The Associated Press received a copy of a letter CEO Sarah Hirshland sent to leaders across the U.S. Olympic world Tuesday, in which she said cuts of 10 to 20% are "necessary to balance both the current delay in revenue and anticipated decline” that’s expected over coming years.
The letter was accompanied by a Q&A that dealt with the possibility that the Olympics, now scheduled to start a year late, in July 2021, could be canceled altogether if the coronavirus isn't curtailed by then.
“We have to fully understand what that possibility would mean for our organization, so we certainly have considered it and evaluated it,” the note said. “The impact of cancellation would be devastating to our athletes, first and foremost, but also to our financial health and stability. We would survive such a scenario, but the impact would be severe.”
Though job cuts or pay reductions appear likely among the 500-person staff, many based at the headquarters in Colorado Springs, the Q&A said “we will look at broader program, services and personnel-related costs before we consider cuts or furloughs.”
Hirshland said decisions will be made by the end of May. Most of the 50 USOPC-affiliated sports organizations were already hurting, and can also expect to see shortfalls in the amounts they receive from the federation in the form of grants and other funds that support athletes.
“Rather than attempting a simple across-the-board reduction, we will make strategic decisions based on the resources needed to continue mission-critical programs, services and functions,” Hirshland wrote, while also telling staff that she has taken a 20% pay cut and the rest of the executive team has taken 10% pay cuts through at least the end of the year.
The USOPC’s budget runs on four-year cycles, and the biggest splash of money comes in during the year of a Summer Olympics, when TV payouts across the Olympic world are at their peak. The federation, for instance, brought in $195 million more in 2016 than in 2015 for total revenue of $336 million.
Should the Olympics go on as now planned, in 2021, the TV money will still arrive, but a year late. But the delay could have a negative impact on a marketing agreement the USOPC cut with organizers of the LA 2028 Olympics, which was supposed to start next year. Virtually all Olympic-style marketing deals set for 2021 will need to be altered while many that were set to expire in 2020 could be extended.
Meanwhile, a full cancellation of the games would throw the USOPC into uncharted territory. It could include having to tap into the $200 million U.S. Olympic Endowment, a fund borne out of the surplus from the 1984 Games in Los Angeles.
“We need to retain the ability to deal with things getting significantly more difficult, for example if there were a cancellation of the Tokyo Games,” the Q&A said in response to a question about why the USOPC isn't using the endowment money now.
National governing bodies already have taken a big hit, with USA Cycling and USA Track and Field among those making staffing cuts, and USA Rugby filing for bankruptcy. A survey of the NGBs estimated they would endure $121 million in lost revenue between February and June -- the result of canceled events, declining membership and reductions in other revenue-generating operations.
In the Q&A, the USOPC acknowledged still seeking government help for NGBs and athletes. The USOPC, which has long held a policy of not receiving government funding, requested funds from the federal government's loan program that it intended to funnel toward the NGBs. It was rejected, but NGBs themselves have been encouraged to apply for their own loans.