Mitt knew he had to get someone with a great business mind. He told me he was trying to get Fraser, but he wasn't sure he was going to be able to get him. —Kem Gardner, chairman of Gardner Company
It was like stepping into an elevator shaft.
That is how Mitt Romney, the newly installed head of Salt Lake Organizing Committee, described the situation in 1999.
"I would concur with his opinion," said Fraser Bullock, SLOC's Chief Operating Officer. "Others might see it differently, but we were there on the inside and we could see what was going on. There were indeed very deep challenges."
The Olympic movement had been rocked by scandal: Salt Lake City might have won the 2002 Olympic Winter Games by allegedly bribing top officials on the International Olympic Committee. Sponsors balked. And it looked like Salt Lake's Games would be remembered for controversy and bankruptcy.
But 10 years after the Olympic Winter Games the legacy is much different. Bullock was at the center of the team that took a projected $400 million deficit and turned it into a $100 million profit. And the principles he used have application not only for other Olympic Games, but for running companies, countries and even the family budget.
Kem Gardner, chairman of Gardner Company, a real estate development firm, is a friend of Mitt Romney's and remembers when Romney was hoping to recruit Bullock to work on the Salt Lake Olympic Winter Games. "Mitt knew he had to get someone with a great business mind," he said. "He told me he was trying to get Fraser, but he wasn't sure he was going to be able to get him."
Romney and Bullock knew each other from working together at Bain & Company.
The first SLOC board meeting with Romney everything changed. He charged board members $1 a slice for the Domino's Pizza he ordered in. The $5 pizzas were cut into eight slices, netting the Games $3 per pizza. "That sent a huge message throughout the entire organization," Bullock said. "We approached everything that way."
It was a culture of frugality.
A matter of principles
Natalie Gochnour, currently an executive vice president with the Salt Lake Chamber, served as a state economist and helped review SLOC budgets and analyzed the economic and fiscal impacts of the Games. This let her see Bullock in action in meetings. "He was always the man who restored focus and discipline to discussions," she said.
That focus was almost a mantra: "Must have" versus "nice to have."
Bullock said the Games had a roughly $1.5 billion budget. "On the cost side we literally looked at every single expenditure; every penny of the budget. And we classified those expenditures into 'Must Have' versus 'Nice To Have.'"
Bullock said each function of the Games had to be reviewed for costs. "And we reviewed every single dollar of expenditure to determine if we needed to spend it or not by utilizing the 'must have' versus 'nice to have' principle," he said. "And that can be used in any business or household."
The principle was to divide the expenditures into the two categories. "Must have" expenditures received priority and "nice to have" expenditures were canceled or put on hold until money was available.
Nice to have
One of the things Bullock classified as a "nice to have," and therefore expendable, was an official 2002 Olympic Winter Games website. Not having a website would save the Games $13 million.
Some countered, "Every Games has had one in recent history."
"That's fine," Bullock said back, "We don't have to have one. We are not spending $13 million on this. If you want to have a website, go find a sponsor that's going to pay for the whole thing."
And they did. Microsoft footed the bill and hosted the website for free.
"For some people it was a little shocking to say we were not going to have a website," Bullock said. "But the Olympics have been put on for 100 years and they did it without websites."
Many other "nice" things were slashed. For example, the Olympic Youth Camp was a long-standing tradition. It was canceled and saved a few million dollars. "It was not core to the Games," Bullock said. "A lot of times we challenged institutional or conventional or historical thinking."
Among the items not on the must-have list were the gigantic photographs wrapped on the sides of Salt Lake City's skyscrapers and buildings. Six months before the Games began, Romney and Bullock determined there was going to be a surplus. "And we said OK," Bullock said. "You only spend the money when you know you have it."
The same thing happened with the fireworks show at the Closing Ceremonies. To save money it was planned to be modest. "When we knew there was going to be a surplus we made it a spectacular show," Bullock said.
But there were other areas where corners were not cut. With the Winter Games, the absolute must-haves were the venues where the athletes competed. "There were no compromises. We were going to be at a world-class level," Bullock said.
About six months before the Opening Ceremonies, John Bennion was certain the Games were going to be successful, a home run. Now a vice president in the performance group of Sorenson Capital, Bennion in 2002 he was the managing director of Games Services — with responsibility for ticketing, accommodations, food and beverage, press operations, broadcast administration, retail operations and visitor information services. "I was called the VP of the fun stuff," he said.
Bullock and Romney were, according to Bennion, the "chief worriers." Fraser worried about operational details and Romney worried about whether the numbers would come together. "I could see and smell it was going to be fantastic," Bennion said.
But there was something to worry about. Something unforeseeable.
Sept. 11, 2001 changed the world — and added unexpected pressure to the Games.
"Fraser took an Olympic bid that did not contemplate security at that high of a level and ramped it up," Gochnour said. "He knew how to adjust to a big shock."
By that point, the Games had a surplus. SLOC had the money it needed to cover its security responsibilities, and the part that was SLOC's responsibility could be paid for.
Bennion saw some downward fluctuation in ticket sales, but it only lasted a few weeks.
"Fortunately we were in such a strong financial footing we could withstand that impact," Bullock said. "And that's another example for a business household. You have to be prepared for things that go wrong."
That preparation helped the 2002 Olympic Winter Games go right. It established a benchmark and a way of conducting business that still influences other Olympic cities and Games. Bullock said it is a legacy that can also affect families if they follow the same financial principles. "They become a part of what you do," he said.
Bullock's financial principles
1. Weigh expenditures: Is it a "must have" or a "nice to have?"
2. Do not spend money you don't have
3. Save money for a rainy day
4. Build these principles into the philosophy of your organization or home