Olympic business stays in the 'family'
In the lucrative field of ticketing and travel, a small group of interconnected Olympic business insiders — all with ties to the Salt Lake 2002 Olympics — plays a powerful role behind the scenes.
Seattle Times staff reporters
SUNDAY: Freezing out the fans
MONDAY: The man behind the monopoly
TODAY: Connections pay off for insiders
WEDNESDAY: Scalpers' market
They call it the "Olympic Family" for a reason.
Beyond just sounding nice, the official nickname for the Olympic power structure also is a spot-on description of the often-cozy relationship between officials who run the Games and companies that profit from them.
The Vancouver 2010 Games aren't immune from that less-than-proud Olympic tradition. In the lucrative field of ticketing and travel, a small group of interconnected Olympic business insiders — all with ties to the Salt Lake 2002 Olympics — plays a powerful role behind the scenes.
At the center of the web is Sead Dizdarevic, whose travel empire stands to profit handsomely from the 2010 Olympics. Dizdarevic, active in the business for 25 years, has a record of backroom deals and cash payments to potential host-city organizers.
The New Jersey man has said that's all in the past. Dizdarevic maintains Jet Set Sport's business dealings all went above board after the Salt Lake bid scandal, in which he admitted to paying $131,000 in cash to curry favor with two Salt Lake organizers who later were tried on federal fraud charges.
Rather than handshake arrangements, Dizdarevic's two companies, Jet Set and CoSport, now have official sponsorship contracts that give them control of the bulk of Olympic travel worldwide. Combined, the two companies are the largest buyer of tickets to the 2010 Olympics. CoSport is the only authorized Olympic ticket dealer in the United States.
But an old Dizdarevic company tradition of handpicking employees from the ranks of organizations controlling the Olympics appears alive and well. And it has expanded to lure an influential investor — one who serves on a key governing panel for the Olympics from which Dizdarevic hopes to profit.
Adviser and investor
For the Vancouver 2010 Games — as in past Olympics — the International Olympic Committee (IOC) appointed an eight-member Coordination Commission to oversee how the Games are run.
The group — composed of IOC members, a high-ranking manager from a previous Olympics, an athlete representative and others — serves as liaison between the Vancouver Organizing Committee (VANOC) and the IOC executive board in Switzerland.
During the seven-year run-up to the Games, the IOC commission for Vancouver has met periodically, in closed sessions, to "monitor and assist" local organizers with Olympic business and operations, according to the IOC.
A key commission member is Fraser Bullock, a Utah investment-firm executive who served as the chief financial officer of the 2002 Salt Lake Games. Bullock was the right-hand man for Mitt Romney when new leaders were hired to right the course of the Salt Lake Organizing Committee (SLOC) after the bid scandal erupted in 1999.
Bullock describes himself as a "jack of all trades" on the Vancouver commission, working to ensure a quality experience for media, sponsors and spectators. That work includes policy decisions on a wide range of Games operations, including ticketing.
Bullock is a key adviser on the Vancouver Olympic budget, and plans to advise organizers of Russia's Sochi 2014 Winter Games, as well.
He had served on the IOC commission for six years when an opportunity arose "totally out of the blue" to buy a minority share of Dizdarevic's Jet Set Sports, Bullock told The Seattle Times.
Dizdarevic invited Sorenson Capital — the Utah private-equity firm Bullock co-founded in 2003 — to invest in Jet Set Sports, Bullock said.
Jet Set at that point already had paid Vancouver organizers a reported $15 million to become the exclusive hospitality provider for the 2010 Olympics.
Although Bullock's firm invests most of its money in manufacturing and technology, he said it seemed logical to buy into Jet Set, a travel company.
Bullock declined to specify the amount of Sorenson's minority investment in Jet Set, announced in December 2008. He continued to serve on the Vancouver IOC commission afterward.
Because the commission made decisions that might affect business for Olympic sponsors, such as Jet Set, he expected questions about a perceived conflict-of-interest.
"Of course, that was my first concern when we started down this path," he said.
Bullock said he "immediately" cleared the matter with a "senior member" of the International Olympic Committee before the investment deal was finalized. He reminded the IOC that Jet Set's contract with VANOC, signed in March 2007, was in place before he ever considered investing in the company.
"That made people more comfortable," he said.
He also recused himself from discussions involving Jet Set, and even offered to resign from the commission, Bullock said. A news release about the deal last year mentioned his role on the commission.
"The biggest issue in any conflict is if it's not disclosed," Bullock said. "Once it's disclosed and everyone knows the issue and you recuse yourself, then there aren't any issues."
Bullock was offended when pressed by The Times to explain whether the investment put him in a position to make decisions that might benefit a company he now partially owns.
"This is going in a direction that is way out of line," he said.
The IOC does not consider Bullock's investment to be a conflict of interest, spokeswoman Emmanuelle Moreau said. She declined to say whether the matter had ever been referred to the IOC's ethics commission to determine if it was in keeping with the organization's ethics policy. VANOC officials did not respond to multiple requests for comment.
But an ethics expert from Santa Clara University said that, in general terms, an appearance of conflict might be unavoidable in such situations. A decision-maker who recuses himself from matters affecting his business might already have benefitted from inside knowledge leading to the investment opportunity, said Kirk O. Hanson, an ethics professor and executive director at The Markkula Center for Applied Ethics.
"Information is worth a lot of money," he said.
Bullock and Dizdarevic have another common interest beyond Jet Set: supporting Romney, who headed the Salt Lake Games, in his bid for the highest U.S. public office. Bullock was a key supporter and contributed to Romney's 2008 presidential campaign. Dizdarevic and his family also funded the campaign, giving nearly $9,000. Dizdarevic has been a strong supporter of the GOP, giving more than $35,000 between 2001 and 2003, federal records show.
Bullock wasn't the only one in a position to give Jet Set an edge with its Vancouver Olympic business. In 2005, when Jet Set was establishing a Toronto office to sell travel packages to Canadians, Dizdarevic looked to a familiar man to run it — Michael Patterson, then-director of marketing for the Canadian Olympic Committee.
Before he jumped ship to Jet Set, Patterson had worked closely with the company, overseeing its exclusive contract to sell travel packages for the 2004 Athens Olympics. Patterson has since left Jet Set and works for a marketing firm in Toronto. He did not return calls for comment.
The revolving door
The world of Olympic management has a revolving door not unlike the one between the U.S. Congress and lobbying firms — but with far less scrutiny. Employees of nonprofit Games agencies, such as host-city organizing committees or national Olympic committees, often gain specialized knowledge that can pay off when they move to jobs with higher-paying private companies.
But few Olympic travel-business insiders can claim to have worked both sides of the aisle as effectively as Mark Lewis, who would sign Dizdarevic to a lucrative deal in Salt Lake City, then see the favor repaid.
Before he went into the travel business, Lewis did marketing work for the IOC. Then he was hired as a senior Games official in Salt Lake, serving as vice president for marketing on Romney and Bullock's team.
Lewis had a dual role there, one that illustrates how intertwined the Olympic business world becomes: In 2001, Lewis was paid a salary of $209,000 by the U.S. Olympic Committee, which had a joint marketing venture with the Salt Lake Organizing Committee (SLOC). But his benefits of $165,000 were paid by SLOC, tax records show.
Lewis' primary task was to raise money for both entities. And he did it in record fashion: nearly $1 billion in sponsor contracts, everything from an official airline of the 2002 Games (Delta) to the official walnut (Diamond).
That quest led him straight to Dizdarevic, whom he had known since 1996. Salt Lake officials, hired to clean up the bid-scandal mess, knew Dizdarevic was a potential government witness in the fraud trial, Lewis said. But Romney's group, inheriting a $379 million budget deficit, decided that wasn't a deal-breaker.
"We did a lot of due diligence," Lewis said. "We were very satisfied, or we would never have had him as a sponsor."
Three years after those Games, Dizdarevic, not Lewis, was doing the recruiting: He hired Lewis to become president of Jet Set — a position that was "too good to pass up," Lewis said. Jet Set's annual revenue has tripled in his tenure.
Lewis also has literal family connections to the Olympic movement — and to Olympic business at three consecutive Winter Games. His wife, Dawn Allinger, is a former U.S. team handball player. Her sister-in-law, Cathy Priestner Allinger, has served in top leadership roles at the Salt Lake, Turin and now the Vancouver Olympics, where she is an executive vice president.
Priestner Allinger and Lewis also worked together running the Utah Athletic Foundation, a nonprofit agency that manages venues left from the Salt Lake Games.
Lewis said the connection offers no business advantage to Jet Set and that Priestner Allinger, a former Canadian Olympic speed skater, disclosed the relationship before she was hired by VANOC. And, he said, she works in sports and venue management, fields that generally don't involve his company.
"We are as honest and ethical as we can be," Lewis said. "We [Jet Set] won't do anything I'm not proud of."
IOC officials referred questions about the matter to VANOC, which did not respond to multiple requests for interviews. Priestner Allinger also declined to comment.
None of these relationships has drawn much public notice — perhaps because Olympic management receives little public or media scrutiny. Despite their use of hundreds of millions of public dollars, Olympic organizations are exempt from open-records laws, and draw no direct government oversight.
That lack of transparency, coupled with the fact that the management structure for each Games is created anew, contributes to an atmosphere "fraught with potential for exploitation," said Santa Clara's Hanson.
The Olympic Games, he said, "have never developed the same standards of transparency about its deals that are common in other areas."
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