Labour MP Clive Betts has highlighted the need for transparency in public private sector deals for delivery of the Olympic developments and has called for parliamentary scrutiny of such arrangements. Deals were being discussed with Stratford City Developments ahead of consent for the Olympic bill to ensure conversion of flats into housing for 4,500 athletes (R. Booth, The Guardian, July 29, 2005). In 2003, the consortium Stratford City Developments and the LDA agreed not to frustrate the other’s planning applications. The Guardian article notes: “A director of the consortium, Sir Stuart Lipton, was also a senior government advisor on the Olympics plans at the time of the co operation agreement. He was later forced to resign from his post as chairman of the Commission for Architecture and the Built Environment following accusations of conflict of interest between his role as government adviser and a leading private developer”.
In March 2006, concerns were raised in the House of Commons over compensation payments to London & Continental Railways for land required by the Olympic precinct development passed to them earlier by the Government at no cost. The House of Commons Transport Committee stated: “It may be some compensation was justified. We are not in a position to take a firm view. We are however disturbed by the appearance of this transaction which gives the distasteful appearance of the taxpayer subsidising the private sector twice over […] London’s intention to bid for the Games is also of long standing. If the Government had inserted the appropriate reversion clauses into the agreements on this land, then there would have been no question of paying the developers to acquire the land [formerly] in public ownership […] We are very disappointed that the Government has demonstrated so little acumen and foresight”. (House of Commons Transport Committee Report: Going for Gold; Transport for London’s 2012 Olympic Games, March 16, 2006).
The bid was highly disruptive of the speculative property economy. Legal Week (Property, Planning & Construction: The Gold Rush, May 4, 2006) report delays in land deals stretching back over three years before the bid decision was announced, impacting on local and regional property markets. Richard Guyatt, Property partner of Bond Pearce, told the website: “Most property deals in the south have been affected by the Olympics, which has taken a broad-brush approach to all of east London. […] For expanding companies it has been a real problem. It is also hard to find comparison prices [for land in the affected area]”.
However, estate agent Dan McLeod of Atkinson McLeod told BBC NEWS (July 6, 2005) that the bid decision “was the best news for the property market in this area for years”. McLeod said: “Almost overnight any land that can be developed will go”, stating that in the few hours since the announcement he had already received calls from interested investors. The BBC note that Barcelona, Sydney and Athens, all saw house prices rise by more than 50% in the five years before the Games (all higher than their national average).
Buy-to-let is 75% of some UK mortgage brokers’ business. Traders report the continuing popularity of east London for buy-to-let, especially in areas of east London slated for regeneration accompanying the 2012 Olympics (FTadviser.com>. Top floor apartments in the athletes’ village will be sold for up to £1 million after the Games are over (I. Pocock, Sunday Times, June 11, 2006).
The indirect impacts of processes of gentrification and price inflation can be severe. In Barcelona, for instance, the 1992 Games was partly responsible for massive increases in costs of living in the city. Between 1986 and 1992 the market price of housing grew by an average of 260% and this expansion continued through the 1990s with significant increases in social inequality. Likewise, in Sydney, rates of evictions and homelessness increased markedly in the neighbourhoods alongside the Olympic development. The consequence is that although development takes place in such cities it does not always lead to the development of its poorer urban neighbourhoods and communities. In fact, it can make things worse by creating blight, congestion and […] displacement.
Mike Raco (2004) Whose Gold Rush? The Social Legacy of a London Olympics in Anthony Vigor et al, After the Gold Rush, A Sustainable Olympics for London (London) APPEAR, Demos
Several US giants were involved in partnerships bidding for Olympic construction work. KBR, formerly Kellogg Brown & Root, the engineering and construction arm of Halliburton Co., bid with Bovis Lend Lease (of the Australian Lend Lease Corporation) and UK design and engineering consultants Capita Symonds for a no risk engagement (as managerial partner) with a chance to bid for cherries in the Legacy phase. Between 1995 and 2000, Halliburton Co. was headed up by US Vice President Dick Cheney. The firm is currently under investigation for the overcharging of contracts to the Iraqi government-under-occupation.
Gordon Brown was forced to clarify to MPs (The Observer, July 23, 2006) whether he had had any dealings with Bechtel, another controversial US construction company bidding for the contract to oversee the building of the main Olympic facilities. Bechtel has been dubbed (The Observer reported) “the working arm of the CIA”. The firm was the first company to be awarded contracts by the Bush administration in the aftermath of the Iraq invasion. Bechtel also advises the UK government on nuclear energy. Demonstrations in Bolivia (O. Olivera, The Guardian, July 19, 2006) against the privatisation of water to the company in 2000, forced the firm to leave the country. Bechtel prosecuted the Bolivian government in international courts, pressing for £13.6 million in damages and costs. However, after international pressure, it dropped all claims to Bolivian water in January 2006.
In the event, Laing O’Rourke in partnership with Mace Ltd. (project management) and environmental evaluation company CH2M Hill, (together called the CLM consortium) won the contract to manage construction of the 80,000-seat Olympic Stadium and the Athletes’ Village (S. Kernon, Bloomberg, August 30, 2006). Contracts for the building work itself will be awarded separately by the ODA at a later date. O’Rourke is currently building the fifth terminal at Heathrow Airport where 900 workers walked out over bonus payments in December 2005-January 2006 (BBC NEWS, December 16, 2005). It also has construction contracts on the Channel Tunnel Rail Link, Canary Wharf and Gatwick Airport. In October 2004, the company faced widespread walkouts and wildcat strikes from UCATT and GMB members over a new contract severely reducing both regular and holiday pay and altering bonus and holiday conditions. Staff had been told to sign the contract or face the sack (Workers’ Liberty, October 27, 2004). Workers at the Kings Cross CTRL site have claimed that company management had intimidated migrant workers around the signing of the contract. The CLM consortium has worked on five previous Olympic Games: Torino 2006, Athens 2004, Salt Lake City 2002, Sydney 2000 and Atlanta 1996 (Contract Journal, August 30, 2006) Responsibility for redeveloping the venues and the Athletes’ Village after the event will also fall to the consortium. The awarding of the management contract to CLM caused some controversy within the industry and Parliament as building tycoon Ray O’Rourke had given a substantial donation to “Tony Blair’s 2012 bid team” and substantial help in kind (Evening Standard, September 3, 2006) in the run up to the IOC decision.
CLM will only be paid if delivery meets specified performance targets determined by the ODA. Anticipated profits can swiftly turn into multi-million losses. The Observer, (N. Mathiason, March 26, 2006) report that Australian firm Multiplex could pay up to £183 million in fines for failing to deliver the Wembley stadium on time.
Meanwhile, Australian shopping mall developer Westfield was due to seal a £140 million agreement this summer (J. Rossiter, Evening Standard, June 5, 2006) for full control of the building rights to the 180-acre Olympic City site in Stratford.
TV rights and sponsorship
The IOC themselves sold TV rights for the 2010 Winter Olympics and the London 2012 Games to a European consortium a month before the bid decision for “a record” £394 million (The Observer, July 10, 2005). IOC President Jacques Rogge is reported as expecting US$3.5 billion (£2.02 billion) in total to be generated by TV rights in the four year run up to the 2012 event (Financial Times quoted by United Press International, May 30, 2005). UPI state that “[a] new standardised open tender process that has increased competition among broadcasters is credited with the increased estimated revenues. […] After the 2008 Beijing Olympics host cities will get a fixed amount of broadcasting rights revenues”, rather than the current 49%. IOC plans to reorientate Olympic programming for the convenience of American viewers at the 2008 Beijing Games (swimming and other finals in the morning so that NBC viewers can watch in the evening) may make it harder for the IOC to sell TV rights to the Beijing Olympics to the rest of the world as well as reduce the capacity for athletes to achieve faster times (P. Derriman, Sydney Morning Herald, August 5, 2006; C. Saltau, The Age, August 17, 2006).
The Institute for Practitioners in Advertising have complained that the London Olympic Games and Paralympic Games Bill, which sets up the Olympic Delivery Authority (ODA) and defines marketing prohibitions “is so extreme that it could technically lead to pubs being prosecuted for using chalkboards to flag up [TV] coverage of the Games” (A. Fraser, BBC SPORT, August 16, 2005). The Northern Echo has already faced a warning from Olympic lawyers not to use Olympic insignia to promote a Sport Aid fundraising event (a campaign taken up by the Newspaper Society, to be promoted through local newspapers across the country) to provide grants for prospective Olympic talent and raise money for grassroots sport (June 5, 2006). Restricted use of the Olympic brand is considered essential for operating budget profits, and legislation was passed as early as 1995 to ensure copyright (1995 Olympic Symbol Protection Act). Thirty one small firms throughout London reflecting the Greek diaspora will be forced to change their company names and shop fronts or face prosecution. British Telecom’s Business and Services Phone Book for London 2003/4 reveals enterprises as diverse as a shipping agent, an airline, sign engravers, a patisserie, two property companies, two hotels, two cafes, one printing firm, debt recovery and employment agencies. Another firm, this time offering “Olympic” mortgages, will have to withdraw or rename its promotion. The BBC reports that “London” has secured first rights to “almost all the billboard space around the city for the key time around the Games”, to inhibit ambush marketing. Such brand enclosures can extend to prohibiting the clothing of fans at the Games itself. Dutch football supporters were forced by FIFA officials to remove their patriotic orange lederhosen, sponsored by the Dutch beer, Bavaria, at a World Cup match against Cote d’Ivoire during the summer of 2006 (The Guardian, June 19, 2006).
Companies likely to benefit from such totalitarian tactics are Coca Cola, McDonalds and Visa which have bought exclusive worldwide marketing rights via the Olympic Partner Programme (TOP). The BBC state that the IOC have made £790 million marketing revenue over the last four years from corporate sponsorship (35% of total), while the London organising committee (LOCOG) estimates that £580 million, or 40% of its operating budget, will come from this source. Protected Olympic trademarks include use of the words ‘Olympic’, ‘Olympiad’ and ‘Olympian’, 2012, London 2012, games, medals, gold, silver, bronze, sponsor, summer (!); insignia such as the 2012 Games logo (and mascots), the Olympic rings, Team GB, the British Olympic Association and the British Paralympic Association logos, London’s bid logo; derivatives of London2012.com; and the Olympic motto ‘Citius, Altius, Fortius’ (Faster, Higher, Stronger). Unofficial ticket sales and merchandise will also become unlawful (BBC SPORT, August 16, 2005). TOP partners have precedence over sponsorship deals negotiated in London — LOCOG cannot do deals with rivals. Sponsoring companies are mandated to participate in ‘community’ and schools programmes in return for use of the London 2012 logo. Successful firms will pay at least £50 million for a six-year association with the Games. Utilities giants, motoring, banking and telecom companies are reported as LOCOG’s first choices as sponsors.
Marketing magazine reported a ‘clutter’ of agencies other than LOCOG offering Olympic sponsorship deals, causing confusion among firms (D. Barrand, June 7, 2006): “As well as each of the national associations for individual sports, a variety of government-funded sports bodies, charities and Department for Culture, Media and Sport sections are actively selling off the back of 2012. Their over-zealous approach has led some marketeers to claim they are turning their backs on 2012 due to proposals’ lack of clarity. Industry experts have been quick to lay the blame at chancellor Gordon Brown’s door after he used his March budget to ask sponsors to fill in an extra £100 million hole in athletes’ funding”.
The Government is also planning to introduce a further curtailment of grassroots commercial reference to the Games with the London Olympic Association Right, again under the pretext of protecting Olympic brands and prohibiting visual and verbal association with the event (A. Bryce, The Times, July 31, 2006). Fines could be up to £20,000. The Times comments: “Opponents of the LOAR provision argue that it goes well beyond existing British intellectual property laws and significantly limits the freedom of commercial expression and competition” and “ensure[s] […] sponsorship fees are kept at a premium”. Athletes’ rights to earn income from endorsements may also be curtailed. The British Olympic Association plans to ‘carpet-register’ a series of London 2012-related images with every trademark class throughout the UK and Europe, to provide a ‘firm foundation’ for brand infringement actions.
Other items of note:
- Fair Olympics (2004) point out that corporate sponsorship dates back only to the Los Angeles Games in 1984 when government funding was withdrawn (incidentally, also the Games where volunteering was introduced on a grand scale).
- Royalty revenues for the Athens Olympics 2004 were expected to generate around US$66 million (£38 million).
- Roots, Canadian sponsor of the US, Canadian, and British Olympic teams, sells replicas of the kits in high street stores. Fair Olympics report that the company is planning to open around 100 shops in China by 2006. At the Salt Lake City Winter Olympics, Roots’ sales exceeded US$25 million (£14.45 million) (ibid, p 33).
Legal Week (P. Hodkinson, July 21, 2005) report that 77% of a survey of 100 “leading business lawyers” believe their firms will win legal work related to the bid, with 18% expecting “to secure substantial levels” of business. 71% of firms will be taking active steps to generate work related directly to the Games. Clifford Chance (IP and finance) and Freshfields Bruckhaus Deringer (corporate issues), Ashurst (commercial aspects), and Bird & Bird (sponsorship issues) have already taken up advisory contracts. A later report also links Herbert Smith, Eversheds, Linklaters, Ashurst and Nabarra Nathanson to projects for the redevelopment of Stratford and the London 2012 Olympic Village (Legal Week, January 12, 2006). The LDA unveiled a legal advisory panel in December 2005, with “leading City firms such as Norton Rose and Berwin Leighton Paisner, alongside national heavyweights Hammonds, Pinsent Masons and DLA Piper Rudnick Gray Cary and regional practices such as Bevan Brittan, Mills & Reeve and Martineau Johnson” (Legal Week, May 4, 2006). The London Organising Committee for the Olympic Games (LOCOG), however, shelved plans for an equivalent panel chosen by competitive tendering on January 20, 2006, opting instead to stay with existing legal contractors (C. Grimshaw, Legal Week, January 20, 2006).
Lord Tom Pendry, a former shadow sports minister, has demanded ministers introduce a code of practice to ensure that the 2012 Games are not marred by betting irregularities (A. Culf, The Guardian, February 14, 2006). Apparently, the government is reluctant to introduce legislation to restrict betting on the Games, although IOC President Jacques Rogge, has been lobbying ministers for tighter rules. Online gambling has produced a rapid expansion in sports wagering. Lord Pendry suggested that the prospective Gambling Commission with the London 2012 Organising Committee (LOCOG) should draw up a code of practice, to restrict wagers in areas where LOCOG has “a concern about integrity”. William Hill report that turnover in the UK on the Winter Olympics 2006 has reached £1 million. Graham Sharpe, a spokesperson for William Hill talking to The Guardian, predicted that more than £10 million would be bet on the 2008 Beijing Olympics. He also asserted: “It is legal to bet on anything other than the National Lottery. It would be ludicrous to think that the law could prohibit betting on the Olympics”. Those worrying about the authoritarianism of government discourse surrounding the 2012 Olympics might take note of one spokesperson for the Department of Culture, Media and Sport, who commenting on the robust powers of the prospective Gambling Commission, told The Guardian: “When everything is in place there will be nowhere to hide for cheats in this country”.
This essay is part of the Games Monitor briefing papers available for download from our Media Centre page.