How Peter Ueberroth and LA84 Saved The Olympic Movement
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Legendary Australian swimmer, Dawn Fraser, has said of the Games, “The Olympics remain the most compelling search for excellence that exists in sport, and maybe in life itself.” There is something about that search for excellence that draws human beings in, that inspires us, that moves our emotions, and leaves an indelible impact on us.
Massive global audiences. High stakes competition. National pride. Exemplary human performances. In many ways, these characteristics make the Olympic Games a perfect platform for brands to latch on to, associate with, and advertise to consumers. The Games are a perfect place to run large-scale sponsorship platforms. However, when we look at the history of the Olympics, this was not always the case.
During the 1970’s, the Olympics were not in great shape. The 1972 Munich Games included an infamous hostage crisis. The ’76 Montreal Games were a financial disaster in which the host city lost $1.5 billion. The 1980 Moscow Games were boycotted by over 60 countries.
The Olympic Games movement was in deep peril. But everything changed in 1984, and it set the stage for an explosion of growth in advertising that has carried us up to the present day.
LA84
When it came time for the International Olympic Committee (IOC) to decide on a host city for the 1984 Olympic Games, very few cities had even submitted a bid. City leaders around the globe had a hard time selling their constituents on an event that had been riddled with financial loss, political turmoil, and terrorism.
Only Los Angeles and Tehran had made legitimate bids for the ’84 Games, but Tehran ultimately withdrew its bid, making Los Angeles the host city, almost by default.
The Los Angeles Organizing Olympic Committee (LAOCC), led by its CEO, Peter Ueberroth, had unique challenges in organizing these games. For one, because the United States had boycotted the 1980 Games in Moscow, Los Angeles could count on very little support from the IOC and the international Olympic family. Indeed, Russia countered with their own boycott of the 1984 Games, refusing to send some of the world’s most dominant athletes to compete in the U.S., during the middle of the Cold War.
At the same time, Los Angeles voters passed an amendment that prohibited the expenditure of government funds to fund the Olympics, leaving the LAOCC to shoulder the entire financial burden for organizing the ’84 Summer Olympics. According to a story in CSQ Magazine on Peter Ueberroth and these games, the LA Olympics “were to be the first, and only, privately financed Olympic Games in modern-day history. Not one penny was received in donations.”
Peter Ueberroth was the right man for this seemingly impossible job. A successful entrepreneur, Ueberroth had just sold the company he had founded, First Travel, for a significant sum to become the CEO of the LAOCC. During the 1960’s, he had moved his family to the San Fernando Valley because he yearned to be his own boss, and “follow the entrepreneurial startup path,” according to CSQ.
“I opened the first bank account [for the 1984 Olympics] with my own money,” Ueberroth said. “We inched our way along.”
Ueberroth took on significant risk, like startup founders often do. Finding new and different ways to fund the Olympics seemed much like the challenge of building a company from scratch. By utilizing a very lean operation, with as few employees as possible and help from thousands of volunteers, Ueberroth and the LAOCC were able to avoid the pitfalls that doomed previous Olympics, like Montreal in 1976. Rather than investing hundreds of millions of dollars to build new facilities and stadiums, the LAOCC signed leases with existing facilities like The Forum, The Sports Arena, and the LA Coliseum.
LA did end up building two facilities — a swim center and a “velodrome” for cycling events — however, they were able to offset much of the cost through corporate sponsorship and media broadcasting rights.
The first big domino to fall for Ueberroth and his LA84 team was their successful negotiation with ABC-TV, selling the exclusive television broadcasting rights for $225 million, which was, at the time, a record deal. The ABC deal served as seed funding to operate the LA84 team’s operations, and from there, they set out to attract other corporations to affiliate with the Games, for a price.
Sponsorship was a relatively novel concept in the 1980’s, a time in which radio and print advertising still ruled the day. However, Ueberroth realized that he could create competition for marketing and advertising during the Olympics through creation of a so-called “golden circle” of Olympic sponsors. In this model, an exclusive group of a small number of companies would become “official sponsors” in different product categories, and a bidding war would ensue. Therefore, Burger King and McDonald’s had to compete for the title of “official burger of the Olympics,” a competition which McDonald’s would win.
Soon, companies including Coca-Cola, Fuji Photo Film, and Converse were committing upwards of $14 million each to become the “official soft drink of the Olympics,” or the “official athletic shoe of the Games.” The category sponsorships that we’ve come to be very familiar with in the sports and entertainment can trace their origins to the success of the LA84 team.
Ueberroth and company secured an additional $126 million from sponsorship deals, and ended up creating a surplus of $232.5 million once the games were all said and done. It was the most profitable sporting event in history.
The legacy of the 1984 Summer Olympic Games did not stop there. The LA84 Foundation was created and endowed with about 40% of the profits from the Games, roughly $93 million. It still operates to this day, and over the past 35 years it has impacted more than 3 million youth and families and supported over 2,200 non-profit organizations, including the Boys and Girls Clubs of America, KEEN Los Angeles, the YMCA, and the PGA Foundation.
