Financial lessons run through audit trail.

Byline: Sherri Buri McDonald The Register-Guard

Back in 2000, the Olympic Trials for Track and Field in Sacramento was heralded as the most successful Trials ever held. It attracted daily crowds of 20,000, at least 1,000 elite athletes and hundreds of journalists from around the world.

It also lost $1.055 million.

Owed $500,000 by the Trials organizers - and committed to hosting the event again in 2004 - Sacramento city and county officials conducted a nine-month audit to see what went wrong and to figure out how to correct any problems.

The city and county ended up forgiving the $500,000 loan, and event organizers worked out deferred payments with vendors for the remaining debt, said John McCasey, executive director of the Sacramento Sports Commission, the event's main organizer.

With lessons learned from 2000, and a loaned city financial expert to track the budget, the 2004 Trials ended on a positive note - with revenues of $609,748 after expenses.

Eugene organizers, recently awarded the bid to host the 2008 Olympic Trials, could learn from Sacramento's mistakes.

"It's been a learning curve of seriously seven years," McCasey said.

Eugene organizers said they were aware that Sacramento ran a deficit in 2000, but they didn't know all of the reasons.

"We will be working closely with our partners at USA Track & Field to determine what some of those issues may have been and how we can avoid them," said Greg Erwin, president of the Oregon Track Club, a leading organizer of the 2008 Trials.

Erwin said he's confident that Eugene can host a financially sound event.

"The people of Oregon have let us know, with great enthusiasm, that they will support this event financially and with all their collective resources," he said.

"There is tremendous pride associated with the incredible heritage of track and field here, and I believe the people of Oregon are ready to show the world just how proud we are of what Oregon has meant to the sport of track and field in the past, and what our vision of the sport is for the future," Erwin said.

"That makes all Oregonians stakeholders in this event, and there is power in numbers," he said.

Not your typical track meet

The Trials dwarf all other track and field events, except, of course, the Olympics itself, said McCasey, the head of the Sacramento Sports Commission.

Hosting the Trials is nothing like a typical track and field meet spanning several days, or a one-day football game at Autzen Stadium.

The Trials will take three years to plan, entail a budget of at least $5.5 million, plus up to $2.5 million in improvements to Hayward Field, and require raising more than $1 million in private donations, local organizers have said.

The committee must find housing for hundreds of athletes, coaches and officials, coordinate thousands of volunteers, sign contracts with scores of vendors, and deal with last-minute requests, such as beefed up security or more space at the stadium for TV cameras.

Building costs mounted

The Register-Guard recently obtained a copy of Sacramento's audit of its money-losing Trials. The biggest unexpected expense, it found, was building the competition and practice tracks at Spanos Stadium at California State University, Sacramento. The improvements - originally budgeted at $1.34 million, actually cost $2.05 million because of additional costs for grandstands, bleachers, the hammer cage, and electrical and telephone improvements.

The University of Oregon athletic department is planning up to $2.5 million in improvements to Hayward Field. The UO will raise the money from private donors, said David Williford, assistant athletic director for media services.

"If it costs more than originally projected, then we'll have to raise more," he said. "We'll have to go back to individuals who have been good to the athletic department."

Professional services, such as legal and accounting fees, also ran over budget in Sacramento - by $77,000. Most of these services were provided pro bono, but near the end of the Trials, "we were wearing out our welcome," McCasey wrote in 2001 memo answering city officials' questions about the Trials.

A preliminary budget provided to The Register-Guard on Monday by Eugene organizers has no line item for consultants or professional services.

Erwin, the Oregon Track Club president, said that a large number of lawyers, accountants and insurance specialists have offered their services pro bono.

"If there are matters that require additional paid expertise, I would expect that they would be a relatively minor expense in the scope of our budget," Erwin said.

Professionals vs. volunteers

Assorted other unexpected expenses added to Sacramento's tab. The organizing committee paid $60,000 in program printing costs when the program's publisher fell short of its advertising goals. Organizers had expected advertising not only to cover the costs of printing the program but to contribute $5,000 to $10,000 in revenue.

Organizers also ended up paying $30,000 to sprinter Maurice Green for using his photo in advertisements without his permission.

Organizers paid professionals to do some jobs that they originally thought could be performed by volunteers. Instead of volunteers, a parking management firm handled parking, at a cost of $30,000. Putting the finishing decorative touches on the stadium required hiring forklift drivers, which cost $26,000. The organizing committee also had to foot an $11,000 bill for overnight security that it had thought the university would cover.

The cost of decorations and signage at the stadium and facilities went over budget by $19,000 because the vendor's initial estimate wasn't accurate. Also the initial signage looked too drab, so the organizing committee splurged on red, white and blue bunting.

Housing costs added up

The biggest unrealized revenue was a shortfall of $110,000 in athlete housing subsidies from USA Track & Field. About a month before the Trials, USA Track & Field officials directed the organizing committee to reserve 900 room nights at local hotels for 170 additional athletes expected to attend.

"They said we gotta have 'em," McCasey said. "So I said, well fine, you gotta do what you gotta do."

The additional athletes ended up not staying at those hotels, and the organizing committee was on the hook for the bill.

"This was a raging forest fire while the Olympic Trials were going on," McCasey said in a recent interview with The Register-Guard.

The organizers avoided this pitfall at the 2004 Trials by creating a special contract with hoteliers absolving the organizing committee of any responsibility for attrition or cancellation fees, McCasey said.

Also on the revenue side, some corporate donations and other fundraising didn't come through. A $65,000 contribution from a local corporate sponsor never materialized, and an elaborate welcoming reception for athletes that was budgeted to pull in $101,000 only generated $2,000 because of poor attendance. McCasey called the event "an utter disaster" in his 2001 memo to city officials.

Working closely with TV network

The organizing committee also lost revenue from 90 seats that had to be eliminated and 179 seats sold at a discount because of obstructed views to make room for TV cameras used by NBC, the broadcaster of the event.

Letters between McCasey and Peter Diamond, NBC's senior vice president for programs-Olympics, detailed the dispute. They were included as exhibits to the audit.

In early July, before the Trials, McCasey asked NBC to pay $113,225 for the use of the seats, other space in the stadium and parking. NBC didn't pay it.

After the Trials, McCasey sent Diamond another letter lowering the requested payment to $53,000. The Sacramento local organizing committee "paid particular attention to NBC's needs and did everything possible to provide the network with what you termed `a great experience,' ' McCasey wrote. "It came with a cost that we are seeking some relief from NBC."

NBC offered no relief, McCasey said in a recent interview with The Register-Guard.

The organizing committee preempted potential similar problems four years later. Before the 2004 Trials, Sacramento had NBC OK arrangements at the stadium early on.

"You've got to get NBC in there right away" to check on power and lighting, McCasey said. The network requires a lot of space, and "every square inch of your stadium is worth revenue to you," McCasey said.

Audit identified needs

The financial picture brightened by the 2004 Trials. The organizing committee ended up with $609,748 in its coffers.

"We learned our lesson," McCasey said. "And we didn't have the one-time capital improvements (to the stadium)."

Sacramento city and county also agreed to double their annual allocation to the Sacramento Sports Commission from $100,000 each to $200,000 each in the three years leading up to the 2004 Trials.

Back in 2000, organizers thought they could put on the event with a budget of $3 million. It ended up costing $5.9 million, McCasey said. The 2004 budget was for $6.1 million, with a contingency fund of $500,000, he said.

One of the upsides of the audit following the 2000 Trials is that it identified the need for formalized accounting and internalized controls, McCasey said.

The city of Sacramento assigned its former budget director to work with McCasey.

"That's what I learned" from the 2000 Olympic Trials, McCasey said. "I can market it, stage it, and run it, but I didn't have the fiscal experience. We thought we had it covered ... but we got blindsided by these unanticipated costs."