed individuals should have either a working knowledge
of ethics, well-run non-profit organizations, corporate boards, or have
experience working with the Olympic community as a prerequisite to
address the unique challenges the Olympic movement presents in the
following areas:
2. Foundation of Governance: History revisited
We all recognize that the governance of the USOC has to be
streamlined. In that regard, section 22052 of the Amateur Sports Act,
pertaining to Membership, should be closely examined. Based on the
Report of the Presidents Commission On Olympic Sports (PCOS, 1975-77),
the Commission recommended then that the USOC should have both a
smaller Board of Directors and Executive Committee to permit the USOC
to be governed more efficiently and be more responsive to the athletes.
Therefore I propose the Act be amended in at least two ways.
(1) Require the USOC board be comprised of not more than 15
members with major representation from individuals skilled in
areas outside of sport such as the late Bill Simon, who, as
President of the USOC from 1980 through 1984 brought his
unchallenged leadership skills and concern for all parts of the
USOC organization.
(2) Mandate that the USOC's larger body (whether it is called a
council or assembly or a congress) be comprised of only NGBs.
This would not only streamline the organization but it would
encourage implementation of a ``vertical structure'', a
fundamental; organizational concept proposed in the 1978
Amateur Sports Act and the Commission report but unimplemented
so far.
However, in changing governance, the USOC should continue to host a
gathering of all interested constituents during a ``Congress'' or
``National Sports Assembly'' which would encourage participation by
members of disparate organizations that provide strength to the Olympic
Movement in the United States (at the expense of the attendees). During
these yearly gatherings, new leadership could be identified, emerging
issues could be addressed and athletes, volunteers and sponsors could
be recognized.
Always problematic, the size of the USOC Board has been and is a
product of its own making. The USOC is free to reduce the size of its
board by revising its own Constitution and Bylaws. However when
streamlining, the volunteer aspect of the USOC, which makes up the
foundation of the Olympic Movement both in the U.S. and
internationally, should be preserved and protected.
With these changes in place, the recent flap over the conduct of
the ethics inquiry, most likely could have been avoided. Under a
revised Olympic structure the ethics committee would be a committee of
the board, as it is in all well managed corporations, smaller in number
(5) and comprised of board members elected from internal constituencies
and those elected from outside the internal constituencies (e.g. Bill
Simon). Instead, under the current model, the USOC has to completely
externalize its ethics reviews to non Board members because its current
123 Board members are potentially the very persons whose ethics might
be scrutinized. Reporting on ethics matters under this model would be
more streamlined and confidential and be solely to the other Board
members whose ethics would have been previously vetted in order to
serve on the Board.
Finally if the USOC is going to be fully reexamined in light of the
Ted Stevens Olympic and Amateur Sports Act we should also revisit not
only the new amendments and other parts of the Act but also current
interpretation of the Act by USOC. As one who has just completed work
on the Opportunity in Athletics Commission, I can attest that tinkering
in one area of legislation can have a profound impact in other areas.
3. Role of the Volunteer vs. the Staff
Studying the way in which the International Olympic Committee
(``IOC'') delineates and coordinates staff functions in partnership
with its volunteer membership to prioritize its agenda and implement
policies could be very instructive when identifying how the USOC should
function. Currently the IOC appoints commissions that are comprised of
IOC staff, IOC members as well as outside experts to deal with
different aspects of international sport. These Commissions include
Marketing, Media, television and broadcast communications, Solidarity,
Olympic Games site selection, Olympic Host City Oversight, etc.
4. International Relations
This area has been a breeding ground for trouble. Clear lines of
authority and responsibility must be drawn in this area. Since the
International Olympic Movement depends on volunteers, National Olympic
Committee Presidents are recognized as the official voice of authority
when international sports protocol is observed. However when business
is conducted, overlapping areas of responsibility often create friction
between the President and the CEO. Therefore in areas of Olympic
protocol, the President should take the lead, and in business dealings,
the CEO should have the responsibility.
5. Transparency
In order to get a handle on the financial situation of the USOC and
its attendant programs and initiatives, the USOC must be willing to
account for all funds raised and donated be they in the form of cash or
``V.I.K.''. How monies are spent and allocated and to whom and for what
purpose should be documented in a report to Congress on a yearly basis.
6. Future
Ideally, if the USOC finds the will and the way to respond to
change, discussions with the NCAA, the High School community and the
President's Council on Physical Fitness and Sports on how to find ways
to support each others programs and share resources will result in even
more Olympic participation opportunities for Americas youth.
Conclusion
The USOC is going through a troublesome and embarrassing period,
and perhaps has only itself to blame. Nevertheless, as one who has been
part of this movement for most of my life I believe that it serves a
very important function and that there are many good and passionate
people already involved. Ideally a restructured USOC would attract
America's brightest and most dedicated, the kind of people who seek out
dreams and help those who dare to reach for them. The kind of people
who work for non-profits because the bonus they get is the smile on the
faces of those who dare to reach for excellence.
As we seek to make the USOC a more streamlined and responsive
organization we must not lose sight, or abandon that which is good.
Ultimately the USOC exists to serve not only the athletes, but also the
American people. It is doing both now, but it can do it much better. I
look forward to whatever contribution I can offer to help it become an
even better and more inclusive organization as do the athletes that we
are all dedicated to serving.
The Chairman. Thank you very much.
Mr. D'Alessandro.
STATEMENT OF DAVID F. D'ALESSANDRO, CHAIRMAN AND CEO, JOHN
HANCOCK FINANCIAL SERVICES, INC.
Mr. D'Alessandro. Good morning, Mr. Chairman. I would like
to thank the Committee for showing leadership on this important
issue. The USOC's problems go well beyond the embarrassing
public feud and predate current management. Simply changing and
shrinking the current structure will solve only part of the
problem. The USOC cannot be fixed until its operational
underpinnings are also understood and addressed.
Contrary to popular belief, the United States Olympic
Committee does not select athletes, it does not develop most of
our Olympians, and it does not operate the games, which begs
the question, what exactly do they do? Their mission, according
to their statement, is to ``lead the world's best national
Olympic committee, help U.S. athletes achieve sustained
competitive excellence, while inspiring all Americans and
preserving the Olympic ideal.''
It would appear clearly the USOC has lost its way. It fails
to provide enough resources for athletes, it fails to be
financially self-reliant, and it fails to provide the
transparency we all deserve. Every dollar the USOC wastes on
its bureaucracy or misguided self-indulgence is a dollar not
spent giving a child an opportunity.
Here are some facts. The USOC spends an average of 24
percent of its total revenue on overhead. Most major nonprofits
spend much less. Now, only 46 percent of these revenues go
directly to the NGB's and the athletes. The USOC's real estate,
according to their tax returns, including headquarters and
training centers, are worth $145 million, with annual expenses
of $21 million, yet as most athletes would agree, most
Olympians do not even use the training facilities. People are
trained in this country on a grassroots basis, and the money
just does not get there.
The USOC has 500 paid employees. Even the IOC has only 150.
Though it receives an average of $70 million a year from the
IOC, it distributes an average of just over $1 million to each
NGB. If the USOC was eliminated except for a person to cash the
IOC checks, our athletes would get $18 million more directly
than they are getting today.
In 2001, the USOC gave more money to NGB's that use
professional athletes from the NBA and the NHL than they gave
to gymnastics and figure skating, kids who are really scraping
for the money. The NHL and NBA should be paying the USOC for
the right to market their product worldwide. The USOC should be
measured primarily on its ability to give our athletes maximum
opportunities through financial support.
Now, I believe the USOC wrongly heralds the number of
medals won as their primary measure of success. As Donna says,
we have excellent Olympic athletes in this country, and we have
every reason to be proud of them. In Sydney, we won 97 medals,
but let us look at those numbers. With a combined population 35
million lower than the U.S., Russia, Australia, and Germany won
202 medals. Salt Lake is a similar story. While I do not agree,
as I said, that we should measure ourselves on medals, if one
has to guess, what would the U.S. have won if the USOC was
actually doing its job?
Let us turn to the failure of self-reliance. The IOC, as we
all have heard, provides a large portion of the budget, as much
as 60 percent, and it comes in cash. We should receive a large
portion of the IOC's revenues. We deserve it. We send a lot to
Switzerland, but overdependence on the IOC is fragile and
dangerous.
The IOC governs 199 national organizing committees, and it
is under growing pressure to support other nations. We should
neither overly rely on fluctuating IOC funding, nor consider
public subsidies. What we need in this country is a committee
competent enough to compete with the likes of the NFL and the
NBA for a share of the $6.4 billion annually spent in corporate
America on sports sponsorships.
The USOC is not transparent and accountable for much of its
money. For example, the IRS now requires the USOC to
specifically disclose certain contributors and their
contributions, yet the USOC failed to do so. In its 2001 tax
return, only international sponsors are listed. All others are
missing. In addition, value in kind contributions are not
accounted for. The public cannot tell what the USOC gets, its
value, or how it is distributed.
For example, gas cards and shopping credits donated by
sponsors Chevron and Sears are given USOC staff for bonuses.
Sports Illustrated yesterday reported 197 company cars are
given to USOC staff. Yes, the USOC has lost its way. Why? I
think we all have different conclusions on this subject. As a
corporate person, I will tell you I believe it has lost its way
because it does not believe it has a boss to hold it
accountable. All of us have to answer to somebody. I have
shareholders and directors. You have voters.
Mr. Chairman, you are right by reminding the USOC of this
committee's prerogatives. I would also encourage you to hold
the USOC to high standards and impose certain goals, including,
obviously, downsizing and streamlining. I believe Congress
should look to appoint at least half of the membership of any
newly reconstituted group.
We should require in this country that 85 cents of every
dollar the USOC brings in goes directly to the athletes. It
should be an absolute requirement. They need to become
financially progressively self-reliant. I believe the IOC money
at some point--and I think we should scrape for every dollar of
it--should be put into a special endowment so the athletes will
have an ongoing stream over the years that we can rely on.
If we took the IOC money, we would have, in 10 years, a
billion-dollar endowment if the cash-flow from the USOC were
simply to come from U.S. sponsors. Obviously, they need to
adhere to standards of financial management, and I think they
need to make a full progress report every year in Congress. If
this process begins, the next time the USOC officers appear at
this table, we will all have something to be proud of and not
embarrassed by.
Thank you.
[The prepared statement of Mr. D'Alessandro follows:]
Prepared Statement of David F. D'Alessandro, Chairman and CEO, John
Hancock Financial Services, Inc.
I want to thank the Committee for showing leadership on this
important issue and for inviting this panel to be part of the
discussion.
John Hancock is a ten-year Olympic sponsor. We have invested over
$100 million in the Olympics because it is the only sports sponsorship
that gives us the dual opportunities for an investment return and to
help America's youth achieve their dreams.
The problems at the USOC go well beyond the current embarrassing
public displays. Changing and shrinking the governance structure will
only solve part of the problem. The USOC cannot be fixed properly
unless its financial and operational underpinnings are understood and
addressed.
In order to address them, a few fallacies first have to be
disavowed:
Contrary to popular belief, the USOC does not select Olympic
athletes. They are selected by the 39 National Governing
Bodies--or NGB's--the federations that run individual sports.
The USOC also has virtually no responsibility for the Games
when they occur in the U.S. That is primarily the
responsibility of the host city.
And it is not the primary developer and trainer of potential
Olympic athletes. That role falls to parents, schools,
universities, sports clubs and the NGB's.
So, what, exactly, is the USOC supposed to do?
The 1978 Ted Stevens Amateur Sports Act, which helped empower the
modern USOC, certainly intends support for athletes. And according to
the USOC's constitution, its mission is to ``lead the world's best
National Olympic Committee: help U.S. Olympic athletes achieve
sustained competitive excellence, while inspiring all Americans and
preserving the Olympic ideal.''
Given the USOC's less than ideal performance in recent years, it is
clear that it has lost sight of this mission.
Frankly, the USOC has lost its way.
It has lost its way by:
Failing to provide enough resources and opportunities
directly to aspiring athletes;
Failing to be financially self-reliant; and
Failing to provide the financial and ethical transparency
that the athletes and the American public deserve.
Let me give a few facts about each of these issues. Much of what we
are going to talk about is taken from the USOC's federal tax filings
and audited consolidated financial statements available to anyone on
the USOC's Web site. These documents are frequently incomplete,
confusing, and difficult to reconcile. Nonetheless, the outline of the
USOC's problems is crystal clear.
First, opportunities for athletes: the USOC uses its money
inefficiently and does not spend enough on the athletes.
For the four-year period ending December 31, 2000, the USOC spent
an annual average of 24 percent of its total support and revenue on
overhead. \1\ The average major nonprofit spends just 16 percent on
overhead--with many lower than that number. \2\ A further statistic:
during the same four-year period, the portion of the USOC's revenues
that actually went directly to the NGB's and the athletes was only an
annual average of 46 percent. \3\
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\1\ USOC 2000 Consolidated Financial Statements, pp. 58-59.
\2\ Forbes Magazine Annual Survey of Charities, December 9, 2002,
p. 186.
\3\ USOC 2000 Consolidated Financial Statements, pp. 58-59.
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The USOC reports that it has considerable real estate investments,
including its corporate headquarters and training facilities, with a
cost basis of approximately $145 million and associated annual
operating expenses of over $21 million. \4\ While the USOC will claim
that its training facilities are vital, a great many Olympians and
aspiring Olympians don't use them and train instead at other sites,
such as universities, private athletic clubs, rinks, and gyms, and
public and community training centers. And most athletes would agree,
this is an ineffective use of a major part of the USOC's budget.
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\4\ USOC 2001 Consolidated Financial Statements, p. 32, p. 36.
---------------------------------------------------------------------------
The USOC has also created a paid bureaucracy that is--in the words
of Lloyd Ward at this Committee's January 28 hearing--``500 strong.''
\5\ Contrast this with the International Olympic Committee, which has
received its share of criticism in recent years. Responsible for both
the Games and supporting athletes worldwide, the IOC has just 150 paid
employees. \6\
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\5\ U.S Senate Commerce Committee Hearing, January 28, 2003.
Transcript pages attached.
\6\ IOC Marketing Department.
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The USOC also reports that it will receive from the IOC $418
million in television royalties over a ten-year period that began in
1998 and approximately $27 million annually from fees paid to the IOC
by U.S.-based international sponsors. On average, that totals about $70
million a year. \7\ Between 1997 and 2000, the USOC distributed direct
grants and allocations to the NGB's and athletes that averaged $52
million per year--an average of only slightly over a million dollars
for each sport. \8\ If the entire USOC bureaucracy in Colorado Springs
were eliminated--even if the questionable training facilities were
kept--and the IOC money were just given directly to the NGB's and the
athletes, they could get about $18 million more a year.
---------------------------------------------------------------------------
\7\ $418 million: USOC 2001 Consolidated Financial Statements, p.
33. $27 million: USOC 2001 Federal Tax Return, Schedule B, and USOC
2001 Consolidated Financial Statements, p. 25.
\8\ USOC 2000 Consolidated Financial Statements, p. 59.
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Here is just one of hundreds of examples of how the USOC has
distributed its money: In 2001, the USOC gave $2.6 million to
gymnastics and figure skating. These are the two most popular Olympic
sports, yet the vast majority of participants are not professional.
They are aspiring amateur athletes who virtually have to scrape for
funding. Meanwhile, in the same year, the USOC gave the hockey and
basketball federations $3.1 million. \9\ The NHL and NBA pros who
populate the Olympic teams in these sports hardly need the subsidy. Why
are the NHL and NBA not paying the USOC for marketing their properties
worldwide?
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\9\ USOC 2001 Federal Tax Return, form 990, statement 8.
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Every dollar that the USOC wastes on its bureaucracy or misguided
selfindulgence is a dollar not spent giving a child an opportunity to
see what he or she can achieve as an athlete. We should measure the
USOC on its ability to allow the greatest number of young people to
avail themselves of that opportunity.
The USOC, on the other hand, heralds the medals won by the world's
greatest nation as evidence of its success. \10\ It is not just about
the medals. But even on their own terms, they are not effective.
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\10\ Lloyd Ward, ``U.S. Can Be Proud Of Olympic Committee,'' The
New York Times, January 12, 2003.
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In the 2002 Salt Lake City Games, the U.S., with a population of
288 million, won 35 medals. Germany, Norway, Austria, Canada and the
Russian Federation, with a smaller combined population of 272 million,
won 111 medals. Certainly, there is an argument to be made that we are
stronger in the Summer Games. We do have great athletes, but even in
the 2000 Summer Games in Sydney, with a population of 282 million, we
won just 97 medals. With a combined population of 247 million, the
Russian Federation, Australia, and Germany won 202 medals. \11\
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\11\ www.Olympic.org; U.S. Census Bureau, International Data Base,
population figures for 2000 and 2002, updated October 10, 2002.
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This leads to my second issue, the lack of self-reliance at the
USOC.
What do we mean by a lack of self-reliance?
If we look back at the estimated $70 million that the USOC receives
on average from the IOC each year, that represents a large percentage
of the USOC's annual operating budget--in some years nearly as much as
60 percent. \12\
---------------------------------------------------------------------------
\12\ USOC 2000 Consolidated Financial Statements, p. 59; USOC 2001
Consolidated Financial Statements p. 25.
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While we should get a fair portion of the IOC's revenues, we should
also be cognizant that our dependence on the IOC is dangerous.
The IOC now has 199 national organizing committees to support--more
than twice as many in both Summer and Winter Games as in 1976. \13\
Many of these nations cannot afford an Olympic program at all. There is
considerable international pressure on the IOC to reallocate money to
them. Given the way the USOC operates, that will only mean even less
money will make its way to American athletes in the future.
---------------------------------------------------------------------------
\13\ www.Olympic.org/uk/games/index.
---------------------------------------------------------------------------
Furthermore, the IOC has awarded the Olympic Games to the United
States four times in the last 23 years. And in the periods when the
Games are in the U.S., the USOC achieves higher revenues than when they
are not. All of this contributes to the USOC's perceived waste and
gluttony and understandably exacerbates the animosity of some IOC
members towards the USOC.
And when the IOC determines two years from now whether to award the
2012 Summer Games to New York City--or not--it may be more interested
in holding the Games in a country where the national organizing
committee is not going to insist on huge sums of money to fund its own
bloated bureaucracy.
Other countries subsidize their national organizing committees. But
we are the richest nation on earth. In 2001, $6.4 billion was spent on
sports sponsorships in North America. \14\ We don't need to depend on
the largesse of the IOC to support our athletes. We don't need public
subsidizes or lotteries for the USOC. We need a USOC competent enough
to compete for those billions of sponsorship dollars with the likes of
Major League Baseball and the NFL.
---------------------------------------------------------------------------
\14\ ``Sponsorship spending n1 in North America by property type,''
The American Marketing Association's Marketing News, July 8, 2002.
---------------------------------------------------------------------------
Here is the third issue: the USOC's current financial reporting is
far from transparent, allowing it to avoid accountability for the way
it raises and spends money.
For example, the USOC is required to specifically disclose to the
IRS all contributors who give at least 2 percent of its revenue in cash
and value-in-kind--approximately $950,000 in 2001. \15\ In its 2001 tax
return, only international sponsors are listed. Its individual donors,
domestic sponsors, suppliers, and licensees appear to be missing. The
question is, where are they?
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\15\ USOC 2001 Federal Tax Return--Form 990 Line 1(d) and Schedule
B--Regulation Section 1.6033-2(a)(2)(iii)(a). Line 1(d) $47,748,000
2 percent = $954,960.
---------------------------------------------------------------------------
Value-in-kind contributions are also not accounted for. The public
cannot tell what the USOC gets, its value, or how it is distributed.
The Los Angeles Times gave us a possible hint when it reported on
January 23 that gasoline donated by Chevron and shopping credits
donated by Sears are going to the USOC bureaucracy for bonuses, not to
the athletes. \16\ The question is, how much, what is it, and where
does it go?
---------------------------------------------------------------------------
\16\ ``USOC Cuts Spending Amid Budget Crunch,'' Los Angeles Times,
January 23, 2003.
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Obviously, the USOC's financial statements raise more questions
than they answer. That is why we sent the USOC a letter on January 20
asking them to fill in the blanks. We look forward to seeing their
financials tomorrow, as promised by Lloyd Ward and the USOC's acting
president, Bill Martin.
Clearly, the USOC has lost its way. How did this happen?
Among other reasons, it has lost its way because it does not have a
boss. The rest of us all answer to somebody. I have shareholders and a
board as my bosses. The members of this Committee have the voters. The
USOC believes it has no boss. I would suggest that this Committee
become the boss.
As boss, I would urge this Committee to hold the USOC to a higher
standard and force it to meet specific goals.
They should include:
Dramatically downsizing and streamlining the governance
structure;
And whatever new form of governance is arrived at for the
USOC, at least half of the board should be appointed by
Congress;
An 85/15 rule that requires that 85 cents of every dollar in
the USOC budget goes to the athletes;
Becoming progressively and completely financially self-
reliant within the next ten years;
Adhering to higher standards of financial management and
reporting; and
Once a year, making a full report to the American people
through Congress.
I believe that if we do these things, the next time the officers of
the USOC appear before this Committee, we will all have something to be
proud of, not embarrassed by.
Thank you.
The Chairman. Thank you. Just to put this in perspective,
your corporation has contributed how much to the Olympics as
sponsors?
Mr. D'Alessandro. About $110 million.
The Chairman. Thank you very much.
Dr. Schiller, welcome.
STATEMENT OF HARVEY W. SCHILLER, PRESIDENT AND CEO, ASSANTE
U.S.; FORMER EXECUTIVE DIRECTOR, U.S.
OLYMPIC COMMITTEE; CHAIRMAN, MANAGEMENT
COMMITTEE FOR NYC 2012
Dr. Schiller. Thank you. Good to see you again. Chairman
McCain, distinguished Members of this Committee, thank you for
the opportunity to discuss the United States Olympic Committee,
its governance and organizational structure. My name is Harvey
Schiller. I am the president of Assante U.S., and I also chair
the Management Committee as the candidate city for New York
City for the Games in 2012.
I have had previous service as the Executive Director, now
called the chief executive officer of the U.S. Olympic
Committee.
The Chairman. During what period of time, Dr. Schiller?
Dr. Schiller. From the beginning of 1990 to almost the end
of 1994, a 5-year period. I served as a volunteer before that,
and have done some work since then.
The Chairman. Thank you.
Dr. Schiller. The United States Olympic Committee has a
long record of doing lots of things well. The performance of
athletes in past Olympic, Pan American, and Paralympic Games
has been extraordinary. The USOC has protected athletes' rights
to compete, established comprehensive drug-testing protocols,
provided expert logistical support, and established national
training centers among their extraordinary achievements, yet
that track record is in jeopardy.
The committee stands at a crossroads, having endured more
than 2 years of constant upheaval and controversy. If the
committee is to meet the challenges it now faces, the internal
conflict and failure of leadership which have marked the last
28 months and more must end.
I believe the problem lies in the organization's principal
governing body, its board of directors, which is dominated by
representatives of the diverse constituent groups that make up
the committee. These range from dozens of national governing
bodies of Olympic, Paralympic, and Pan American sports to
community-based organizations. As an example, a sport such as
boxing and equestrian are not only different in the fields of
play, but in terms of the athletes that they represent
economically as well.
This diverse membership competes for the organization's
limited funding, representation, and recognition. The
conflicting interests and needs of the members of the board
place them at odds with the primary goal of the committee, as
defined by the Sports Act. I believe the solution is management
restructuring aimed at achieving three goals, responsible,
objective oversight, independent, unaffiliated governance,
orderly transition of leadership.
The following steps by an appointed committee of this
committee could put the USOC on the right path, but will only
work with the appropriate leadership in place. My
recommendations are as follows.
Congress create an oversight committee to which the USOC
leadership must answer. This authority would have two
responsibilities, ensuring propriety and staffing a new
governing body. The oversight committee would ensure that the
committee complies with all relevant legislation, its own code
of ethics, and the IOC charter. It would also select qualified
individuals, independent of both the USOC and its member
organizations, to serve as a majority of the USOC's newly
constituted Executive Committee.
Chief qualifications would include an ability to bring a
different but complementary perspective to the committee, and
to reflect the common interests of the American public.
Next, reorganize the USOC Executive Committee and make it
the governing body. The most efficient way to create this new
governance entity will be to use an existing framework. While a
reorganized and reduced Executive Committee could include USOC
officers and IOC members, it would predominantly feature
individuals recommended by the oversight committee.
The Executive Committee would appoint a chairperson from
its members, and the CEO of the USOC would continue to be a
member. The specific responsibilities of the CEO and staff vis
a vis volunteer leadership would be determined by the Executive
Committee.
Next, shift and downgrade the role of the board of
directors. The board of directors would become an advisory
group to the reconstituted Executive Committee. Its membership
should continue to represent the organization's constituent
groups, and should reflect the broad objectives and purposes of
the U.S. Olympic Committee. There would be appropriate changes
in responsibility and voting powers.
Change the nature of the USOC's Nominating Committee. This
body, on a quadrennial basis, makes recommendations to the
board of directors regarding the officers and public sector
members that the board will then elect.
The Nominating Committee is currently composed of members
representing the USOC's various constituent groups. It should
instead be peopled with individuals unaffiliated with the
committee, who would more objectively consider appropriate
individuals for leadership. In fact, a recent study by the
conference board suggests that independent board members
comprise the Nominating Committee of all boards of directors.
Finally, reestablish the positions of first, second, and
third vice presidents. A strong second tier of management would
allow for orderly transition when the office of the president
becomes vacant. This would eliminate the political infighting
that has so often occurred during these periods of change.
The USOC and its members have been blessed with many
individuals who have given much to the Olympic movement. They
deserve the best from their leadership. Our athletes are
entitled to an organization whose priorities are clear, and
whose efforts are focused on supporting them.
In addition, America's great cities deserve to be viable
competitors for future Olympic Games, and the need for change
is urgent. New York is the candidate city of the United States
for 2012. It needs a stable and successful USOC to have the
best chance of making its bid a reality.
Congress must now move to effect the needed management
restructuring. It is past the time for us to have a USOC. We
need one that is befitting our Nation's stature as an
international competitor, global leader, and steward of human
freedom and achievement.
Thank you.
[The prepared statement of Dr. Schiller follows:]
Prepared Statement of Harvey W. Schiller, President and CEO, Assante
U.S., Former Executive Director, U.S. Olympic Committee, Chairman,
Management Committee for NYC 2012
Chairman McCain, distinguished Members of the U.S. Senate Committee
on Commerce, Science, and Transportation, ladies and gentlemen, thank
you for the opportunity to appear today to discuss the United States
Olympic Committee (USOC), its governance and organizational structure.
My name is Harvey W. Schiller and I currently serve as President of
Assante US, a financial services company and also as Chair of the
Management Committee of NYC 2012, the United States candidate city to
host the Summer Olympic Games in the year 2012. I have served as
Executive Director (the position has since been renamed ``Chief
Executive Officer'') of the USOC, as an officer of a National Governing
Body (NGB) of Olympic Sport, as well as a volunteer member of the
USOC's Board of Directors and Executive Committee. My bio is attached
for your reference.
First, I would like to recognize the many contributions made by
members of this Committee, as well as by local, state and federal
governments in support of the Olympic Movement, its athletes, and the
dreams and aspirations of so many Americans. From providing the
services of the Armed Forces for security, to creating coin programs to
help finance the training of athletes, the support of each of you and
our government has helped enable our Olympians to accomplish what
otherwise would have been an impossibility. My respect for Senator
McCain spans decades, from my service as an Air Force pilot in Vietnam
to this day. I remember a meeting some ten years ago with Senator
McCain to discuss many of these same issues that faced the USOC at that
time. Senator Stevens has been awarded the Olympic Order by the
International Olympic Committee in recognition of his significant
contributions to the Ted Stevens Olympic and Amateur Sports Act of
1978, as well as to subsequent revisions and other legislation in
support of America's athletes. Senator Hollings, a fellow graduate of
The Citadel, has been a long time contributor to America's Olympic
efforts. I can recall discussing officiating with Senator Burns based
on his personal experience as a game official. When Senator Allen was
Governor of Virginia many years ago, he led a delegation to St. Louis
to support the city's bid to host an Olympic Festival in his home
state. Senator Breaux assisted in staging a very successful Olympic
Festival in Baton Rouge and has continued to support Olympic fund-
raising efforts here in Washington, D.C. Senator Lautenberg may
remember a discussion regarding facilities for the New Jersey Nets and
New Jersey Devils during my tenure as Chairman of the YankeeNets
organization. And of course, as an Olympian himself, Senator Campbell
knows the Olympic Movement from all perspectives, and has personally
assisted me in my former Olympic duties more times than I can remember.
The views I express today are my own, based on my Olympic service
and my observations of the USOC since the end of my tenure as Executive
Director in 1994. The USOC has a long record of doing many things well.
The performance of our athletes, coaches, and officials in past Olympic
and Pan American competitions has been extraordinary. The
accomplishments of our disabled athletes in Paralympic and world
championship competitions have been second to none. The U.S. Olympic
Committee itself has done many things well. It has protected athletes'
rights to compete; established comprehensive drug-testing protocol;
provided expert logistical support for Olympic, Pan American,
Paralympic and World University Games; established national training
centers for athletes and accomplished a long list of other successes.
The USOC is an organization with a diverse membership, unique needs
and limited resources. The constituent groups of the USOC range from
National Governing Bodies of Olympic, Paralympic and Pan American sport
to community-based organizations such as the Boys and Girls Club. These
diverse membership groups compete for the organization's limited
funding, representation and recognition. The diversity of interests and
needs among the members of the current Board of Directors indicates a
need for structural change to insure the primary goal of the USOC as
defined by the Olympic and Amateur Sports Act is met, namely: ``to
promote and coordinate amateur athletic activity in the United
States.'' While the USOC is obligated to oversee dozens of different
sports, it does not benefit from the collegiality seen in organizations
such as the NCAA and other sports associations. The National Governing
Body for a sport such as Archery has little in common with the NGB of
Basketball. Boxing and Equestrian are dramatically different sports,
not only on their fields of play, but in their social and economic
compositions as well. While the Olympic Team may appear as an
integrated unit during Opening Ceremonies, the National Governing Body
for each of the sports represented on that team are far fields apart.
Each one competes with the others for sponsorships, media coverage, and
even athletes themselves. Add to this mix the desire for non-Olympic
sports to be added to the Olympic program, the special challenges of
Disabled Sports Organizations, the particular needs of the armed
forces, community based and religious entities, school and college
communities, and state organizations. Only then can you begin to
understand what differentiates the USOC from other charitable
organizations, and why it needs a structure that will enable it to
accommodate the needs of its members and fulfill the mission defined by
the Olympic and Amateur Sports Act and expected by the American public.
The future holds even more significant challenges for this
country's Olympic Committee. Today, the USOC depends heavily on Olympic
Games television and sponsorship revenues for a large percentage of its
income. Not only will it be more difficult for the USOC to raise
sponsorship dollars in this country's current economic climate, but the
organization will also be forced to compete against the growing needs
of emerging nations in the world marketplace. Both of these factors
will continue to reduce the pool of funds available to the USOC and its
athletes. Additional stress is placed on the USOC's budget as it
becomes more expensive to adequately fund sports teams and the
organization's operating costs continue to rise. The current expense of
operating the USOC is driven in part by the travel and meeting costs
associated with volunteer committees, as well as by the costs of
maintaining a large paid staff. Forbes magazine has identified the USOC
as one of three non-profits that failed to meet its minimum standard
for fund-raising efficiency and warned that the USOC's overhead is too
high and it doesn't spend enough money on its programs. All of these
factors demand careful consideration of developing a more streamlined
and efficient structure of the USOC.
There have been numerous attempts in the history of the USOC to
improve the governance structure of the organization. During my tenure
as Executive Director, the organization eliminated the House of
Delegates, a cumbersome quadrennial meeting of over 600 individuals. We
established a Code of Conduct for team members, increased involvement
of athletes, and even created an independent Ethics Committee. In past
years there have also been additional attempts to change the
organization's constitution and operating procedures, including
engaging independent entities, such as McKinsey and the Steinbrenner
Commission, to study and make recommendations to the governance
structure of the USOC. Olympic leaders such as IOC member Anita
DeFrantz have also worked hard to expand opportunities for women in
sports as well as develop grass roots programs across America. However,
while many valid recommendations have been made, most have not been
implemented by the USOC. There is no question that change must now
occur.
The involvement of the Commerce Committee and its members can lead
the effort for needed change in the USOC's governance structure and
help the organization to meet its growing challenges. I do feel,
however, that although the USOC may need some repair of its current
structure, the required changes may not be as dramatic as some would
suggest. The interface of volunteers and paid staff is no different at
the USOC than it is in thousands of other non-profit organizations
across the nation. I personally served under three different USOC
Presidents during my tenure at the USOC, witnessed numerous changes in
the composition of the Executive Committee and saw an almost 75 percent
change in the leadership of National Governing Bodies. However, I also
found that the majority of individuals were fully dedicated to the
success of the Olympic Movement. Most volunteers give much of
themselves, their resources and their time to serve the needs of their
respective organizations, the USOC and the Olympic Movement as a whole.
However, the many accomplishments of the USOC and the athletes it
supports seem to have been obscured in recent years by frequent changes
of leadership and internal conflict. There have been significant
cultural changes in the USOC since my tenure as Executive Director. The
role of the elected president and the duties associated with the
position have certainly changed since the days of General Douglas
MacArthur and William Simon. Today, the president and other officers of
the USOC are engaged in much more travel both domestically and
internationally and are required to commit enormous amounts of time to
their volunteer positions. Defining the roles of both volunteers and
staff will help eliminate extraneous expenditures of both time and
financial resources. While there are certainly many changes that would
help the organization move forward, no change will be effective without
a sound governance structure that can support the appropriate
individuals in leadership positions. The USOC must recruit, develop,
and maintain quality leaders to be successful. Participation should not
be based on the rewards of protocol or Olympic junkets. We all will
need to work together to insure the best leaders are selected,
supported, and retained, and that the focus of the organization remains
on America's athletes.
As a start, I believe the following proposals regarding the
governance structure of the USOC should be both examined and
considered:
Creation of an ``Oversight Committee'' by the Commerce
Committee, to which the USOC's leadership would be required to
report to on a periodic basis. This Oversight Committee would
have defined powers to insure that the USOC complies with
current legislation, the USOC Code of Ethics and the IOC
Charter. The Oversight Committee would play an important role
in helping to select qualified individuals (independent of both
the USOC and its member organizations) to serve on the USOC's
Executive Committee by either (1) appointing such individuals
directly to the Executive Committee , or (2) proposing a list
from which the USOC Board of Directors would select a certain
number of individuals to serve on the Executive Committee.
These individuals should be selected on their ability to bring
a different, but complementary perspective to the USOC and to
reflect the common interest of the American public.
Reorganization of the existing Executive Committee, which
would then function as the principal governing body of the
USOC. The new Executive Committee would include USOC officers
and IOC members. Officers are an integral and important part of
the governance structure of the USOC. I believe those who have
served sport through both NGB leadership and athletic
performance deserve the opportunity to serve the organization
in more significant roles. However, a majority of Executive
Committee members would be those individuals recommended by the
Oversight Committee. The Executive Committee would appoint a
Chairperson from its members and the CEO of the USOC would
continue to be a member of Executive Committee. The specific
responsibilities of the CEO and staff vis a vis the volunteer
leadership would need to be determined by the CEO and the
Executive Committee.
Preservation of the current Board of Directors with some
changes in responsibilities and voting power of the current
members. The role of the Board of Directors would be shifted
from acting as the principal governing body within the
organization to becoming more of an advisory group to the
reconstituted Executive Committee. The members of the Board of
Directors should continue to represent the diverse interests of
the organization's constituent groups and should reflect the
objects and purposes of the U.S. Olympic Committee.
Restructure the USOC's Nominating Committee, which is
currently appointed on a quadrennial basis to make
recommendations to the Board of Directors regarding the
officers and public sector members that the Board of Directors
will then elect. The Nominating Committee is currently
comprised of members representative of the USOC's various
constituent groups, each of which brings an inherent bias to
the process. The Conference Board Commission on Public Trust
and Private Enterprise has recommended that such nominating
committees of private corporations be comprised of individuals
outside the corporation and who would be more able to
objectively consider appropriate individuals for leadership
positions. The USOC would benefit from following this sound
practice.
Reestablish the positions of First, Second and Third Vice
Presidents to allow for an orderly transition if the Office of
President should become vacant. This would help to eliminate
the political in-fighting that often occurs during this period
of change.
There are certainly many other changes that would help the USOC
move forward and I only offer these recommendations as a start. The
USOC and its members have been blessed with a multitude of individuals
who have given much to the Olympic Movement. These volunteers deserve
the very best from their leadership and the athletes of this country
deserve the very best from their leadership. In addition, America's
great cities deserve the chance to be viable competitors in the contest
to host future Olympic Games. New York is the candidate city of the
United States for the Games of 2012, and it needs the support of a
stable and successful United States Olympic Committee to have the
chance of making its bid become a reality.
Senator McCain, I stand ready to help you and the Commerce
Committee in any way possible to enable America's athletes, the Olympic
Movement, the USOC and its members be the best that they can be. Thank
you again.
The Chairman. Thank you, Dr. Schiller, and your
recommendations are important, and will be very valuable to
this Committee.
Ms. DeFrantz, your complete statement will be made a part
of the record.
STATEMENT OF ANITA L. DeFrantz, OLYMPIC MEDALIST;
EXECUTIVE BOARD MEMBER, U.S. OLYMPIC COMMITTEE;
VICE PRESIDENT, INTERNATIONAL ROWING FEDERATION;
MEMBER, INTERNATIONAL OLYMPIC COMMITTEE
Ms. DeFrantz. Thank you, sir. Mr. Chairman and Members of
the Committee, I thank you for the opportunity to appear before
you today to discuss the necessary reform of the USOC. My name
is Anita DeFrantz. I am an Olympian. I share my opinions with
you today as an athlete who has served as an administrator on
both the national and international levels. While I am a member
of the International Olympic Committee and the USOC, I serve in
no capacity that provides me the formal authority to speak on
behalf of either of those organizations.
I know the IOC shares this committee's concern. It respects
the autonomy of the USOC in managing its affairs. It is
confident a better and stronger USOC will emerge from this
process. I also know the leadership of the USOC is determined
to work with this committee to make sure that happens.
The USOC and its precursors owe a debt of gratitude to
Congress, which provided its charter in 1950 and clarified its
role as coordinator of the Olympic and Amateur Sports Movement
in 1978 and again in 1998. Today, I feel Congress has yet
another important role in the evolution of the USOC, that of
guiding the needed reforms.
The USOC's most recent restructuring back in 1999 was on
target and in some cases has begun to make a difference in the
USOC. However, there are some further changes needed to the
structure and scope of the organization. Those changes will go
a long way toward resolving the issues that trouble us today.
I have a list of 10 proposals. I wish to focus on only six
this morning. The first need is to bring the USOC's governance
structure more in line with that dictated by the best practices
of corporate governance. Volunteerism has a long tradition in
this country, and certainly makes an essential contribution to
sports on every level. However, the time has come for the
volunteers to cede authority to the professional
administration, and for the professional administration to find
better and other ways to recognize the volunteers for their
contributions.
Today's board and Executive Committee structures are much
too unwieldy, as has already been recognized. I believe the
board should be converted into an advisory board that meets
only once a year in the form of a national assembly of sports,
and with the country's sports leaders involved. The assembly
would help the administration examine the issues and trends
affecting sports. Its only authority would be to elect the
newly configured USOC board, which would in essence be a
streamline of today's version of the Executive Committee.
This new USOC board would act much like a corporate board,
having no executive, day-to-day authority other than hiring and
firing the CEO. The president, or chairman of the board, would
then fulfill the important role of representing the
organization on both the national and international levels, but
would not have authority to bind the organization in any
contractual manner at all. This means that all executive
authority would be entrusted to the CEO and his staff.
The second element of reform is as important as the first,
defining the qualifications of the people who should oversee
the organization. We must demand that all persons hoping to
serve on both the volunteer board and the professional
administration are held to the highest of qualifications before
they are even considered for those positions. Quite simply,
only qualified athletes compete, only qualified directors
should represent us.
The third element of the reform is a better implementation
of the ethics code. The USOC has an ethics code, but it has
been poorly implemented and, in order to be effective, the
code's tenets must be woven into the fabric of its organization
so that it becomes a part of the philosophy by which all
decisions are made.
Fourth, clarity of purpose. One issue that certainly needs
to be reconsidered is the USOC's wide-ranging mission, powers,
and jurisdiction granted in 1978. We all agree that a 123-
member board is unwieldy, and it is expensive. The USOC must
interact with 78 member organizations, only 39 of which manage
Olympic sports. In many ways, the USOC was chartered to act as
a privately funded ministry of sports. When considering
reforms, it will be important to determine whether the
structure should be changed to meet this expectation, or
whether the expectation remains a realistic one.
The fifth element is the enhancement of the governance of
the NGB's, national governing bodies. I would urge you to
consider the fact that the USOC is a reflection of the NGB's.
Reforming the USOC without reforming the NGB's is like pruning
a tree without examining its roots.
Sixth and most important is the focus on athletes. That
should be from which all other reforms flow. One of the most
important provisions of the Ted Stevens Olympic and Amateur
Sports Act is a requirement that 20 percent of all the members
of each body of USOC should be recent athletes, or must be
recent athletes. The fact of the matter is, if you start by
asking how each decision affects the athletes, the reform would
be straightforward.
In closing, I want to thank your Committee again for taking
the time to urge these reforms for the USOC. The USOC should be
a council of sports, not a council of sports politics. Your
efforts in the coming weeks will be important in making that
become a reality.
Thank you. I am ready to answer any questions the Committee
might have.
[The prepared statement of Ms. DeFrantz follows:]
Prepared Statement of Anita L. DeFrantz, Olympic Medalist; Executive
Board Member, U.S. Olympic Committee; Vice President, International
Rowing Federation; Member, International Olympic Committee
Mr. Chairman, Members of the Committee: Thank you for the
opportunity to appear before you today to discuss a topic dear to my
heart: the health of the United States Olympic Committee.
My name is Anita L. DeFrantz, and I have been actively involved in
the Olympic Movement since representing our great country at the Games
of the XXI Olympiad in 1976, where my boat won a Bronze Medal in
rowing. I was also a member of our 1980 Olympic team.
After my career as an athlete, I served in various positions within
the Olympic Movement. I worked as a vice president for the Los Angeles
Organizing Committee for the 1984 Olympic Games; I was elected to the
International Olympic Committee in 1986; and I was elected vice
president of the International Rowing Federation in 1993. In my
professional life, I now serve as the president of the Amateur Athletic
Foundation of Los Angeles, which seeks to serve youth through sport. To
date, we have leveraged the portion of the Olympic legacy provided to
the Los Angeles community, $95 million, turning it into more than $130
million worth of programs, facilities, and equipment for the youth of
Los Angeles.
I share my opinions with you today from the perspective of an
athlete and an administrator, on both the national and international
levels. Although I am a member of the International Olympic Committee
and the United States Olympic Committee, I serve in no capacity that
provides me with formal authority to speak for either organization. I
do know the International Olympic Committee shares this Committee's
concern but respects the autonomy of the United States Olympic
Committee in managing its affairs. It is confident a better and
stronger United States Olympic Committee will emerge from this process.
I also know that the leadership of the United States Olympic Committee
is determined to work with this Committee to make sure that will indeed
happen.
As for my thoughts on reform, I first wish to say we have a great
and proud Olympic tradition in this country.
Our country has been the host of eight Olympic Games--more than any
other country, by far--from St. Louis in 1904 to Salt Lake City in
2002. Each time, the organizers have shown the world what great hosts
the United States of America can be and how dedicated we are to
providing all athletes with the support they need to perform at their
very best.
Our athletes, year after year, continue to achieve amazing results.
They always give it their all, often earning a spot on the medals
podium. They especially make our nation proud when their gold-medal
performances are met with the raising of the American flag and the
playing of our National Anthem. From Jesse Owens and Wilma Rudolph to
``the Miracle on Ice'' to Sarah Hughes--just think how many times our
athletes have given the nation goose bumps or made us shed tears of
joy. They truly are national treasures.
Our National Olympic Committee has had shining moments over the
years, but recently our leadership has failed to attain the same kind
of excellence that the athletes exhibit on the field of play. Quite
frankly, I am dismayed that this Committee, which deals with so many
issues of great strategic importance, has had to intercede.
The United States Olympic Committee and its precursors owe a debt
of gratitude to Congress--having provided its charter in 1950, and
having clarified its role as coordinator of Olympic and amateur sports
in both 1978 and 1998.
Today, I believe that Congress has yet another important role to
play in the evolution of the USOC: that of a guiding force behind its
reform. Every reform must be examined and judged by how it helps the
organization better serve the athletes. In that way, they will also
serve the broader public interest.
Fighting for the rights of athletes led me into the world of sports
administration. In fact, I appeared before this very Committee at a
hearing Senator Stevens presided over in 1977 to defend the athlete's
basic right to enter the competition of his or her choice. So it will
come to no one's surprise that I believe the United States Olympic
Committee must refocus on serving the athletes. I want to underscore
the word serving. The United States Olympic Committee must rededicate
itself to the idea of becoming a service organization.
While serving may be a word that is not repeated enough,
restructuring has been spoken much too often. The United States Olympic
Committee's most recent restructuring, back in 1999, was on target. In
some cases, it has begun to serve the organization quite well. However,
there are some further changes to the structure and scope of the
organization that will go a long way toward resolving the issues that
trouble us today. I have a list of ten such changes.
1. Corporate Governance
The first requirement is to bring the United States Olympic
Committee's governance structure more into line with the processes
dictated by the best practices of corporate governance.
Volunteerism has a long tradition in this country, and it makes an
essential contribution to the development and operation of sport. We
cannot do without the volunteers, especially at the grassroots level.
They work tirelessly, giving hundreds of thousands of hours to keep
sport going in this country. However, the time has come for volunteers
to cede governing authority to the professional administration, and for
the professional administration to develop other and better ways to
recognize the volunteers for their contributions. We must incorporate
stronger standards of corporate governance while maintaining the
enthusiasm and spirit of the volunteers. Today's Board and Executive
Committee structures are much too unwieldy, as has been already
recognized. The Board, which today comprises a wide array of member
organizations, should be converted into an advisory body that meets
only once a year in the form of a national assembly of the country's
sports leaders. The assembly would help the administration examine the
issues and trends affecting sports. The assembly's only authority would
be to elect a newly configured USOC Board--in essence, a streamlined
version of today's Executive Committee. This new USOC Board would act
much like a corporate board, having no executive or day-to-day
authority, other than hiring and firing the CEO. The President, or
Chairman of the Board, would then fulfill the important role of the
representing the organization on the national and international levels
but would not have the authority to bind the organization to any
contractual agreements. This means all executive authority would be
entrusted to the CEO and his or her staff.
This change, by itself, will go a long way toward ensuring
workable reform.
2. Qualifications
The second element of reform is just as important as the first:
defining the qualifications of the type of people who should oversee
the organization. Currently, the qualification criteria are lacking.
The time has passed for good intentions to be considered a sufficient
qualification to lead the United States Olympic Committee. We must
demand that all persons hoping to serve on both the volunteer board and
in the professional administration are held to the highest standards of
qualifications before they are even considered for those positions. The
qualification requirements must be carefully developed and designed to
gather all the necessary expertise needed to manage what should be the
best National Olympic Committee in the world. Quite simply: Only
qualified athletes can compete. Only qualified administrators should
manage.
3. Accountability
The third ingredient for the United States Olympic Committee reform
should be increased accountability. In my sport, if you cannot pull
your weight, you are out of the boat. Volunteers and professionals
alike should be held accountable to strict performance standards. The
United States Olympic Committee needs to set expectations for every
major director and executive position so their performances can be
evaluated on a yearly basis. The organization also should develop a
mechanism to replace non-performing officers. I go back to my initial
point: It should be an honor to serve--not an honor to merely hold an
office.
4. Ethics
The fourth element of reform is better implementation of the Ethics
Code. The United States Olympic Committee has a fine Ethics Code, but
it has been poorly implemented. In order for any Ethics Code to be
effective, its tenets must be woven into the fabric of the
organization, so that it becomes part of the philosophy by which all
decisions are made. This has yet to be fully ingrained within the USOC.
5. Orientation
The fifth element is education. The organization needs to do a
better job of supporting its people. Because the Olympic world is
unlike any other, all newly elected directors and executives should
undergo a mandatory orientation process. That will help them fully
appreciate the scope of their new roles, as well as the intricacies of
the global Olympic Movement. This perspective is necessary to
succeeding in the Olympic arena.
6. Clarity of Purpose
The sixth element is clarity of purpose. One issue that certainly
needs study--and that will require Congressional action to change--is
the rationalization of the United States Olympic Committee's wide-
ranging mission, powers, and jurisdiction granted in 1978 with the
needs and circumstances of today. One ramification of this mission, for
instance, is today's large Board. We all agree a 122-member board is
unwieldy--and expensive. But we must remember that, due to its mandated
mission, the United States Olympic Committee must interact with its 78
member organizations--of which only 38 currently manage Olympic sports.
In many ways, the United States Olympic Committee was chartered to act
as a privately funded ``Ministry of Sports.'' When considering reforms,
it will be important to determine whether its structure should be
changed to meet this expectation, or whether the expectation has become
unrealistic in today's changed circumstances.
7. NGBs
The seventh element is the enhancement of the governance of the
National Governing Bodies, known as NGBs. I would urge this Committee
to consider the fact the United States Olympic Committee is a
reflection of the NGBs. Reforming the United States Olympic Committee
without reforming the NGBs is like treating the leaves of a tree
without examining its roots.
I am not saying that all NGBs have governance issues, but their
governance must conform to the standards of the United States Olympic
Committee. In a similar way, one cannot properly reform the United
States Olympic Committee without focusing on the unique structures and
needs of the NGBs--one of the United States Olympic Committee's most
important stakeholders.
8. Integration
The eighth element is a need for the United States Olympic
Committee to become better integrated with all its stakeholders,
especially the public. One symbolic but important change would be to
move the organization's executive offices to a major metropolitan city,
such as New York, Chicago or Los Angeles. Having the headquarters in
Colorado Springs has served the important purpose of developing our
central athlete training complex. That mission has been fulfilled, and
the Colorado Springs training center will always be an important
complex. At this point in its history, it is more important for the
organization to be out-front and interacting with the public in a major
metropolitan area on a more regular basis.
The United States Olympic Committee also must become more actively
integrated with the international sporting community. We have the
largest national Olympic Committee, with the best athletes in the
world. Yet the United States is woefully under-represented in the
international governing bodies of sport. We need to do a better job of
working with, and integrating with, this global community. If we do so,
it will return great dividends to our athletes since they compete in
the international arena.
9. Reporting to Stakeholders
The ninth element is closely related to the previous one. There
should be increased reporting to the stakeholders. Sunshine provides
credibility and accountability. There is much great work being done at
the United States Olympic Committee, and everyone should know that. All
the same, the organization needs to be held accountable to its
stakeholders' expectations and reviews. Again, the USOC should be a
service organization.
10. Focus on the Athletes
Last, but surely not least, is a principle from which all the
reforms should flow: the focus on the athletes. The most important
provision of the Ted Stevens Olympic and Amateur Sports Act is the
requirement that each USOC body should include at least a 20 percent
representation of recent athletes. The fact of the matter is: If you
started with the needs of the athletes as your guide, you would have
the best rule by which to guide your reform efforts.
Conclusion
In closing, I would like to again thank this Committee for taking
the time to urge reforms for the United States Olympic Committee. The
United States Olympic Committee should be a council of sports, not of
sports politics. Your efforts in the coming weeks will be important in
making that principle become a reality.
Thank you.
The Chairman. Thank you very much, Ms. DeFrantz. Thank you
for appearing before the Committee again.
Mr. Fehr, welcome.
STATEMENT OF DONALD FEHR, EXECUTIVE DIRECTOR, MAJOR LEAGUE
BASEBALL PLAYERS ASSOCIATION; PUBLIC SECTOR MEMBER, U.S.
OLYMPIC COMMITTEE
Mr. Fehr. Thank you Mr. Chairman, Members of the Committee.
I appear here today in my capacity as a public sector member of
the USOC board. There are eight of us out of 123 on the USOC
Board, with the kind of power and influence that eight out of
123 would suggest, but we are the only members of the board who
are charged to represent the American public, and who do not
come from and are not identified with any constituent group.
I have taken the liberty of asking my fellow public sector
directors both from this term and two from the last term who
are no longer in that position to review my statement, which I
ask be made a part of the record. They have indicated to me
that, in the main, while the words are mine, the views I have
expressed are shared by all of them. That does not surprise me.
We have spent a good part of our time during the 6 years I have
been on the board expressing wonderment and amazement and
frustration at what we have witnessed. We sit in board of
directors' meetings, which are entirely formalistic affairs,
wondering why we are there. We also have sat from time to time
in Executive Committee meetings. No member of our group is a
member of the Executive Committee, but we have attended from
time to time, and in large part, those meetings have given us
the same degree of frustration and wonderment, and we often ask
each other why in the world we bother. We do because we think
we can make a difference, but it is difficult.
It is not my purpose here to comment on the Ethics
Committee report or the Executive Committee response to it, but
given the questioning, there is one comment that I would make,
I think, that is relevant. Whenever you ask an Ethics Committee
composed primarily of outsiders (except for the athletes) and
all of whom are volunteers, to make sense out of a complicated
situation fraught with interpersonal rivalries in which
everyone's motives are suspect and everyone they are speaking
with has a personal interest, I think we can be grateful that
they came out with any conclusion at all, much less a unanimous
one. And, I for one, was pleased that they made all three
points clear: that there were violations of the code, that
there were problems with the ethics officer and that, what I
view as potentially the most serious, there was, at least in
the opinion of the committee, an attempt to abuse the ethics
process itself. That is difficult to do, and I think it took a
fair amount of courage.
Having said that--or with that lead-in--let me suggest that
the Public Sector Directors hoped several years ago, at the
time the McKinsey report was completed, that the changes
suggested would go a long way toward reforming the
organization. We were wrong. We were wrong mostly because the
organization is not committed to reform.
As a matter of fact, when I talk to people that have been
involved in the committee for a long time, and around the
Olympic movement, it is astonishing to me that the only strong
leader--that is, within the last 15, 20 years--that is referred
to is Dr. Schiller, which says, I suspect, not only something
important about him, but something more important about the
rest of the people that were there.
What are the problems? First, I do not think it is healthy,
and it does not make a lot of sense, to compare this
organization to any other. It is nonprofit, that is true. It
does not pay income taxes, but it engages in a wide variety of
activities which mirror precisely what a for-profit entity
would do. Licensing revenue must be raised. That takes a first
class commercial organization, because you are competing for
the sports dollar with the likes of the NFL and NHL and Major
League Baseball and all the colleges and so on.
Second, however, the USOC is not, even in the context of
its nonprofit work, much like an ordinary nonprofit, which has
a uniformity of purpose, that it is going to raise money and
have that distributed to a given cause. Instead, what you have
is a constituency which acts like a legislature. Their
interests are adverse to one another. There is a limited pie,
and everybody wants their piece of it, and all of the conflicts
stem, in my judgment, from that difficult proposition. That is
a structural matter, and it is a profound cultural matter.
Until that is overcome, and people begin to strive in
uniformity toward a common goal which is not limited to their
individual interests, I am not sure what structural changes are
going to be able to make a significant difference.
That point is emphasized, in my view, because there is not
even a common understanding as to what the role of the USOC is.
There are some that say its sole purpose is to raise money and
give it to the NGB's and stay out of the way. There are others
who say, on the farthest extreme on the other side, that the
Amateur Sports Act requires us to develop and enhance amateur
athletics. Well, unless you know what you are trying to do, it
is going to be very difficult to get a consensus on doing it,
and it is going to be even more difficult to figure out the
level of funding needed.
Third, as has been spoken to, you have an enormous problem
with the volunteers and the staff not understanding their
respective roles and relationships. I will not dwell on it
further, except to point out that in a recent article, if my
memory serves me right, a former USOC president suggested that
if you wanted to be president of the USOC, which is a volunteer
role, you ought to be prepared to devote 20 to 25 hours a week
to it. That is 1,000 to 1,300 hours a year in a volunteer role.
Nobody can do that. If you do, of necessity you will attempt to
micromanage, you will look over everyone's shoulder, you will
engage in turf battles, and politics will be the order of the
day. It has been the order of the day.
Fourth, Clearly, the board is much too large. I would
suggest that the actual governing body, whatever it is called,
be reduced in size, to somewhere in the 18 to 25 range, and it
would not bother me if it were slightly smaller than that.
There is a problem with officers and the election of officers.
In the current structure, the election of officers mirrors the
kind of discord and nonuniformity of purpose that you see on
the board.
The officers are elected by competitions between coalitions
of the constituency groups. Candidates appear before them, they
answer questions, promises are sought, commitments are made,
people are upset when people are not perceived to be honoring
their commitments, and that affects who gets elected the next
time around, not to mention that who gets to be on what
committee and make what trip is often a result of who is
elected.
Last, in terms of what the problems are, we have not
managed, with some exceptions, to get the very best people, and
we need to find a way to do that, but solving the structural
problems will not do it alone. You are not going to get the
best people unless they think they are walking into an
organization that they want to be a part of.
I think I share the views of a number of the other
witnesses about a number of the specific reforms that should be
made, but perhaps with some differences. While the board should
be substantially reduced, I believe it should consist in
majority part of outsiders who have no interest in and do not
come from any affiliated constituency group.
That may raise an issue with the 51 percent requirement of
the IOC, but I believe a case can be made for it, and I am
confident that if that is determined to be desirable, the IOC
will find a way to accommodate us in that regard.
The problem will be that by the very nature of doing that,
you will drastically curtail the power and influence of the
constituent groups. That will require a major effort to get
consensus. I agree that the board, even a much smaller board,
should not act like an additional or substitute CEO or COO by
committee.
I think that the purpose of the USOC needs to be clarified,
and what I mean by that is this. If the job is only to raise
money for athletes, then that is a job and we can do that. If
the job, on the other extreme, is to play a substantial role in
the development and enhancement of amateur athletics for young
people around the country, that is a much different job, and
not only does that role need to be clarified, but far more
importantly, the level of funding it will take to do the latter
job is vastly greater than that that it will take to do the
former job.
How do we begin to address these issues? I was a member of
the USOC group that was formed to investigate the Salt Lake
City bribery allegations. There were five of us on that group.
Three were outsiders, Senator Mitchell, Kenneth Duberstein,
Roberta Ramo, the first woman to have been president of the
American Bar Association, I represented the public sector
directors, and there was an athlete representative required by
law, who was Jeff Benz, who is now the USOC's general counsel.
We were completely independent. We retained our own
counsel. We talked to people, certainly, but all deliberations
were internal. We identified a problem which was cultural, the
culture of gift-giving that had pervaded the selection of bid
cities to host the Olympic Games, and we wrote a series of
recommendations which we hoped would go a long way toward
remedying that. Those were adopted completely by the USOC and
in part by the IOC.
I think a commission like that can be successful again. I
would suggest it needs two things. It needs a majority of
individuals on it who have no affiliation with USOC constituent
groups, but it needs at least some representation--I suggest
from the USOC public sector directors--of individuals who have
some familiarity with how the organization has actually
functioned. You need that to make sure that you are not missing
critical points.
I welcome, in addition, the USOC's Executive Committee's
efforts to try and do its own reform work. I think it is their
obligation to do that. I think it is essential that they do it,
and certainly any thoughts the Executive Committee has would be
welcomed by an outside group. I do not think, however, that the
credibility of the organization either to this Congress or to
the public, is likely to be restored merely by an internal
review.
In discussing this with some people, one of my fellow
public sector members suggested that such ideas would be
referred to by internal USOC constituencies as very radical
surgery, and nobody likes that, and they will not like it in
particular. I think it probably is pretty radical surgery.
Sometimes you have to do it.
Thank you.
[The prepared statement of Mr. Fehr follows:]
Prepared Statement of Donald Fehr, Executive Director, Major League
Baseball Players Association; Public Sector
Member, U.S. Olympic Committee
Mr. Chairman and Members of the Committee:
My name is Donald M. Fehr, and I have previously testified before
this Committee in my capacity as the Executive Director of the Major
League Baseball Players Association. Today, however, I appear to
discuss issues related to the United States Olympic Committee (USOC),
and I do so based upon my experience serving as a member of the USOC
Board of Directors from the Public Sector. The Committee's invitation
to testify states that this hearing will ``examine the current
organizational structure and culture of the USOC'' to determine what
reforms may be appropriate to make certain that the ``USOC operates
more effectively and efficiently''. As requested, I will focus my
testimony on recommendations to improve the USOC, in light of the
recent series of unfortunate events which led to this hearing being
called.
EXPERIENCE AS A USOC PUBLIC SECTOR DIRECTOR I was elected as a
member of the USOC Board of Directors from the Public Sector for a four
year term following the 1996 Summer Games in Atlanta, and was re-
elected to a second four year term following the 2000 Summer Games. My
opinions about the governance and culture of the USOC stem almost
entirely from my experiences these last six plus years. The USOC
Constitution, Article XII(3)(J), provides that eight (six prior to
2000) Public Sector directors will be elected by the Board, who must be
individuals who are ``not affiliated with or associated with any
amateur sports organization, who in the judgment of the USOC represent
the interests of the American public in the activities of the USOC.''
This charge puts a Public Sector director in a class different from
that of any other of the more than 120 members of the USOC Board, each
of whom is either elected or appointed directly by a constituent
organization, or, in the case of an officer, usually comes from and/or
is identified with a constituent organization. My colleagues and I take
this difference very seriously. Although Public Sector directors do
serve on various USOC committees with some significant
responsibilities, no Public Sector director sits on the Executive
Committee or on the Ethics Committee. I have taken the liberty of
asking my fellow Public Sector directors to review this statement.
While the specific words here are mine alone, I am satisfied that the
views expressed here reflect, in the main, the views of all of the
Public Sector directors with whom I have served. (The current Public
Sector directors are Gwen Baker, Roland Betts, Bill Bradley, myself,
Gordon Gund, Henry Kissinger, Donna Lopiano and Mike McManus. Charles
Moore and Frank Marshall served in this capacity with Gwen, Roland,
Mike and I from 1996-2000.) Throughout our tenure, as a group we can
perhaps best be described as very frustrated with the operations of the
USOC. We each thought we could help out, and hope and believe that from
time to time we have, but it has been and remains an inordinately
frustrating and trying experience. During my six years the USOC has
been an organization fraught with rumor and gossip, and often consumed
by internal politics. Volunteer vs. volunteer disputes abound, and
volunteer vs. staff disagreements have been constant. Ethics issues
continue to arise. When the current internal dispute hit the papers
some weeks ago, I thought ``Here we go again''. My initial foray into
these matters took place mid-way through my first term, when I was
asked by the then President to look into the performance of the then
Executive Director, whom he thought should be replaced. I went to
Colorado Springs and spent a day or two talking to staff and trying to
understand the situation. I then returned to New York and contacted the
other Public Sector directors, to ask for their help with what appeared
to be a chaotic situation. Our conclusion was that, at bottom, there
was no consensus as to who had the responsibility or authority to do
what. In other words, there was no common understanding as to the
basics of how the USOC was to operate. After discussing it among
ourselves, we offered to coordinate the ongoing management study being
done by McKinsey & Co. At the end of that process, in an effort to put
the organization on the right track, we both facilitated the
resignation of the Executive Director and the agreement of the
President not to seek another term. We urged the adoption by the USOC
Board of the report by McKinsey, which called for a more traditional
corporate model of governance with clear division of roles between the
professional staff and volunteer leadership. At that time we did not
seek to reduce the size or change the composition of the USOC Board,
hoping that would not prove to be necessary and also believing it to be
a political impossibility at that time. We hoped that, with a new
President and Executive Director/CEO, and the adoption of the McKinsey
report, significant changes had been made, and that the USOC's internal
difficulties would be overcome. As events have conclusively
demonstrated, we were unreasonably optimistic. Since that time we have
seen three CEO's and three Presidents. And, as Dr. Schiller has
explained to me, what we have witnessed since 1996 is only a
continuation of the previously existing pattern; it is neither new nor
different. It is somewhat like a television soap opera, which runs for
years and years with the same plot, although the characters keep
changing. The question, then, is ``Why?'' What is it about the USOC
organization and structure, and/or the USOC culture, which causes and/
or permits this kind of behavior to continually arise? Why do we
witness continual personal animosity in the organization? (We saw a
glimpse of that at the last hearing.) Why have the USOC's leaders
apparently failed to recognize the stage that they are on, and the
responsibilities entrusted to them? This is all the more mystifying
because, so far as I can tell, everyone who becomes involved with the
USOC or an NGB does so, at least initially, for the very best of
motives and with the best of intentions, to be of service to our
athletes and our young people. I believe that it is a combination of
the structure and culture of the organization to which we should direct
our attention.
WHAT ARE THE PROBLEMS? It seems to me that the current USOC
structure and culture suffers from several difficulties, which can be
generally described as follows. It is important to remember, however,
that these factors are at work at the same time; the USOC suffers from
each of them on an ongoing basis. First, one must recognize that the
USOC is a bit of an odd duck of an organization. It is non-profit (that
is, it does not pay income taxes), but the USOC is clearly not a non-
profit organization as that term is commonly understood. In any
ordinary sense, the USOC often acts like a classic for- profit entity:
it receives income for the sale of licensing rights of marks, tickets
for events, and broadcast of events. It protects such commercial rights
vigorously. Over a four year quadrennium (the period between summer
Olympic Games) such revenue amounts to several hundred million dollars.
Obviously, the USOC' commercial operations need to be first rate;
savvy, well-managed and creative, and able to compete with any other
entity for the sports dollar. But, that said, the USOC is not
interested in making profits for the purpose of paying dividends or
increasing share prices. Rather, it generates revenue for the purpose
of dividing it up among what seems like an innumerable number of
constituent groups, which groups make up the USOC Board of Directors.
Satisfying this amalgamation of National Governing Bodies (NGBS),
community based, educational and other organizations, and the athletes
is a daunting task. This is so because the various constituent groups
which make up the USOC Board have interests which are adverse to one
another. The various organizations contend with one another to
determine policy (how will we do things) and money (which programs and
organizations will be funded, to what extent, and under what
conditions). Put simply, a corporate board has a uniformity of purpose,
to make money for the investors. A charitable board has a uniformity of
purpose: to raise funds to distribute to worthy individuals or in
support of worthy causes outside of the organization. But, in the
USOC's case, there is no such uniformity of purpose. Rather, the USOC
is more like a legislative body, with the differing interest groups
struggling with one another to protect their own and to get their piece
of the pie. What this means is that, for all practical purposes, the
structure of the USOC makes dispute and discord the order of the day.
It is the natural and inevitable way of things given the existing
governing structure. Second, there is no overall agreement or
understanding as to what the role and purpose of the USOC actually is.
Some believe that the USOC is a limited sort of umbrella organization,
having as its sole purpose the raising of money to distribute to the
NGBS for them to do with as they please. After all, the USOC doesn't
produce any athletes, only the NGBS do. Others assert that the USOC's
purpose is simply to win events--medals--which is used to define and
measure success and serve as a source of pride for the organization and
for the nation. And there is a third view, that the USOC has larger and
broader responsibilities to the youth of America and the development of
athletic programs at the grass roots level. The absence of an
overarching view of what the USOC is supposed to be doing makes the
internal decision making processes much more difficult. The USOC
volunteers and staff can't be expected to march together if there is
not even an agreement on where they are trying to go. A third problem
is the seeming inability of the USOC volunteers and staff to sort out
their respective roles and responsibilities so as to be able to work
together on an ongoing basis. This role confusion is seemingly embedded
in the USOC culture, as the history of disputes between the volunteer
leadership and prior CEO's amply demonstrates. Throughout my tenure on
the USOC Board volunteers have from time to time attempted to micro-
manage day to day operations, and even direct staff. Clearly,
volunteers are critical to the success of the USOC, but part-time,
unpaid volunteers should not interfere with or attempt to direct staff
functions; running the organization is the CEO's job. The problem that
the Public Sector Directors pointed out years ago persists: there is no
accepted division of authority and responsibility between the volunteer
leadership and the staff; we still have no agreement on who has the
responsibility and authority to do what. I recall a recent press
article which I believe attributed to a former USOC President the
notion that anyone seeking the position of USOC President--the senior
volunteer position--should be prepared to devote 20-25 hours per week
to the USOC. Consider that for a moment. What person, with a regular
day job, can devote 1000-1300 hours per year to unpaid volunteer work?
More importantly, can one reasonably expect that such a level of
ongoing involvement will lead to anything other than turf battles with
the CEO? Fourth, The USOC Board of Directors is much too large. A Board
with 120+ members simply cannot be expected to function well. In my
view, this Board does not function at all. The twice yearly full Board
meetings are (with one critical exception noted below) entirely
ceremonial affairs, albeit very expensive ones. Board meetings are not
deliberative sessions; rather, they are conventions given over to
formalistic ratification of decisions already made, speeches,
videotaped productions extolling the success of our athletes, the
giving out of awards, and the like. I and the other Public Sector
members have often asked one another why we bother to come to the Board
meetings, given that nothing substantive takes place. There is, however
an exception. Once every four years officers must be elected by the
Board. This is serious business. Candidates for such positions nearly
always come from and/or are identified with distinct constituent
groups. (Frank Marshall, formerly a Public Sector Director, is an
exception.) They ordinarily vie for the support of the NGB's, the
athletes, or others. Coalitions form and dissolve. Promises are sought
and made. In short, elections for officers reflect the disparate
interests of the various USOC internal groups. And one should remember
that the officers make up a significant portion of the Executive
Committee--the real policy making organ of the USOC--along with the
directly appointed representatives of the various constituent groups.
Thus the difficulties of the overall Board structure are necessarily
reflected in the makeup of the Executive Committee. The Members of the
Committee should understand that I am not arguing that officer
elections are bad in and of themselves, or that constituent
representation on the Executive Committee is inappropriate. Rather, I
submit that officer elections conducted within the current system often
can and do perpetuate the internal political discord that is the
predictable result of the existing governance structure. Finally, to
state what may be obvious, it seems clear that all too often in the
past the USOC has not had the right people in key leadership positions.
The repeated leadership changes we have lived through, and the
circumstances of those changes, are powerful evidence of that point.
This is important notwithstanding the governance structure that is in
place. Effective leadership can make an inefficient governance model
work; ineffective leadership can fail even in a perfect structural
setting. Given its current image, if the USOC is going to attract the
best people it must demonstrate that both the structure and the culture
which produced these difficulties has changed.
WHAT SHOULD BE DONE? I have been asked to make recommendations to
the Committee as to what changes should be made in the USOC structure
and culture. I do not today offer formal or precise recommendations,
but I will offer a few ideas which may merit some consideration by the
USOC and by the Congress. I will first suggest several substantive
concepts, and then offer an idea as to how, procedurally, the Congress
and the USOC may wish to proceed to consider what should now be done.
The principle by which I am guided is that the USOC is a public trust,
and the volunteers and staff of the USOC are charged with carrying out
the purposes of that trust. Accordingly, the USOC should be organized
and operated in a way which is consistent with that broad public
purpose. First, the Board of Directors should be reduced to a
manageable number, perhaps down to \1/5\ or even \1/6\ of its current
size. Second, the membership of the Board of Directors should be
composed largely of independent outsiders; i.e., individuals who do not
come from or represent any internal USOC constituent group. In other
words, the Board should consist in large part of outside directors who
want nothing from the organization save the satisfaction of making a
needed contribution to a good cause. Such outside, independent
directors should include individuals with significant experience in
management, administration, fundraising and other skills that would be
helpful to the operation of the USOC. The various internal USOC
constituent groups would then make their arguments re policy and
budgets, etc., to this largely independent Board. ( I do not have a
suggestion at this time as to how such outside directors should be
selected, but that is obviously a matter of considerable import.) This
may well be a difficult sell to existing USOC Board members and
constituent organizations. After all, the practical effect of adopting
such a structure would be to limit the power and influence that such
groups have traditionally enjoyed. The question which then arises is
how to determine which, if any, of the internal USOC constituencies
would be directly represented on the Board, and how the constituency
groups would interact with the Board. Resolving such issues will not be
easy. Third, the Board should be expected to act like a Board of
Directors, not like an additional or substitute CEO or COO by
committee. The role of the Board is to set overall policy, approve
budgets, hire the CEO and perhaps other senior staff members, and meet
its oversight obligations to make sure that the organization is getting
the job done. The uncertainty of the volunteer / staff roles and
responsibilities must be clarified so that they work together, and not
at cross purposes. Fourth, the role and purpose of the USOC needs to be
clarified. Whatever that role is--raising money for NGBS, winning
medals, or serving the much larger purposes envisioned by the Amateur
Sports Act--everyone needs to be on the same page, marching in the same
direction. It seems to me unlikely that unity of purpose will be
achieved in the near term absent the Congress insisting on it, and
conducting periodic oversight to ensure that such purpose is
effectuated. (It goes without saying that the more extensive the
purpose the greater will be the need for funding. If the USOC and/or
its constituent organizations are to undertake tasks beyond the current
uses of funds, how the USOC will get the money for such other purposes
necessarily becomes a significant issue.) Procedurally, how should the
Congress and the USOC proceed to consider such of these ideas as may
have merit, along with the many other ideas that have been and will be
offered in response to the current situation? I note that at its
meeting last weekend, the USOC Executive Committee established a task
force for the purpose of making a thorough review of existing governing
structures and policies. I welcome that effort. Quite apart from what
the Congress or this Committee may suggest, it remains the
responsibility of the USOC Executive Committee to act promptly to put
things right, and I am pleased that this step has been taken. . At the
same time, however, I wonder whether the credibility of the USOC to the
Congress, and, more importantly, to the American public, can be
restored without some sort of independent review. For this reason, I
think that an independent review commission is both appropriate and
should be helpful to both the USOC and to the Congress. I believe that
we already have a proven model for such an independent commission.
About 4 years ago, after the Salt Lake bid-city scandal broke open, the
USOC appointed an independent commission for the express purpose of
examining promptly and in detail the entire situation, and making
findings and recommendations to the USOC for changes in existing bid-
city practices and procedures. There were five members of that group,
which came to be called the Mitchell Commission. Former Senator
Mitchell was the chairman, and the other outside members were Ken
Duberstein and Roberta Cooper Ramo (the first woman President of the
American Bar Association). I served in my capacity as a Public Sector
Director, and the athlete member of the commission (required by law)
was Jeff Benz. We retained our own counsel, and insisted upon and
received the complete cooperation of the USOC. We made a number of
findings, including a specific finding that a ``culture of gift-
giving'' pervaded the process by which cities were selected to host an
Olympic Games. We wrote a comprehensive set of recommendations intended
to break this culture and change the way that cities were selected to
host the Games. Our recommendations were in turn adopted by the USOC,
and significantly influenced measures which were adopted by the IOC. In
short, the process worked. I believe that a commission with a similar
charge can do so again. In addition to the independent members, such a
commission would be helped to a very great extent by having among its
members one or perhaps two individuals familiar with the USOC's history
and current operations. In this regard I suggest that such a group
include one or two current or former Public Sector Directors who, one
will recall, neither come from nor represent any USOC internal
constituency, but rather have the obligation to represent the public.
As I have previously indicated, the Public Sector Directors can bring
to such a group the benefit of their experiences with the USOC,
frustrating as they have often been. I can without hesitation tell you
that each of my seven current colleagues as Public Sector Directors,
and Charles Moore, who served in that role from 1992-2000, would serve
ably and with distinction in such a role. Over the last 6 years I have
developed enormous respect for their integrity, intelligence and
dedication. Finally, I recognize that there is a desire to move forward
with dispatch. However, I would not set an artificially short deadline
for the independent commission to complete its work. The job needs to
be done quickly, but sufficient time must be allowed for the issues to
be thoroughly examined and any proposed solutions comprehensively
analyzed and considered before final conclusions are reached.
CONCLUSION In conclusion, Mr. Chairman, in this written statement I
have made certain observations and suggestions for the consideration of
this Committee, and for the consideration of the USOC, the purpose of
which is to suggest an alternative framework for the governing
structure of the USOC, which, hopefully, would operate in a way that
would also modify its culture. The ideas I have offered here will no
doubt seem to many like radical surgery. Perhaps so. However, this may
well be a time in which radical surgery should be considered.
The Chairman. Thank you very much.
Senator Boxer has another engagement, and she would like to
make a statement.
STATEMENT OF HON. BARBARA BOXER,
U.S. SENATOR FROM CALIFORNIA
Senator Boxer. Thank you, Mr. Chairman, very much. I have
to be on the Senate floor, and I will be as brief as possible,
less than 5 minutes.
Mr. Chairman, thank you very much for the series of
hearings you have called here. I appreciate it. This hearing
and the previous hearing you held with Lloyd Ward are about the
values and principles that the USOC management and its
structure should uphold. I had a scheduling conflict the last
hearing. It is just so unfortunate. I wish that I could be
everywhere at once.
I appreciate the fact that you are carrying forward with
this. On the hearing with Mr. Ward, I shared the, I think,
dismay with several of my colleagues on both sides of the aisle
that the evidence indicates that Mr. Ward does not really live
the values that I think are necessary to lead the USOC, and I
want to put into the record with your consent just one page of
the constitution of the Olympics.
The Chairman. Without objection. *
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* The information referred to was not available at the time this
hearing went to press.
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Senator Boxer. This says that there shall be no
discrimination based on a whole series of factors, including
sex, and then, in regard to the employees, respect the rights
of all employees to fair treatment and equal opportunity free
from discrimination or harassment of any type, and this is very
serious, and I think when you look at membership in the Augusta
National Golf Club, a club that will not allow women as
members, I believe it runs contrary to the spirit of the
Olympic Games.
I am not going to ask anyone to comment on that, but it is
just a view that I hold, and I know that Senator Campbell
shares that very strongly, and others on this committee do as
well.
We see two sports heroes here, both women. I think that
their presence--it is just an honor for me to be in their
presence. I know what they had to overcome in those early
years, and yet it seems to me the CEO of this committee should
respect not only the female athletes in the Olympics, but just
females in general. I think that is the point of equality.
California has an extraordinary Olympic heritage. More
current and former Olympians live, train and work in California
than any other State, so this is important for us.
One more point I wanted to make to you, Mr. Chairman,
because I did not have a chance to discuss it with you one-on-
one, and that is, we have some concerns in California about the
bid city selection process. Nobody is saying do it again, that
is not what I am here to say, but I believe there were
conflicts of interest with people who were having a vote here,
one in particular, and I ask unanimous consent to place a news
article in the record, Could Grudge Foil San Francisco's Bid,
if I might ask you to put that in.
The Chairman. Without objection.
[The information referred to follows:]
The San Francisco Chronicle, September 1, 2002
Could Grudge Foil San Francisco's Bid?
By Phillip Matier, Andrew Ross
Political campaigns always include a dash of paranoia that the fix
is in--and the race between San Francisco and New York for the 2012
Summer Olympics bid is no exception.
In this case, local Olympics organizers (although they would never
say so publicly) have pretty good reason to believe a member of the
crucial U.S. site selection committee may be bearing a grudge against
the city.
We're talking about Roland Betts--businessman, developer and old
college chum of President Bush.
He's one of 10 members of the all-important Olympic site selection
panel, which may well recommend to the U.S. Olympic Committee's 123-
member board which city--San Francisco or New York--should get the nod
Nov. 3 as the U. S. bid city to host the 2012 Games.
It's not just that Betts lives in New York, or that he heads the
board of Lower Manhattan Development Corp.--the post-9/11 agency
charged with replacing the World Trade Center.
No, this is about something more intensely personal--like the de-
pantsing Betts got from San Francisco politicos when he put in a bid
for what he thought was an all but (wink, wink) done deal to build an
athletic mega-club on San Francisco's waterfront.
Betts, you may recall, had hoped to build a West Coast version of
Chelsea Piers--his highly touted New York recreation village/health
club--at Piers 27-31. But in spring 2001, after a long fight, the Port
Commission awarded the site to Mills Corp. (the same folks behind the
yet-to-be-built 49ers stadium-mall) and to the YMCA, which had jointly
proposed a competing plan for offices, retail and a fitness club.
And now the Bay Area Olympians are worried that Betts may seek
revenge.
After all, after initially encouraging Betts to come West, Mayor
Willie Brown turned around and threw his weight (and Port Commission
votes) behind the Mills-YMCA deal.
It didn't help Betts' mood that he shelled out $43,000 to state
Sen. John Burton for advice on how to push his plan--only to get
nowhere.
``The whole experience was a nightmare,'' Betts recalled last week
from his New York offices. ``It didn't even occur to me that we were
going to be bidding against somebody.''
For his part, Brown (who is keenly aware of Betts' anger) said, ``I
don't know why he's mad at me--it was Burton he paid all the money
to.''
So will Betts' experience here influence his Olympic decision?
No way, says Betts.
``I have bent over backwards to be fair and objective,'' he said,
adding that San Francisco wouldn't have made it this far if he and his
fellow Olympic bigwigs didn't think the city had put in a ``superb
offer.''
As a matter of fact, said Betts, ``The whole Olympic process was
100 percent on the merits--and if the city of San Francisco had treated
Chelsea Piers on the merits, we'd be under construction by now.''
Ouch.
Senator Boxer. Thank you very much.
The point it makes is, there was someone on the committee
that just was turned down to do a real estate deal in San
Francisco. He had a deal in New York, and it is in an area
where they would benefit from the Olympics. This is very
discouraging. Someone like that should not really be involved
in pushing for a particular venue, and so I am very hopeful,
Mr. Chairman, as you determine where you want to go with this
particular set of hearings, if we have an independent
commission, or whether you ask the Olympics to do it, that they
not only look at the issues that you have been championing, but
also this issue of the bid selection process.
So I thank you very much for giving me this opportunity.
The Chairman. Thank you very much, Senator Boxer.
Ms. de Varona, did you want to say something?
Ms. de Varona. I just wanted to welcome Senator Boxer, as a
former resident of California, and I want to thank the
Committee for letting me speak. I have a plane to catch at
11:50, so I am going to have to excuse myself, but I would make
myself available at any time to respond.
The Chairman. Before you go, I saw you paid attention to
Mr. Fehr's statement. Do you have any disagreement, or are
there some contradictions between your recommendations and his?
Ms. de Varona. No. My recommendations are an opening point.
I think that this is a very complicated committee with a lot of
responsibilities, and how we move the deck chairs around, or
create a new widget to get the best and the brightest and
governance that works is very important, and I do not disagree
with anybody on the panel.
The Chairman. Thank you very much. Thank you for being with
us.
Ms. de Varona. Thank you.
The Chairman. Dr. Schiller, did you have any disagreement,
or agreement with Mr. Fehr's statement and his recommendations?
Dr. Schiller. Specifically about the nominating committee
and how people are chosen, yes. I think at the same time, we
have to be a little cautious that the organization does not
become exclusionary by virtue of economic means. Years ago, the
committee was filled with what we called the blue blazer boys,
when you go back to the 1940s and earlier, because people could
not afford to be part of the committee, and a lot of the
expenses we are talking about were intended mainly to include
athlete representation, and we ought to be really cautious that
we do not exclude the people that may not be able to afford to
be part of the representation.
The Chairman. Thank you. I agree with all of Mr. Fehr's
recommendations, and I guess it is a given that that will then
bring about some kind of financial discipline, but Mr.
D'Alessandro's statement I think indicates that there is a very
serious problem there. I do not know much about how big
corporations work, but a fleet of 197 company cars for the
staff of 350, if that is indicative of the spending that is
going on, then Mr. D'Alessandro's comments about how little is
actually going to the athletes is certainly understandable.
Dr. Schiller. You are right, sir, and I think part of the
problem is the way some of these sponsorship deals are put
together. They try to look big, and what they contribute are
called value in kind, which really do not take care of the
direct cash needs of the organization, and certainly certain
organizations may want to give gas cards and automobiles in
lieu of the kind of money that would be necessary to move the
organization forward, so you have to be very, very careful
about trying to put a deal together that does not have that
much of that in its order.
Mr. D'Alessandro. Thank you, Mr. Chairman.
The Chairman. By the way, Mr. D'Alessandro, as a part of
your comments, have you received any response to your letter of
February 20, or January 20, I believe, where you asked for a
financial----
Mr. D'Alessandro. I have been told, Mr. Chairman, I am
going to receive tomorrow about 80 percent of the actual
specifics. I was informed yesterday by Mr. Ward in writing
that, indeed, the tax returns are not correct, that they do not
reflect accurately all of the contributions, the federal tax
returns, and that clearly the accounting is not anywhere near
as transparent as needs to be. I actually have correspondence
with him on that subject, and so I am looking forward to
sharing all of the data that we receive.
I would like to echo Dr. Schiller's comments. In the world
that I live in, in sports marketing, aside from the insurance
world I live in, as Don Fehr said, there is a great deal of
competition for that $6.5 billion. It is an unfair fight today.
Basically, you have a committee of marketing people trying to
get money, today, that look a little bit like they came from
Ted Mack's Amateur Hour.
They cannot compete with the heralded marketers that are
around today, so what happens, basically, is there is a barter
system that has occurred, and as Harvey says, if you take a
look at where the USOC gets most of its money, it is from the
IOC. That is the cash that funds salaries and some of the
NGB's, but basically, when we sit in a room with the NFL, they
basically say, show me the money.
When the USOC shows up in similar suits, they say things
like, show me the Jello, we'll take 20,000 cases of Jello, or
Kleenex. It is a bit ridiculous to try and fund what we are
trying to do in this country with barter, and that is the value
in kind we are talking about. The value in kind really needs to
be judged, because you cannot train athletes with value in
kind.
The Chairman. Ms. DeFrantz, first of all, I understand that
these reorganization recommendations are the critical aspect of
it, and I think that it will probably address many of the
financial issues that have been raised, but has it not
disturbed you that over a period of time so little money
actually got to the athletes, and then when it did, as Mr.
D'Alessandro pointed out, the USOC gave more money to Michael
Jordan than it did to gymnasts and amateur athletes? Is there
not something really wrong there?
Ms. DeFrantz. My understanding was that those organizations
gave money back to the USOC.
The Chairman. Say that again.
Ms. DeFrantz. My understanding was that those organizations
either had specific programs for youth, or they gave the money
back to the USOC. My understanding was they were sort of a
place holder to remind the USOC that they have an NGB, even
though the athletes now at the games are professionals, but the
athletes who represent the USOC, or their NGB, actually their
NGB at other events are not professionals.
The Chairman. Dr. Schiller, has something changed since you
were there?
Dr. Schiller. It might have. I cannot reflect since I left,
but during my tenure, the eligibility rules changed most
specifically for the national basketball--so professional
players were allowed to participate.
David Stern, the commissioner, was forthright and really
paid for all the logistical support of the team, all the
travel, anything that was associated. In addition, he made on
behalf of the league specific contributions, and we did realize
increased funding by virtue of some of the joint licensing and
sales programs we did with the league.
I really cannot comment since I have left.
The Chairman. Well, maybe I am straying a little bit, but
it seems that when you have dysfunctionality, then perhaps the
people who are intended to receive the benefits obviously are
not getting them.
And Mr. Fehr, I understand that we have to define the
purpose more clearly, and yet I would assert that it is a
combination of both, it is not just money-raising, because
there is an obligation to train and help athletes so they can
prepare themselves for Olympic competition, in some cases that
is for years, particularly in sports where they otherwise would
not be able to, wrestlers, for example, so I do not think it is
either one or the other. I think that perhaps it is some kind
of combination of the two, with a balance of the emphasis that
is perhaps not there today. Is that an accurate statement?
Mr. Fehr. I do not disagree with that. When I talk about
redefining the purpose, what I was attempting to point out was
that there are some members of the USOC board that will tell me
that all they want the USOC to do is go out and generate money
from Sponsor X and Sponsor Y and give it to them, and stay out
of my business no matter what I do with it.
There are others that say no, there are some NGB's that are
good, but we have to help others and direct others and staff
them.
There are some who say that we are missing the point. The
point is, they say we ought to be developing soccer programs
for thousands and thousands and thousands of kids out there and
making sure they work, not just focusing on elite Olympic
athletes.
Those are different purposes, and there is no uniformity on
the board on what we ought to be doing.
The Chairman. Thank you.
Let me just say it is my view, and I think that Senator
Campbell can speak for himself, but I think he and Senator
Stevens and I agree we have no problem with an internal review
and changes being made for the better that would be implemented
to improve the workings of the USOC, and perhaps reduce some of
this dysfunctionality, but I think in addition to that, we need
to implement the kind of recommendations you have made and
others have made, and that would require some outside,
qualified, knowledgeable people, a combination, as you said,
some with no affiliation, but probably with some that have some
affiliation, because corporate knowledge is always an important
aspect of bringing about meaningful reform.
Senator Stevens and Senator Campbell and I are going to try
to get out to Colorado Springs to talk to some of the people,
but at the same time, we hope we can get a board moving.
There is some time sensitivity to this whole issue. As I
think Mr. D'Alessandro pointed out, the people in New York have
already contacted me to say that their ability to get the 2012
games is impeded at the moment by this situation, so I do not
think we can afford to have a lengthy process here, and so I
would like to act as quickly as possible, again with the expert
advice and counsel and activity of Senator Campbell and Senator
Stevens. I thank the witnesses. You have been very helpful
today.
Senator Campbell.
Senator Campbell. Thank you, Mr. Chairman.
While I certainly agree with many of the statements, and I
certainly agree with the first part of your statement, Mr.
Fehr, about we have an obligation, really, to all youth of
America, regardless of where they come from, not just the elite
athletes, and I have always supported that--everybody cannot be
a gold medal winner, that is for sure, but I think all
youngsters can certainly get some great benefits out of the
Olympic movement--I certainly do not agree, however, that we
cannot compare the structure of the USOC with other groups. I
believe, as Ms. DeFrantz does, that we can compare it. In fact,
it has been compared a number of times, and not looking very
good in comparison.
You said we need radical surgery. Radical surgery is
warranted, I agree. Well, how would you like to have somebody
operate on your liver who has never seen a successful liver
transplant? We can use models, and we do for almost everything,
and I think there are models out there that we can use.
I wanted to put a few charts up on the board, with your
permission, Mr. Chairman. I cannot see all the numbers, but I
have got a small one up here, but it compares, based on the
Forbes Magazine study of 200 nonprofits--they did an efficiency
study, I guess that is the best word to call it, and if you
compare the numbers up there, you can see, obviously, that the
Red Cross, which is one of the top ones, according to Forbes,
for efficiency, and the U.S. Olympic Team, which was one of the
bottom three for efficiency out of the 200, have some
similarities and some big dissimilarities, too, numbers of
employees, and look at the number of board members as an
example.
And I might tell you that the Red Cross, we bounced some
numbers back and forth in the computer a while ago. The Red
Cross management expense is 5 percent of their annual revenues.
The USOC's is 15 percent of their annual revenues. The Red
Cross fundraising expense is about 4.5 percent of their annual
revenues. The USOC fundraising expense is 18 percent of their
annual revenues.
Now, the revenues come into nonprofits, all of them, I
think very similar. They come in from sales of merchandise,
they come in from donors and sponsors, they come in from in-
kind contributions, and I think the Olympic Committee has a
definite advantage because they get a large share of the
international television marketing process that goes on that
most profits do not have, but I wanted to point those out.
The average efficiency, by the way, is 85 percent, about.
According to the Red Cross about 90 cents of every dollar that
they raise goes to their commitment, and according to the
numbers I have, I have seen everything from a high of 78 that
is on that chart down to 65, the same corresponding number for
the Olympic Committee.
This is the organizational chart of the Red Cross, and it
is a little far for me to see. No, this one that is being put
up now is the Red Cross, and the first one is the USOC, pretty
similar. I mean, it does not take a rocket scientist to figure
that one out. You can see, sort of lines of authority, and
reading the boxes of what their mission in that area should be.
The Olympic Committee, although being much smaller, has 18
departments as opposed to 15 for the Red Cross, but I think I
could read that, as most laymen could, and get a pretty good
understanding about what is going on. The chain of command, the
lines of communication and so on are pretty clear to me, if you
can see that.
Now, look at this last chart that I am going to ask staff
to put up there. I have not found any corresponding chart like
this in corporate America or, in fact, even in the other
nonprofits, but that is the U.S. Olympic Committee's
organizational chart, basically of their board of directors,
and I will tell you, if a guy designed a Rorschach test and
gave it to somebody, he could use that as a model, because when
I look at that and I try to follow all those lines around, it
looks like a bird's nest instead of some kind of an
organizational chart.
I think that is where the big problem is, Mr. Chairman, in
that area of organizational, and it would seem to me as we move
forward that is where we probably ought to put our emphasis,
and that has been alluded to several times already by this
committee, and it is not going to be an easy thing to do. I
mean, people resist change, particularly if they have got a car
and an expense account and they are staying in five-star
hotels. I understand the deal. It is not easy, but it is
something that very clearly has to be done.
Early on, the chairman alluded to other options, and
clearly, one is that the United States Olympic Committee, if
there is some real problem where they cannot do it because of
political reasons to restructure this very clumsy group, I
think most of you know, as I do, that in most countries they
have a sports minister that is actually part of the government.
In our case, it would be an Under Secretary of HEW, or somebody
with the President's Council on Physical Fitness, or something
like that.
I have always resisted that, very frankly, but it is not
out of the realm of possibility that if they cannot reorganize
and do it in some kind of manner that is satisfactory to the
athletes--and I say that first, because without the athletes,
who needs the USOC? I have mentioned that before, but also to
all Americans, and certainly here in Congress, that there is
always that last option, very simply, revoking your charter and
doing what other countries have done, and letting the
government take it over.
I do not want to do that, most of my colleagues do not want
to do that, but I get the feeling in talking to some of my
colleagues in the U.S. Senate that they have got a few fewer
friends now than they used to have. I hope that kind of a trend
does not continue, and that this problem can be straightened
out.
With that, Mr. Chairman, I really have no further
questions.
Mr. Fehr. Mr. Chairman, perhaps I summarized a little too
quickly. Senator Campbell, let me try and respond to your
initial comments.
First of all, I think if you will look at my statement, you
will see that I agree with the notion that we have sort of a
spaghetti bowl up there on the board of directors chart, which
is a mess. It needs to be drastically cut down. There is no
disagreement with that. There is no disagreement about
clarifying the lines of authority, and so on.
When I said there is no model, though, I was not referring
to finances. I was referring to something rather more
fundamental than that. In an ordinary corporate board, the
board of directors share one purpose, we are going to make
money and we are going to give it back to our shareholders in
some fashion, dividends, or increasing share prices, or
something.
In the Red Cross, the board of directors, I suspect--I have
no personal familiarity with it--has a uniformity of purpose.
We are going to raise money, and we are going to distribute it
for causes outside this organization that we believe should
merit Red Cross support.
On the USOC board, members of the board are saying, in
effect, give the money to me, give it to my organization. Do
not give it to his, and do not give it to hers. That is what I
mean when I say it is an odd duck of an organization, for which
I know of no comparable model, and that is what drives me to
the conclusion that governance has to get past the constituent
competition that we have.
Thank you.
Senator Campbell. I might also mention, Mr. Chairman, just
in closing, I was just reminded, looking at some of my notes,
to compare the Red Cross with the U.S. Olympic Committee and
any oversight we might have, that as I understand it from
asking staff to research a little bit, there are 10 committees
in the U.S. Congress, House and Senate side, 10 committees that
have some oversight of the Red Cross' actions.
I think the Olympic Committee just has one, and that is
this committee, and perhaps a little bit in the Appropriations,
because that is where they come for a lot of the subsidy money
we do not give them directly, but the indirect money we put
into olympiads every single year, which is going, as I
remember, something like $4 billion last time for the Salt Lake
Games, so we have a real vested interest.
But one of the things that I noticed--and I do not know if
the Olympic Committee does it or not. If they do not, they
probably should. The Red Cross, as an example, provides a copy
of their audit as well as a number of other things to every
single Member of the House and the Senate. They may not get
read, but they are there, so they cannot say later on that they
never saw it.
Harvey, you are nodding your head. Is that done?
Dr. Schiller. I know we did it during my tenure. I would
assume that it is still done. I do not know.
Senator Campbell. Well, I am an Olympian, and I darned sure
have not seen one in my office since I have been in this body,
10 years.
Dr. Schiller. Anita just said it has changed from every
year since 1999 to every quadrennial period, every 4 years.
Senator Campbell. Every 4 years.
Dr. Schiller. It was every year during my tenure.
Senator Campbell. That means, in the case of our House
friends, some of them will not even be here that long.
Thank you, Mr. Chairman.
The Chairman. Mr. D'Alessandro, go ahead.
Mr. D'Alessandro. Just one more comment, Mr. Chairman. I
think everybody is basically in agreement with the direction. I
have to agree with Don Fehr also, because--and with Senator
Campbell in this sense. We have the greatest development of
athletes in the world, a lot of it, frankly, through public
funding. Our universities are one of the great feeders of much
of our athletes, as are public schools, as are private money
from parents that are able to do so.
What we have not been able to do is, frankly, have someone,
some organization actually develop and coordinate how we give
more opportunity to everybody throughout the system, not just
an NGB, to Don's point. It is very, very important, and
frankly, there are some sports that are underfunded that are
going to need to be funded, so I think that Don Fehr is right,
you need some way of finding someone in the governance
structure in the end who can bring together much of the
resource in this country that is basically diluted because of
the effort we see in Colorado Springs.
The Chairman. Thank you very much. I thank the witnesses.
This has been very helpful. Thank you. This hearing is
adjourned.
[Whereupon, at 11:20 a.m., the Committee adjourned.]
A P P E N D I X
Prepared Statement of Frank Lautenberg, U.S. Senator from New Jersey
Mr. Chairman, I commend you for holding these hearings into the
operations and structure of the U.S. Olympic Committee (USOC).
The bitter dispute between former USOC President Marty Mankamyer
and USOC CEO Lloyd Ward and their respective ``camps'' would easily
rival any soap opera or ``reality TV'' show.
I understand that CBS is auditioning contestants for ``Survivor
7''--maybe the network should just televise USOC meetings during
primetime on Thursday nights.
In all seriousness, these internal problems at USOC have been
played out in public, I'm sure they have caused USOC sponsors to
reconsider their support, and--most important--they have undoubtedly
hurt the athletes the USOC was created to help.
As I see it, the two principal issues that need to be addressed are
as follows:
1. Is Lloyd Ward too ``damaged'' because of his ethics problems
to stay on as CEO; and
2. How can the USOC be transformed from a dysfunctional
bureaucracy into a leaner, more effective organization?
I find it difficult to believe that the USOC has 500 paid employees
and a four-year budget of $500 million, and that only one-quarter of
that amount--$127 million--gets paid out in grants to member sports
organizations every 4 years.
It's clear that the USOC Board is way too big. The USOC Board is so
big--120 or so members--that it costs at least $100,000 just to have a
board meeting.
I've had plenty of experience with boards over the course of my
business career, and I think they cease to be effective when they get
too large.
I understand why the USOC Board has grown over the years and the
inclusiveness intended is laudable. But maybe what the USOC should do
is have a much smaller board and rotate the various eligible members
through.
I use this analogy with some trepidation, but the Security Council
at the U.N. has just 15 members; only five are permanent and the other
10 serve 2-year terms.
And the job descriptions for the USOC president and the USOC chief
executive need to be sorted out once and for all.
I hope that all of this can get resolved for the sake of our
athletes--especially our true amateur and Paralympic athletes who so
desperately need the USOC's help if they are going to keep competing
and winning.
Thank you, Mr. Chairman.
______
Prepared Statement of Charles H. Moore, Jr., Executive Director,
Committee to Encourage Corporate Philanthropy
Query
To examine the current organizational situation and culture of the
USOC to determine what reforms may be appropriate to make certain that
the USOC operates more effectively and efficiently.
Introduction
I am Charles H. Moore, Jr., Executive Director of the Committee to
Encourage Corporate Philanthropy. I also serve as a National Board
member of the Smithsonian Institution, Commissioner of the Smithsonian
American Art Museum, Regent of Mercersburg Academy and Director of The
Sports Authority.
Following 40 years of senior management of multi-national
manufacturing companies and of venture capital and consulting firms, I
served as Director of Athletics at Cornell University from 1994-1999.
Relevant Background
I served as Public Sector Director and Chairman of the Audit
Committee of the USOC from 1992-2000 and as Chairman of the USOC Bid
City Evaluation Task Force in 2001-02. I was a member of the U.S.
Olympic team in 1952. I presently serve on the President's Council for
Physical Fitness and Sports.
Assessment
The Board of Directors of the USOC is little more than symbolic and
ceremonial. It is preoccupied with special interests seeking funds or
other considerations.
The Executive Committee of the USOC meets more frequently, but has
consistently operated in a reactive mode. It is ``too representative''
(i.e., is designed to represent all constituencies) and not
independent. It tends to be divisive and to micro-manage. It does not
effectively represent Paralympic interests.
Considerations for Overhaul
To be successful, an overhaul of the Board of Directors of the USOC
must address:
1. Roles of volunteers vs. professionals
2. Mandated representation, if any, of National Governing
Bodies (NGBs) and Athletes
3. A clear mission (is it more the oversight of Olympic and Pan
American sports?)
4. Significant changes that have developed in the last decade,
including
Commercialization of former amateur sports
More inclusion of Paralympic sports
Scope of Olympic/Paralympic and Pan American Games
Technology (in all areas) and media
IOC, International Federations and NOCs (including
interaction/interdependence)
Sponsor needs
Drug use and testing
Escalating costs, size of staffs and management of
training centers
Tranparency
5. A sustainable financial model (should there be government
support?)
6. Roles of Armed Forces and community-based organizations
7. Role of USOC in grassroots development, including fitness
(should there be any relationship with the President's Council
on Physical Fitness and Sports?)
8. Sustainable leadership
9. Continuity
Recommendations
1. Start again! The culture and mistakes (even conflicts) have been
institutionalized. This will require a government mandate. I believe
that it will be impossible for the existing organization (no matter how
configured) to fix itself.
2. Create a Board of Directors with a non-executive chairman
(elected by the BoD) and no other elected officers (similar to
corporate model except directors are not paid, other than expenses). If
the NGB, Athletes and Paralympic Councils are maintained, let each
elect two directors. Appoint nine independent directors. Meet at least
four (4) times a year, plus Committee schedule, comprising at least
Audit, Nominating/Governance, Ethics and Finance. Maintain separation
from Olympic Foundation.
3. Create volunteer Committees like Games Preparation, Membership,
International Relations and Development, which will report to
professional staff, who will, in turn, report to the CEO. Continue
other staff departments like Marketing, Public Relations, HR,
Information Technology and General Counsel with clear objectives.
4. The CEO is responsible to the Board; there is likely little need
for an Executive Committee.
5. Government oversight needs to be defined and may vary depending
on funding role, if any. The Smithsonian Institution model of Regents
could be considered, or a Minister of Sports.
Summary
The United States Olympic Committee is a public trust and is
critical to the promotion of sport in the United States.
Notwithstanding the fact that the USOC has lost the confidence of
public, private and independent sectors, it should be restructured and
restored to a transparent and credible organization to fulfill its
mission (however defined). These recommendations, while appearing
dramatic, are straightforward, actionable and measurable.
Constituencies (NGB, Athletes, etc.) can be maintained as they bring
continuity, but their direct input (``feeding'') will be replaced with
sustainable, transparent and independent oversight through a
professional organization (led by a CEO) and a Board of Directors (led
by a non-executive chairman), both acting in step with appropriate
government oversight.