Examination of Witnesses (Questions 100
- 119)
TUESDAY 4 DECEMBER 2007
LORD COE,
MR PAUL
DEIGHTON, MR
JOHN ARMITT
AND MR
DAVID HIGGINS
Q100 Chairman:
So the sponsor of UK Sport is not going to be able to say that
they are associated with London 2012?
Mr Deighton: No.
Q101 Chairman:
That might make it harder to attract a sponsor.
Mr Deighton: The challenge for
UK Sport, in my view (and this is where the adviser will be working
very hard) will be to define precisely what it is they are effectively
selling to the sponsor.
Q102 Chairman:
Is it not a little bit strange? Essentially they are sponsoring
our ambition to rise up the medal table to fourth in 2012 and
yet they are not allowed to talk about that.
Mr Deighton: They are allowed
to talk about the development of the lead athletes but not in
the context of London 2012; and that is why this is a challenging
proposition, I agree.
Q103 Paul Farrelly:
Inscrutability might be allowed in some measure still in China,
but events in politics continue to demonstrate the importance
of transparency, particularly with big, high profile and very
political projects such as this. It would be remiss of me not
to ask a couple of questions at least to give you the opportunity
to put your views on record about the recent Dispatches
programme on Channel 4. Mr Deighton first, could you tell the
Committee why it took a Freedom of Information Act request by
Dispatches to get you to disclose your accounts to them?
Mr Deighton: It did not. The accounts
that were disclosed to them were ones which had not even been
approved by our board. I think what they particularly wanted was
executive salaries. Those executive salaries were in the accounts.
The accounts had not yet been approved by our board. As soon as
they were approved by our board they were released for everybody
to have a look at. I think that was merely a timing issue.
Q104 Paul Farrelly:
It was a red herring. You will be forthcoming. Whichever way you
are constituted, you are seen as a public body.
Mr Deighton: As I hope comes across
when I talk about our revenue raising, and it is quite a sensitive
subject because, of course, there is some information in there,
if I am too granular, which is quite useful to the people who
we are trying to be sponsors, and, as I hope has come across,
our objective is to be as transparent as we possibly can be without
compromising our commercial objectives, and we absolutely accept
that that is the position that we hold, as stewards. I see us
effectively as stewards of the games on behalf of the UK public,
and that is the way we plan to behave.
Q105 Paul Farrelly:
Lord Coe, my briefing notes here, the first paragraph talks about
your phenomenal sporting achievements, the second your considerable
political achievements and the third mentions that you are a controlling
shareholder in the Complete Leisure Group Plc, and, of course,
that relationship was the subject of the Dispatches programme
as well. I think in the programme they made reference to a draft
fund raising prospectus for the Complete Leisure Group which contained
a reference to the intention to cement a strategic business relationship
which would involve consultancy payments with Anschutz Entertainment
Group, which, of course, owns the Dome, which is an Olympic site.
Could you tell us a bit more about that intended relationship
and what has come of it?
Lord Coe: Yes, very happily. It
is a relationship that never actually took place. It was a series
of thinking that we had in the development of the company and
we never actually went down that road—so it is as simple
as that—and that was a draft document.
Q106 Paul Farrelly:
Because there could be the perception of a conflict of interest
with your role as Chairman of LOCOG if that sort of relationship
were to be intended or cemented by your private business interests.
Lord Coe: Yes, it is a relationship
that was not pursued.
Q107 Paul Farrelly:
Did you declare those intentions to the board of LOCOG in the
usual and acceptable fashion?
Lord Coe: Absolutely, and also
to DCMS and to the International Olympic Committee.
Q108 Paul Farrelly:
As things stand, because you did not get the opportunity or did
not comment on the programme, you can categorically say you have
no business relationships via your companies or associates that
would lead to any conflict of interest with your current position
as the Chairman of LOCOG.
Lord Coe: Absolutely, yes.
Q109 Philip Davies:
Do we take it from the answers that you have given that your income
from sponsorship is on target to where you expected it to be at
this stage?
Mr Deighton: Yes. Of course the
last £200 million is likely to be more difficult to raise
than the first 200 million. The best benchmark I can give is that,
as I have already said, we will, before the Beijing games, have
a minimum of seven sponsorship contracts fully signed. As far
as I am aware, no previous Olympic Games has ever had one contract
signed before the previous edition of the games; so, in terms
of getting it done fast, we are considerably ahead of where anybody
has ever been before and that offers, I think, a couple of important
advantages. One is that the sponsors we are putting in place really
do have a significant amount of time to get the most out of their
investment, which is obviously a very good thing for them, but
it is also a very good thing for us because they are putting in
place what we describe as activation plans which involve community
investment, involve cultural investments, involve things that
we all want to happen, and they have the time and money to do
that effectively. So, having the sponsors in place early means
they can have very significant, effective activation strategies.
The second reason it is very helpful to have things in place early
is that there is a lot of detail that needs to go into what I
would describe as the secondary and tertiary levels of sponsorship,
and because when we get to 2009-2010 we will still not be trying
to land the big sponsorships, we can really focus on the detail
in the smaller sponsorships and you can save a significant amount
of money and make the games significantly more efficient if you
have been able to give those secondary and tertiary sponsorships
that kind of attention. So getting things done early is not just
nice because it demonstrates commercial momentum, it gives you
some real practical advantages as well which will translate into
benefits for us.
Q110 Philip Davies:
What is your assessment of where public opinion is on the Olympic
Games and how things have been going up to the present?
Lord Coe: We have a 76% approval
rating which, given the predominant profession in this building,
I think is probably a pretty reasonable figure to be working on.
Q111 Philip Davies:
Do you not think that the public have any reservations at all
about the way that the preparations for the Olympics have been
going?
Lord Coe: No, I think the real
challenge going forward is to be open and transparent and very
clear about what it is we are doing and why we are doing it, when
we will be doing it and making sure, for instance, through our
engagement programmes, through Nations and Regions, which is a
structure that affects all your constituencies and has moves and
shakers in any number of spheres helping us drive local opportunities,
that we use that as the vehicle as well. Actually we have had
levels of approval for the project and the overall vision that
have varied very little certainly since the bidding process started.
Q112 Philip Davies:
Is there not a danger that when you go round, because it is your
job and therefore all you see is all the activity that is going
on, you get a slightly false view of everybody's enthusiasm for
it? Has anybody said to you what the straw poll that I asked before
here has said to me about the Olympics, which is that as far as
they could tell it was costing an absolute fortune and the biggest
thing they could remember was that an astronomical amount of money
had been spent on a logo?
Lord Coe: No, those are not the
kind of conversations I have, and actually going around various
parts of the country witnessing all the things that are happening
on the ground is not a bad way to start the day. We have very
grown up discussions with all sorts of community groups. We have
probably spoken to 650 different organisations the length and
breadth of this country. We know there is a huge challenge ahead
to make this a project that is as relevant to young people in
the north of Scotland as it is in Cornwall and, as I said a few
moments ago, what I am witnessing on the ground is frankly staggering
and I am witnessing it in all parts of the country. I went to
Belfast just a few weeks ago where, during the bidding process,
there was discussion about having a centre of gymnastics excellence.
I went to a club where they were working on mattresses and equipment
which probably would not have been out of place in the average
gym in the 1950s. This is a club that had coached to Commonwealth
Games standard 20 different competitors. Two weeks ago I went
to open a new centre that simply would not have been there had
the games gone somewhere else, and I see this all the time, both
at local and at national level. So I am satisfied that the task
that we set ourselves in Singapore, which was to provide the once
in a lifetime opportunity to inspire and then provide that opportunity,
is coming together very well.
Q113 Philip Davies:
We are looking forward to welcoming you in Shipley as well. Out
of those 650 groups, how many thought that the money spent on
the logo was well spent?
Lord Coe: The logo is a hardworking
logo. It was absolutely designed to connect with young people.
It was designed also to confront some of the challenges going
forward. You know as well as I do that it is harder every year
to engage young people, particularly in sport. The motivations
that probably got most of the content of this room into sport
have dramatically altered. The average age of people watching
Olympic sport has risen quite dramatically in the last ten, 12,
15 years. We have to be very creative, we have to be very different
in our approach and for some we knew that this would be a challenge,
but this is going to be a hardworking brand and, if you look at
the way that our partners that Paul Deighton spoke about a few
moments are now enshrined creatively in their own marketing programmes,
the way that we are working together with the London boroughs
particularly to make sure that this has a really important focus,
this is coming together extremely well.
Philip Davies: I will take that as being
that not many have said it was money well spent.
Q114 Chairman:
Can we turn quickly to the ODA in terms of your funding. Obviously
a significant proportion of that is intended to come from the
Lottery. Revenue from the Lottery has begun to turn down in comparison
to previous years. If that were to continue, do you have contingency
plan?
Mr Armitt: At the end of the day
the funding which comes to the ODA is funding which is organised
one way or another by government. The Government would deal with
that if that were to be an issue. I think all we could say in
response to your comment on the Lottery is what the Lottery themselves
said in the newspaper reports, which was that they were confident
that, with the future games and the changes which they are bringing
in, they will be able to meet the obligations which they have
met in terms of the amount of funding they will make available
for funding the games.
Q115 Chairman:
If it turned out they could not, that would be the Government's
problem?
Mr Armitt: As I say, as the ODA
we are not responsible for raising the funds which we need; they
are organised by government.
Q116 Chairman:
The Olympic Lottery Distributor has said that you should repay
lottery grant if it creates or enhances assets. Can you perhaps
clarify how and when that might happen?
Mr Armitt: I will ask David to
talk about that since he has been dealing with it.
Mr Higgins: There is agreement
that surplus profits from land sales that the LDA own would go
to repay the Lottery; so that is what that refers to.
Q117 Chairman:
I had understood this was different to the requirement to enable
repayment of lottery contributions via the LDA. This relates specifically
to the assets rather than the land.
Mr Higgins: If there are assets
to be sold or realised, obviously the receipts will be dealt back
to the funders, which will obviously include lottery.
Q118 Chairman:
The Olympic Lottery Distributor maintains a distinction between
this requirement and the handling of the proceeds of land sales
on the Olympic sites. Are you in discussion with the distributor
about how exactly they envisage that there might be some repayment?
Mr Higgins: Yes, we have a letter
of offer, which we are in the process of accepting, that sets
out all the terms.
Q119 Chairman:
Will you be making that public in due course?
Mr Higgins: I am sure the details
of that will be public, yes.
Chairman: We now move on to the costing
side. Mike Hall.
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