The Committee will examine possible structural and organizational reforms of the United States Olympic Committee (USOC) to determine what can be done to make the organization more effective and efficient to fulfill the objectives of the 1978 Ted Stevens Amateur Sports Act.
Witness Panel 1
Mr. Fred Fielding
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Witness Panel 2
Dr. Harvey W. Schiller
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Ms. Anita L. DeFrantz
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Mr. Donald Fehr
Mr. Chairman and Members of the Committee: My name is Donald M. Fehr, and I have previously testified before this Committee in my capacity as the Executive Director of the Major League Baseball Players Association. Today, however, I appear to discuss issues related to the United States Olympic Committee (USOC), and I do so based upon my experience serving as a member of the USOC Board of Directors from the Public Sector. Statement of Donald Fehr, 13 February 2003, page 2 The Committee’s invitation to testify states that this hearing will “examine the current organizational structure and culture of the USOC” to determine what reforms may be appropriate to make certain that the “USOC operates more effectively and efficiently”. As requested, I will focus my testimony on recommendations to improve the USOC, in light of the recent series of unfortunate events which led to this hearing being called. EXPERIENCE AS A USOC PUBLIC SECTOR DIRECTOR I was elected as a member of the USOC Board of Directors from the Public Sector for a four year term following the 1996 Summer Games in Atlanta, and was re-elected to a second four year term following the 2000 Summer Games. My opinions about the governance and culture of the USOC stem almost entirely from my experiences these last six plus years. The USOC Constitution, Article XII(3)(J), provides that eight (six prior to 2000) Public Sector directors will be elected by the Board, who must be individuals who are “not affiliated with or associated with any amateur sports organization, who in the judgment of the USOC represent the interests of the American public in the activities of the USOC”. This charge puts a Public Sector director in a class different from that of any other of the more than 120 members of the USOC Board, each of whom is either elected or appointed directly by a constituent organization, or, in the case of an officer, usually comes from and/or is identified with a constituent organization. My colleagues and I take this difference very seriously. Although PublicStatement of Donald Fehr, 13 February 2003, page 3 Sector directors do serve on various USOC committees with some significant responsibilities, no Public Sector director sits on the Executive Committee or on the Ethics Committee. I have taken the liberty of asking my fellow Public Sector directors to review this statement. While the specific words here are mine alone, I am satisfied that the views expressed here reflect, in the main, the views of all of the Public Sector directors with whom I have served. (The current Public Sector directors are Gwen Baker, Roland Betts, Bill Bradley, myself, Gordon Gund, Henry Kissinger, Donna Lopiano and Mike McManus. Charles Moore and Frank Marshall served in this capacity with Gwen, Roland, Mike and I from 1996 - 2000.) Throughout our tenure, as a group we can perhaps best be described as very frustrated with the operations of the USOC. We each thought we could help out, and hope and believe that from time to time we have, but it has been and remains an inordinately frustrating and trying experience. During my six years the USOC has been an organization fraught with rumor and gossip, and often consumed by internal politics. Volunteer vs. volunteer disputes abound, and volunteer vs. staff disagreements have been constant. Ethics issues continue to arise. When the current internal dispute hit the papers some weeks ago, I thought “Here we go again”. My initial foray into these matters took place mid-way through my first term, when I was asked by the then President to look into the performance of the then Executive Director, whom he thought should be replaced. I went to Colorado Springs and spent a day or two talking to staff and trying to understand the situation. I then returned to New York and contacted the other PublicStatement of Donald Fehr, 13 February 2003, page 4 Sector directors, to ask for their help with what appeared to be a chaotic situation. Our conclusion was that, at bottom, there was no consensus as to who had the responsibility or authority to do what. In other words, there was no common understanding as to the basics of how the USOC was to operate. After discussing it among ourselves, we offered to coordinate the ongoing management study being done by McKinsey & Co. At the end of that process, in an effort to put the organization on the right track, we both facilitated the resignation of the Executive Director and the agreement of the President not to seek another term. We urged the adoption by the USOC Board of the report by McKinsey, which called for a more traditional corporate model of governance with clear division of roles between the professional staff and volunteer leadership. At that time we did not seek to reduce the size or change the composition of the USOC Board, hoping that would not prove to be necessary and also believing it to be a political impossibility at that time. We hoped that, with a new President and Executive Director/CEO, and the adoption of the McKinsey report, significant changes had been made, and that the USOC’s internal difficulties would be overcome. As events have conclusively demonstrated, we were unreasonably optimistic. Since that time we have seen three CEO’s and three Presidents. And, as Dr. Schiller has explained to me, what we have witnessed since 1996 is only a continuation of the previously existing pattern; it is neither new nor different. It is somewhat like a television soap opera, which runs for years and years with the same plot, although the characters keep changing.Statement of Donald Fehr, 13 February 2003, page 5 The question, then, is “Why?” What is it about the USOC organization and structure, and/or the USOC culture, which causes and/or permits this kind of behavior to continually arise? Why do we witness continual personal animosity in the organization? (We saw a glimpse of that at the last hearing.) Why have the USOC’s leaders apparently failed to recognize the stage that they are on, and the responsibilities entrusted to them? This is all the more mystifying because, so far as I can tell, everyone who becomes involved with the USOC or an NGB does so, at least initially, for the very best of motives and with the best of intentions, to be of service to our athletes and our young people. I believe that it is a combination of the structure and culture of the organization to which we should direct our attention. WHAT ARE THE PROBLEMS? It seems to me that the current USOC structure and culture suffers from several difficulties, which can be generally described as follows. It is important to remember, however, that these factors are at work at the same time; the USOC suffers from each of them on an ongoing basis. 1. First, one must recognize that the USOC is a bit of an odd duck of an organization. It is non-profit (that is, it does not pay income taxes), but the USOC is clearly not a non-profit organization as that term is commonly understood. In any ordinary sense, the USOC often acts like a classic for- profit entity: it receives income for the sale of licensing rights of marks, tickets forStatement of Donald Fehr, 13 February 2003, page 6 events, and broadcast of events. It protects such commercial rights vigorously. Over a four year quadrennium (the period between summer Olympic Games) such revenue amounts to several hundred million dollars. Obviously, the USOC’ commercial operations need to be first rate; savvy, well-managed and creative, and able to compete with any other entity for the sports dollar. But, that said, the USOC is not interested in making profits for the purpose of paying dividends or increasing share prices. Rather, it generates revenue for the purpose of dividing it up among what seems like an innumerable number of constituent groups, which groups make up the USOC Board of Directors. Satisfying this amalgamation of National Governing Bodies (NGBS), community based, educational and other organizations, and the athletes is a daunting task. This is so because the various constituent groups which make up the USOC Board have interests which are adverse to one another. The various organizations contend with one another to determine policy (how will we do things) and money (which programs and organizations will be funded, to what extent, and under what conditions). Put simply, a corporate board has a uniformity of purpose, to make money for the investors. A charitable board has a uniformity of purpose: to raise funds to distribute to worthy individuals or in support of worthy causes outside of the organization. But, in the USOC’s case, there is no such uniformity of purpose. Rather, the USOC is more like a legislative body, with the differing interest groups struggling with one another to protect their own and to get their piece of the pie. What this means is that, for all practical purposes, the structure of the USOC makes dispute and discord theStatement of Donald Fehr, 13 February 2003, page 7 order of the day. It is the natural and inevitable way of things given the existing governing structure. 2. Second, there is no overall agreement or understanding as to what the role and purpose of the USOC actually is. Some believe that the USOC is a limited sort of umbrella organization, having as its sole purpose the raising of money to distribute to the NGBS for them to do with as they please. After all, the USOC doesn’t produce any athletes, only the NGBS do. Others assert that the USOC’s purpose is simply to win events - medals - which is used to define and measure success and serve as a source of pride for the organization and for the nation. And there is a third view, that the USOC has larger and broader responsibilities to the youth of America and the development of athletic programs at the grass roots level. The absence of an overarching view of what the USOC is supposed to be doing makes the internal decision making processes much more difficult. The USOC volunteers and staff can’t be expected to march together if there is not even an agreement on where they are trying to go. 3. A third problem is the seeming inability of the USOC volunteers and staff to sort out their respective roles and responsibilities so as to be able to work together on an ongoing basis. This role confusion is seemingly embedded in the USOC culture, as the history of disputes between the volunteer leadership and prior CEO’s amply demonstrates. Throughout my tenure on the USOC Board volunteers have from time to time attempted to micro-manage day to day operations, and even direct staff. Clearly, volunteers are critical to the success of the USOC, but part-time, unpaid volunteers should not interfere with or attempt to direct staff functions; running the organization isStatement of Donald Fehr, 13 February 2003, page 8 the CEO’s job. The problem that the Public Sector Directors pointed out years ago persists: there is no accepted division of authority and responsibility between the volunteer leadership and the staff; we still have no agreement on who has the responsibility and authority to do what. I recall a recent press article which I believe attributed to a former USOC President the notion that anyone seeking the position of USOC President - the senior volunteer position - should be prepared to devote 20 - 25 hours per week to the USOC. Consider that for a moment. What person, with a regular day job, can devote 1000 - 1300 hours per year to unpaid volunteer work? More importantly, can one reasonably expect that such a level of ongoing involvement will lead to anything other than turf battles with the CEO? 4. The USOC Board of Directors is much too large. A Board with 120+ members simply cannot be expected to function well. In my view, this Board does not function at all. The twice yearly full Board meetings are (with one critical exception noted below) entirely ceremonial affairs, albeit very expensive ones. Board meetings are not deliberative sessions; rather, they are conventions given over to formalistic ratification of decisions already made, speeches, videotaped productions extolling the success of our athletes, the giving out of awards, and the like. I and the other Public Sector members have often asked one another why we bother to come to the Board meetings, given that nothing substantive takes place. There is, however an exception. Once every four years officers must be elected by the Board. This is serious business. Candidates for such positions nearly always come from and/or areStatement of Donald Fehr, 13 February 2003, page 9 identified with distinct constituent groups. (Frank Marshall, formerly a Public Sector Director, is an exception.) They ordinarily vie for the support of the NGB’s, the athletes, or others. Coalitions form and dissolve. Promises are sought and made. In short, elections for officers reflect the disparate interests of the various USOC internal groups. And one should remember that the officers make up a significant portion of the Executive Committee - the real policy making organ of the USOC - along with the directly appointed representatives of the various constituent groups. Thus the difficulties of the overall Board structure are necessarily reflected in the makeup of the Executive Committee. The Members of the Committee should understand that I am not arguing that officer elections are bad in and of themselves, or that constituent representation on the Executive Committee is inappropriate. Rather, I submit that officer elections conducted within the current system often can and do perpetuate the internal political discord that is the predictable result of the existing governance structure. 5. Finally, to state what may be obvious, it seems clear that all too often in the past the USOC has not had the right people in key leadership positions. The repeated leadership changes we have lived through, and the circumstances of those changes, are powerful evidence of that point. This is important notwithstanding the governance structure that is in place. Effective leadership can make an inefficient governance model work; ineffective leadership can fail even in a perfect structural setting. Given its current image, if the USOC is going to attract the best people it mustStatement of Donald Fehr, 13 February 2003, page 10 demonstrate that both the structure and the culture which produced these difficulties has changed. WHAT SHOULD BE DONE? I have been asked to make recommendations to the Committee as to what changes should be made in the USOC structure and culture. I do not today offer formal or precise recommendations, but I will offer a few ideas which may merit some consideration by the USOC and by the Congress. I will first suggest several substantive concepts, and then offer an idea as to how, procedurally, the Congress and the USOC may wish to proceed to consider what should now be done. The principle by which I am guided is that the USOC is a public trust, and the volunteers and staff of the USOC are charged with carrying out the purposes of that trust. Accordingly, the USOC should be organized and operated in a way which is consistent with that broad public purpose. First, the Board of Directors should be reduced to a manageable number, perhaps down to 1/5 or even 1/6 of its current size. Second, the membership of the Board of Directors should be composed largely of independent outsiders; i.e., individuals who do not come from or represent any internal USOC constituent group. In other words, the Board should consist in large part of outside directors who want nothing from the organization save the satisfaction of making a needed contribution to a good cause. Such outside, independent directors should include individuals with significant experience in management, administration, fundraising and other skills that would be helpful to the operation of the USOC. The various internal USOC constituent groups would thenStatement of Donald Fehr, 13 February 2003, page 11 make their arguments re policy and budgets, etc., to this largely independent Board. ( I do not have a suggestion at this time as to how such outside directors should be selected, but that is obviously a matter of considerable import.) This may well be a difficult sell to existing USOC Board members and constituent organizations. After all, the practical effect of adopting such a structure would be to limit the power and influence that such groups have traditionally enjoyed. The question which then arises is how to determine which, if any, of the internal USOC constituencies would be directly represented on the Board, and how the constituency groups would interact with the Board. Resolving such issues will not be easy. Third, the Board should be expected to act like a Board of Directors, not like an additional or substitute CEO or COO by committee. The role of the Board is to set overall policy, approve budgets, hire the CEO and perhaps other senior staff members, and meet its oversight obligations to make sure that the organization is getting the job done. The uncertainty of the volunteer / staff roles and responsibilities must be clarified so that they work together, and not at cross purposes. Fourth, the role and purpose of the USOC needs to be clarified. Whatever that role is - raising money for NGBS, winning medals, or serving the much larger purposes envisioned by the Amateur Sports Act - everyone needs to be on the same page, marching in the same direction. It seems to me unlikely that unity of purpose will be achieved in the near term absent the Congress insisting on it, and conducting periodic oversight to ensure that such purpose is effectuated. (ItStatement of Donald Fehr, 13 February 2003, page 12 goes without saying that the more extensive the purpose the greater will be the need for funding. If the USOC and/or its constituent organizations are to undertake tasks beyond the current uses of funds, how the USOC will get the money for such other purposes necessarily becomes a significant issue.) Procedurally, how should the Congress and the USOC proceed to consider such of these ideas as may have merit, along with the many other ideas that have been and will be offered in response to the current situation? I note that at its meeting last weekend, the USOC Executive Committee established a task force for the purpose of making a thorough review of existing governing structures and policies. I welcome that effort. Quite apart from what the Congress or this Committee may suggest, it remains the responsibility of the USOC Executive Committee to act promptly to put things right, and I am pleased that this step has been taken. . At the same time, however, I wonder whether the credibility of the USOC to the Congress, and, more importantly, to the American public, can be restored without some sort of independent review. For this reason, I think that an independent review commission is both appropriate and should be helpful to both the USOC and to the Congress. I believe that we already have a proven model for such an independent commission. About four years ago, after the Salt Lake bid-city scandal broke open, the USOC appointed an independent commission for the express purpose of examining promptly and in detail the entire situation, and making findings and recommendations to the USOC for changes in existing bid-city practices andStatement of Donald Fehr, 13 February 2003, page 13 procedures. There were five members of that group, which came to be called the Mitchell Commission. Former Senator Mitchell was the chairman, and the other outside members were Ken Duberstein and Roberta Cooper Ramo (the first woman President of the American Bar Association). I served in my capacity as a Public Sector Director, and the athlete member of the commission (required by law) was Jeff Benz. We retained our own counsel, and insisted upon and received the complete cooperation of the USOC. We made a number of findings, including a specific finding that a “culture of gift-giving” pervaded the process by which cities were selected to host an Olympic Games. We wrote a comprehensive set of recommendations intended to break this culture and change the way that cities were selected to host the Games. Our recommendations were in turn adopted by the USOC, and significantly influenced measures which were adopted by the IOC. In short, the process worked. I believe that a commission with a similar charge can do so again. In addition to the independent members, such a commission would be helped to a very great extent by having among its members one or perhaps two individuals familiar with the USOC’s history and current operations. In this regard I suggest that such a group include one or two current or former Public Sector Directors who, one will recall, neither come from nor represent any USOC internal constituency, but rather have the obligation to represent the public. As I have previously indicated, the Public Sector Directors can bring to such a group the benefit of their experiences with the USOC, frustrating as they have often been. I can without hesitation tell you that each of my sevenStatement of Donald Fehr, 13 February 2003, page 14 current colleagues as Public Sector Directors, and Charles Moore, who served in that role from 1992 - 2000, would serve ably and with distinction in such a role. Over the last six years I have developed enormous respect for their integrity, intelligence and dedication. Finally, I recognize that there is a desire to move forward with dispatch. However, I would not set an artificially short deadline for the independent commission to complete its work. The job needs to be done quickly, but sufficient time must be allowed for the issues to be thoroughly examined and any proposed solutions comprehensively analyzed and considered before final conclusions are reached. CONCLUSION In conclusion, Mr. Chairman, in this written statement I have made certain observations and suggestions for the consideration of this Committee, and for the consideration of the USOC, the purpose of which is to suggest an alternative framework for the governing structure of the USOC, which, hopefully, would operate in a way that would also modify its culture. The ideas I have offered here will no doubt seem to many like radical surgery. Perhaps so. However, this may well be a time in which radical surgery should be considered. Respectfully Submitted, Donald M. Fehr
Mr. David F. D'Alessandro
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Ms. Donna de VaronaU.S. Olympian and Sports Commentator
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