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Has SOCOG significantly mishandled the sale of Olympic Games tickets?




Echo Issue Outline 1999 / 43: copyright © Echo Education Services
First published in The Echo news digest and newspaper sources index.
Issue outline by J M McInerney

What they said ...
'[I have] no problem ... balancing the commercial realities of running the Games and using premium tickets to help support those cheap tickets (offered to the public at) between $10 and $19'
Mr Paul Reading, SOCOG's chief finance manager

'The Australian public deserve a lot more and I think they are being conned ... it just makes me so angry, it's such a cynical exercise'
Former Australian Olympic marathon runner, Ron Clarke

On November 22, 1999, an independent review of SOCOG's handling of ticket sales was released. The report suggested significant shortcomings in SOCOG's method of operation. The SOCOG board responded with some internal re-organisation of duties and the appointment of two new senior staff.
No senior SOCOG member has been removed, however the Olympics Minister, Mr Mark Knight conceded that SOCOG accepted responsibility for any mismanagement and would be more zealous in overseeing future ticketing operations.
There was immediate criticism from the media and elsewhere that SOCOG has responded inadequately to the review's findings and that more was amiss than SOCOG's limited response to the review suggests.
This has been only the latest installment in an on-going round of criticisms of SOCOG's handling of ticket sales. These criticisms have been variously defended by SOCOG.

Background
There has been a number of controversies dogging the Sydney Olympic Games Organising Committee (SOCOG).
There was contention over which nations should supply marching bands for the opening ceremony. There have been concerns about the possible rescheduling of some extremely popular events. There has been debate over who should open the Games. Most significantly, however, there has been contention about the method of ticket selling.
Public disquiet was originally limited to disappointment when a significant number of people failed to receive either their preferred seats, or indeed any seats, in the first round ticket ballot.
Almost 250,000 Australians missed out on tickets in the first round of allocations. About 25 per cent of the 321,500 applicants were allocated nothing, while a third received all of their choices.
At the same time SOCOG was accused of incompetence and inequitable treatment when mail delays (of disputed origin) meant that some people who had not received anything in the first round allocations where effectively handicapped when it came to applying for second round seats.
However, public irritation became anger when it was at first suspected and then finally revealed that in many events the number of tickets being offered to the Australian public was much smaller than had initially been believed.
One of the major reasons for fewer than expected tickets being available to the general public is that a large number of tickets appear to be being held in reserve as part of premium packages at inflated prices for the wealthy.
Professor Alan Fels of the Australian Competition and Consumer Commission suggested that SOCOG may have been guilty of misleading advertising in its promotion of Olympic Games tickets to the Australian public.
He also questioned the probity of encouraging people to purchase tickets for events to which they had much less likelihood of gaining admission than they had been lead to believe.
What appeared to concern him particularly was where people were allocated and charged for their second or third preferences when they had actually had very little chance of receiving their first preference.
An independent review was established to investigate SOCOG's handling of ticket sales.

There is a number of Internet sites supplying background information on aspects of this issue.
An interesting place to start is with an article published in the Sydney Morning Herald on June 5, 1999. The article is titled, Cashing up a big ticket item. It can be found at http://www.netmarket.com.au/news/9906/05/features/features8.html
It is interesting in part because it suggests the level of return which SOCOG originally planned to achieve through the sale of tickets within Australia.
Also of interest is the claim that `Last year the International Olympic Committee warned that SOCOG's estimates of tickets sales and sponsorship earnings were "ambitious". '
The article also suggests that in response to the IOC's warning SOCOG then significantly lowered its estimates of likely returns from ticket sales within Australia.

Another interesting article was published in The Age on May 31, 1999.
It was written by Matthew Moore and Michael Evans and is titled, 'Low demand threatens Olympic ticket sales targets'
It outlines the various limitations and combinations that SOCOG was imposing on other nations seeking to purchase Olympic tickets. One of the expedients being employed was that tickets in high interest events could only be purchased in conjunction with tickets for less popular events. It is suggested that this has been standard practice in a number of previous Olympics.
The article can be found at http://www.theage.com.au/daily/990531/news/news14.html

Another article of interest was printed in a United States publication, US Today. It was published on July 10, 1999.
The article is titled, 'Deficit rumors haunt Sydney' and indicates that in July, 1999, SOCOG was some $290 million behind in raising revenue. It goes on to make the point that Atlanta was in a similar position at a similar point in staging the 1996 Olympic Games and yet ultimately 'broke even'.
The article also notes that since the 1976 Montreal Olympic Games, after which taxpayers were left with a major debt to pay off, Olympic organisers have been very wary of potential revenue shortfalls.
The article can be found at http://survey.usatoday.com/olympics/olyglory/og15/og1504.htm

The Age in its Issues 99 series has a large collection of articles dealing with different aspects of the Sydney Olympic Games organisation. This collection includes a significant number of articles treating the sale of tickets.
The index to the Games articles can be found at http://www.theage.com.au/special/gamescrisis/index.html

Arguments in defence of SOCOG's handling of Olympic Games ticket sales
There have been two major criticisms levelled against SOCAG regarding the sale of tickets.
One is that the general public was denied appropriate access to events because too many tickets were held in reserve to be sold at higher prices to the wealthy.
The other principal criticism is that SOCOG deliberately mislead the Australian public as to the number of tickets that would be available for general purchase.
There are several arguments in defence of SOCOG in response to each of these accusations.
The first argument in support of SOCOG's reserving of premium tickets for the wealthy is that the Committee had an obligation to ensure that the Games were not run at a loss.
It has been suggested that shortfalls in expected sponsorship for the Sydney Olympic Games required the organisers to look at other means of increasing the Games' revenues.
This point has been noted by The Australian's Olympic Games reporter, John Lehmann.
Mr Lehmann has written, 'In late July [1999] Olympics' organisers were rapidly coming to the conclusion that raising another $140 million in sponsorships was a pipedream.'
It has been suggested that at this point it was decided to try to tap the readiness of corporate ticket buyers and other wealthy sports enthusiasts to pay high prices. This apparently included a plan to sell some 6000 premium tickets in the United States.
In all, it appears there were some 250,000 premium tickets to be sold. This included 200,000 tickets which John Lehmann claims 'are ready to be sold to the highest bidder for a combined total of $60 million'.
One source, apparently within SOCOG, has been reported by John Lehmann as claiming, 'There was a collusion of two curves - one that time was falling away and revenue raising was getting harder; the other that there really was a lot of people willing to pay a lot of money to get to the Games.'
It has further been suggested that SOCOG's sale of premium tickets to the wealthy has made it possible for cheap tickets to be made available to the general public.
This point has been made by Paul Reading, SOCOG's group general manager, commercial and marketing.
Mr Reading has claimed he has 'no problem ... balancing the commercial realities of running the Games and using premium tickets to help support those cheap tickets (offered to the public at) between $10 and $19.'
According to this line of argument, the sale of premium tickets to the wealthy may actually have been to the advantage of the general public, because, without the revenue raised through the sale of premium tickets, the general cost of tickets would have been higher.
It has further been suggested that SOCOG was restricted in what it could do because many Olympic venues appear to offer too little seating and financial imperatives required that a significant number of available seats be sold to sponsors and other wealthy purchasers.
This point has been made by The Age's economics editor, Tim Colebatch.
Mr Colebatch has noted, 'In part, it seems SOCOG was hamstrung by venues too small for the events. It Has allocated 13 per cent of its seats to the media, 14 per cent to athletes, officials and international Olympics and sporting bodies, and 20 per cent to sponsors and packages for the rich. For premium events in small venues, this has left few seats for the Australian public.'
This difficulty appears to have been compounded by the fact that in some of the particularly popular and therefore saleable events significantly more than 20 per cent of the tickets were held over for sponsors and premium packages.
Later figures have suggested that only a third of Olympic tickets were made available to the Australian public, while in some events the figure may be as low as 10 per cent or less.
Finally, regarding the relatively small number of tickets being made available to the Australian public, it has been noted that the Olympics is an international competition and that spectators from other nations should rightly be able to attend.
This point has been made by SOCOG's chief executive, Mr Sandy Hollway.
Mr Hollway has noted that SOCOG has obligations to other parties, not just the Australian public.
In regard to the accusation that SOCOG mislead the Australian public about the number of standard tickets that would be available for purchase, it has been claimed that some inaccurate statements made by SOCOG board members were made in ignorance rather than as part of a deliberate attempt to misinform.
It has been suggested that only those directly involved with ticket sale and allocation were fully aware of the percentage of tickets being made available to the general public for any particular event.
One SOCOG board member has been reported as claiming that Paul Read, SOCOG's group general manager, commercial and marketing, `has kept all these figures from the board as well as the public.'
It has further been suggested that even those SOCOG officials who were aware of the number of seats being made available to the different groups did not keep this information secret because they wished to mislead the public.
Rather, it has been suggested, SOCOG's intention was to retain positive public relations and to try to ensure that the Australian public would be willing to buy those tickets that were available to it.
It has been argued that to the extent that there was secrecy about the number of tickets to be released to the general public, it was again because of SOCOG's commercial imperative.
According to this line of argument, SOCOG felt it was necessary to keep up public interest in the purchase of tickets.
Professor Alan Fels, the chairperson of the Australian Competition and Consumer Commission, has claimed that SOCOG's behaviour was probably neither fraudulent or criminal. (Please note, despite this, Professor Fels should not be read as endorsing SOCOG's ticketing practices.)
The desire to retain a positive public perception of the Games and the ticketing process was voiced by the Olympics Minister, Michael Knight.
Mr Knight has claimed, after ticket availability figures began to become public, `I think that there'll be a lot of distress when people see these figures.'
It has been suggested that the central difficulty facing SOCOG in its ticket selling operations is that it has two different and not always fully compatible responsibilities.
On the one hand it has to supply the best possible experience of the Olympic Games to the Australian public and to all other interested spectators.
On the other hand it is a commercial operation with an obligation to at least minimise the level of Olympics-related debt to be passed on to the taxpayer.
This dilemma has been summed up by one SOCOG member who has claimed, 'The difficulty is that SOCOG is both a public body and a commercial body, and it has got to straddle both responsibilities.'

Arguments criticising SOCOG's handling of Olympic Games ticket sales
The central argument offered against SOCOG's handling of Olympic Games ticket sales is that SOCOG has been more concerned with raising revenue than it has with ensuring that as many Australians as possible are able to attend the Games.
This argument centres around SOCOG's practice of having many of the seats, especially those to the most popular events, tied up in premium ticket packages to be sold to the wealthy in Australia and overseas. Critics of this policy have maintained that it has resulted in too few tickets being made available to the general public.
It was revealed toward the end of October, 1999, that as few as 10 per cent of tickets to some of the best events were available to Australians in the first-round ballot. These events included ceremonies, swimming, basketball and gymnastics.
One SOCOG board member commenting on the ticket availability statistics noted, 'They're pretty startling figures in terms of how low they were ... They're pretty pathetic - we saw about half a dozen figures and there was not all that much variation.'
It has been suggested that such a ticketing policy is grossly discriminatory. Former Olympic marathon runner, Ron Clarke, has suggested that average Australians have been treated as 'peasants'.
Mr Clarke has stated of SOCOG, 'They said ... We'll keep the best seats for our mates and all you peasants think you're going to get the tickets you want but you aren't, you're only getting tickets for the events that aren't supported.'
Mr Clarke's criticism centres on what he appears to suggest was the preferential treatment given corporations, sponsors and other wealthy potential ticket buyers.
A related point was made in The Australian in its editorial of October 26, 1999.
The editorial states, 'Somewhere, fairness and decent treatment of the public was overtaken by a desire for cash.'
The Australian, in a later editorial dated November 23, 1999, made a related point. This editorial stated, ' ... SOCOG has to meet a complex set of financial, political and social objectives, and operates according to a very different set of external constraints and influences than does a private sector business.'
The second major criticism that has been made about SOCOG's ticketing practices is that they have been misleading.
The suggestion has been made that SOCOG deliberately kept from the public the limited number of tickets that were available to many events because they feared that ticket sales within Australia would fall if people were aware how little choice they actually had.
This point has also been made by former Olympic distance runner, Mr Ron Clarke.
Mr Clarke has stated, 'The whole exercise was designed to get normal people to take all the tickets they didn't want ...'
Mr Clarke went on to say, 'If they'd known they only had a one in 1000 chance they wouldn't have been willing to go in.'
A similar point was made by the Australian Prime Minister, Mr John Howard.
Mr Howard has stated, '[The public] appear to have been misled, to say the least, and I can understand their anger and think they're entitled to an explanation.'
The same point was made in the independent review of SOCOG's ticketing procedures which was released in November, 1999.
One of the review's findings stated, 'There was carelessness on the part of management concerning the accuracy of information being given to the public about the numbers of tickets in the public ballot.'
The review also offers support for those who have suggested that the SOCOG board and its chief executive Sandy Hollway remained deliberately uninformed about ticketing procedures.
The review found, 'Both the board and Sandy Hollway knew in mid-1999 that the tailored premium package program was developing. Neither the board nor Sandy Hollway sought information regarding the number or type of tickets being sold or committed ... to the program.'
According to this line of argument, ignorance is not an excuse for SOCOG executives who failed to inform the public of the limited number of tickets that were available. Those who hold this view suggest that these executives were ignorant because they chose to be.
Another criticism of the premium ticket program is that it was not fairly advertised even to those corporations and others who may have been able to take advantage of it.
According to this line of argument the premium ticket procedures were also unjust because there was no formal procedure for disseminating information about them to prospective purchasers.
The review concluded, 'Access to tailored premium packages was limited to organisations and individuals who became aware of the program through word of mouth.
The tailored premium package was not formulated or managed in a way which took proper account of the public interest in having access to tickets.'
Another criticism that has been made of SOCOG ticket sale procedures is that they could result in a relative lack of mainstream Australian spectators at the Sydney Games which would be disappointing for the Australian competitors.
Australian distance swimmer, Daniel Kowalski, has claimed, 'What makes it so special about sport in our country is the great crowd support, the enthusiasm of the fans.'
It has further been suggested that the scandals surrounding the distribution of tickets might even impact on the performance of Australian competitors.
Four-time Olympian, Simon Baker, in a letter published in The Age on October 26, 1999, noted, 'While we spend hours of daily, soul-breaking grind, and ignore the pain we must endure to achieve our best in Sydney, must we also ignore the disappointment of families and friends who hoped for tickets to our (or any) events?'

Further implications
The full consequences of this series of revelations and reports on SOCOG ticketing practices is not yet clear.
SOCOG is generally felt to have responded inadequately to the criticisms of its management procedures contained within the recent independent review.
It seems reasonable to conclude that public confidence in SOCOG's ticketing practices is, and is likely to remain, low.
This is significant for a number of reasons.
Firstly, in response to criticism and forced revelations SOCOG has released additional tickets to the general public. It is also anticipated that unsold tickets originally offered overseas and to corporate buyers will ultimately be returned to the pool of tickets available to the Australian public.
It would be an unfortunate irony if disaffection with SOCOG's ticketing practices meant that many Australians did not buy tickets even when they were genuinely available.
Secondly, and relatedly, if SOCOG's handling of this affair has been the public relations disaster that has been suggested there is the possibility that the public's enthusiasm for the games themselves may be dampened.
Further, if the Games is ultimately run at a taxpayer funded loss, there will by little enthusiasm among the general electorate to meet the bill.
This could have significant electoral consequences for the NSW government.
It is possible to argue that the general public had an unreasonable expectation of the level of access they would have to events. It is equally possible to argue that SOCOG made no effort to shape a reasonable or accurate public expectation.
It will be interesting to note what lessons are taken from this affair to the 2006 Commonwealth Games in Melbourne.

Sources
The Age
23/10/99 page 5 news item by Jacquelin Magnay & Michael Evans, 'Outrage over 10 per cent ticket ballot'
26/10/99 page 1 news item by Jacquelin Magnay & Michael Evans, 'Games ticket fiasco: 500,000 seats found'
26/10/99 page 18 editorial, 'The right to watch the home Games'
26/10/99 page 18 letter from Simon Baker, 'The shame of our Olympic Games scandals'
27/10/99 page 1 news item by Jacquelin Magnay, 'Watchdog orders inquiry on tickets'
27/10/99 page 8 analysis by Ben Hills, 'How Chainsaw Al's prot‚g‚ became ticketmaster'
27/10/99 page 8 analysis by Tom Colebatch, 'How the public will miss out'
23/11/99 page 1 news item by John Salvado, 'Ticket fiasco blame spread'
24/11/99 page 20 editorial, `SOCOG's shame undiminished'

The Australian
8/10/99 page 3 news item by John Lehmann, 'Agony, ecstasy after Games' first race - to letterbox'
16/10/99 page 9 comment by John Lehmann, 'Ticket lottery? That's rich'
23/10/99 page 1 analysis by John Lehmann, 'Need, greed and tickets drive a gold medal scandal'
26/10/99 page 1 news item by John Lehmann, 'Olympic lies exposed'
26/10/99 page 4 news item by Andrew Mc Garry & John Ellicott, 'Public was misled, says Howard'
26/10/99 page 14 editorial, 'Games chiefs earn gold for deception'
26/10/99 page 14 cartoon by Nicholson.
27/10/99 page 4 analysis by Fiona Harari, `Ticket tout toughs out scandal.
27/10/99 page 4 transcript of an ABC radio interview with Sandy Hollway, 'From the horse's mouth'
23/11/99 page 1 news item by John Lehman, 'Olympics ticket duo dodge axe'
23/11/99 page 1 summary of an independent review of the SOCOG ticketing process, 'Board of mismanagement'
23/11/99 page 2 news item by Andrew McGarry & Geogina Safe, 'Reading ran his own show, auditor finds'
23/11/99 page 2 news item by Andrew McGarry, 'Seat of an historic problem'
23/11/99 page 2 news item by Christopher Niesche, `Revealed: the latest player'
23/11/99 page 14 editorial, 'Going public not SOCOG's real interest'

The Herald Sun
26/10/99 page 4 news item by Tom Salom, 'Ordinary Aussies lose to high-flyers'
26/10/99 page 18 editorial, 'Gold medal for deception'
26/10/99 page 18 comment by Tom Salom, 'Games sown up'
27/10/99 page 8 news item, 'Treated like peasants: champ's Olympics outrage'
27/10/99 page 8 news item by Tom Salom, 'Watchdog to probe sales'
28/10/99 page 18 editorial, 'SOCOG betrays our trust'
24/11/99 page 10 news item by Tom Salom, 'Games compo threat'