Lessons for FIFA from the Salt Lake City Olympic scandal

Diptic

By Will Jennings, Professor of Political Science and Public Policy at University of Southampton (Academia.edu, Twitter). You can read more posts by Will Jennings here.


FIFA is in crisis. Nine current or former senior officials have been charged by US prosecutors over bribes totalling more than US$150m over 24 years. The allegations have shocked the football world.

The story so far has some parallels with the scandal that engulfed the Olympics’ governing body, the IOC, in the late 1990s. The way the IOC dealt with that crisis might offer some lessons for how FIFA should respond.

In 1998, revelations concerning the bidding process for the Salt Lake City 2002 Winter Olympics led to investigations and a series of disclosures about bid-related malfeasance at other Olympic games. Officials from the Salt Lake bid committee were indicted on charges of conspiracy to commit bribery, fraud and racketeering.

It turned out that officials from applicant cities had been lavishing IOC members and their families with payments, gifts and luxurious hospitality, as well as scholarships, with the aim of buying their votes. The revelations were highly damaging for the IOC, clashing as they did with the idealistic rhetoric that the Olympic movement had sought to harness.

Reputation salvaging

Looking back, it is arguable that the IOC’s response to the crisis salvaged its reputation and led to important reforms aimed at the long-term sustainability of the event. This is in deep contrast to FIFA’s reaction to its first corruption scandal in 2011 – which simply allowed a serious governance problem to fester.

The IOC’s response to its bribery scandal was an effective approach to managing reputational risk: Apologise. Investigate. Punish. Reflect. Reform. In the immediate aftermath of the revelations, numerous senior figures in the IOC expressed regret and contrition, soon followed by internal investigations into wrongdoing.

As a result of these probes, a substantial number of IOC members resigned or were expelled, while an extensive programme of institutional reflection and reform was quickly instigated through the creation of the IOC 2000 Commission, which included external members. Out of this review came important reforms, including the introduction of a code of ethics and a ban on IOC members who were not serving on its Evaluation Commission from visiting candidate cities.

IOC president at the time of the scandal, Juan Antonio Samaranch.
EPA

A big hole

Questions remain, however, whether FIFA will be able to learn from these lessons to dig itself out of a very big hole. For one thing, while the Olympic bribery scandal was undoubtedly damaging to the image of the event and to the IOC as its governing body, the allegations largely related to members of the Olympic movement who were not on its executive board.

The FIFA allegations have hit much closer to home in relation to the administrative machinery of world football. The charges involve two vice-presidents of the organisation and other senior officials. This is deeply ironic given that commenting on the Salt Lake affair, in 1999, Sepp Blatter observed that the smaller size of FIFA’s executive made it less easy to sway: “Twenty-one members is really a group of people that are easier to supervise than a group of 114.”

The US Department of Justice charges point to a much more systematic pattern of kickbacks and patronage that, if proven, will be less easy to blame on a few bad apples. Indeed, FIFA’s defiant response to the bribery accusations levelled at it in 2011 will make it difficult to claim it had missed the warning signs.

While FIFA might take the lesson that contrition and meaningful reform are both important steps in starting to salvage the wreckage of the governance of world football, this may not be enough. As it stands, FIFA and its leadership seems irreparably damaged in terms of its credibility and legitimacy. This before criminal proceedings threaten a lengthy period of organisational fire-fighting and paralysis.

 

This article was originally published on The Conversation. Read the original article.

Olymponomics: politics and the measurement of Olympic economic impacts

By Will Jennings, Politics & International Relations

Blog cross-posted at The Conversation.

Since the financial blowout experienced at the Montreal 1976 Olympics, economic impact assessment has been an increasingly popular tool for host governments and organizers to justify the vast expense of major events of this sort. These methodologies are not value-free, however, and are often reliant on problematic assumptions or are used to particular political and economic ends. The recent report into the legacy of London 2012 by the government and the Mayor of London exhibits some of the typical hallmarks of political use of economic impact assessments – and their tendency to put a positive spin on the economic benefits of major events despite the uncertainties involved. Indeed, some of the claims seem quite unnecessarily outlandish: for example that “so far £9.9 billion in international trade and inward investment has been won because of the Games and Games-time promotional activity.” There must be a small dose of caution about the causal relationship between the event and subsequent flows of investment – even if these were facilitated at Olympic-badged events. To put it in context, this figure is larger than any previous official/sponsored assessment of Olympic economic impacts — by a substantial margin – while the estimated £11.5 billion gross value added of the public sector funding package is also an outlier compared to other events (see Chapter 5 of Olympic Risks, Palgrave Macmillan, 2012).*

The key problems of evaluating the economic benefits of the Olympics is that it is difficult to provide counterfactuals about what would have transpired if the event had not taken place. Indeed, the background document to the report acknowledges that “…there is no counterfactual assumption related to spending the public money on anything else.” Nor is it possible to determine whether the trade and investment deals linked to Olympic-related promotions would have been secured through other channels if the Games had not taken place. London was already an iconic global city ahead of 2012, unlike many other hosts, who use the Olympics to promote themselves as a global destination – e.g. Barcelona, Sydney, Beijing. On top of this, the magnitude of the estimated gross value added to economic activity reflects the dire under-employment that existed in the aftermath of the global financial crisis – meaning that the economic modelling assumed a low level of displacement, as the Olympics absorbed spare economic capacity. The details of the report hardly makes good reading for the government, as it notes “a legacy of higher unemployment” despite the economic legacy left by the Olympics. Further, the headline figures only tell a partial story, as economic benefits – especially in terms of employment – are concentrated in London and the South East. In this respect, the impact of London 2012 has simply been to reinforce existing imbalances in the British economy – and in the economic experience of its citizens.

Even if we accept that the Olympics created long-term economic capacity, it is possible to question whether this was the optimal use of resources. Popular “input-output” methods of economic impact analysis do not differentiate between different types of economic activity, however, yet the long-term economic benefits of constructing a school or a hospital, or a train link, are quite different from those involved in building a car park or a sports venue (especially if assets are later transferred to private developers at discounted rates, removing any potential for long-term public amortization of the assets). Methods of economic impact assessment surprisingly make little meaningful distinction between gains or losses that accrue to the public and private sectors.

A final aspect of the economic impact that might be called into question is the degree to which the UK economy will see a return from its businesses positioning themselves in the market for major global event contracts as a result of their 2012 experience. Certainly since Sydney 2000 there has emerged an Olympic ‘consultocracy’ that wanders nomadically from Games to Games – selling their expertise to the highest bidder. However, most of the major firms involved in the mega-event industry are multinationals, while the individual consultocrats and trouble-shooters who are now positioned to reap the rewards of their London experience are by no means guaranteed to divert their private economic gains directly back into the UK economy (this is without venturing into the debate over global tax regimes!).

While there can be little doubt that London 2012 has had substantial economic benefits for the UK, and successful delivery of the event served to promote its reputation on the world stage, the methods of economic impact assessment are ill-equipped to deal with some of the ambiguities and uncertainties associated with mega-events and their consequences. These methodologies rarely challenge their underlying assumptions and tend to emphasise best case scenarios and headline figures, without digging deeper into the regional imbalances of the event, the flawed or exaggerated nature of some causal claims, and extraction of private economic gain from public investment – at the expense of taxpayers already battered by austerity.

*Note that there is no official estimate of the economic impact of Beijing 2008.