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Ryan's Hope

Crain's' Chicago Business, February 02, 2009

By John Pletz

Patrick Ryan is facing the biggest sales pitch of his life.

The 71-year-old insurance broker who heads Chicago's Olympics bid team must convince the International Olympic Committee that the city can pull off a privately financed games in 2016, an increasingly tricky proposition amid a worsening economic slump. At the same time, the bid team must shore up support at home by quelling burgeoning dissent from community and neighborhood groups.

The bid has reached a critical stage: Chicago and its competitors — Tokyo; Rio de Janeiro, Brazil; and Madrid, Spain — submit their final proposals to the IOC on Feb. 12. Seven weeks later, an evaluation committee will visit Chicago. The final vote comes Oct. 2 in Copenhagen, Denmark.

"We have to demonstrate that in spite of the economic environment that exists today, if they choose Chicago, we will be able to deliver," says Mr. Ryan, who founded Aon Corp. and built it into the world's second-largest business insurance broker. "If we can't demonstrate that, we won't win. It's that simple."

On the home front, Mr. Ryan has beefed up his local team, last month adding City Hall veteran Lori Healey as president of Chicago 2016.

Ms. Healey is charged with selling the games here. It's a critical job: The IOC polls local residents to ensure broad support before it awards the games.

"The single biggest goal we have is to convince the IOC that Chicago and the surrounding region supports the bid," she says.

While Ms. Healey tries to smooth things over at home, Mr. Ryan will work the globe to reassure IOC members that Chicago can deliver a spectacular games — like they saw last summer in Beijing — and avoid the financial troubles plaguing London, the 2012 host.

"They're going to be compared to London and Beijing," says Rob Livingstone, a Toronto-based Olympics historian who runs the Web site GamesBids.com. "Are you going to be as exciting as Beijing but avoid the problems that London's having?"

We need reasons to cheer for a Chicago Olympics. Read on . . .Meanwhile, Chicago's competitors are raising the stakes. Tokyo recently made an additional $1.1-billion public government commitment, bringing its guarantee to $4.4 billion.

Mr. Ryan is sticking to his pledge that Chicago taxpayers won't have to put up more money beyond the $500-million backstop the city agreed to last year, money he continues to insist won't be used.

He is working on private insurance for another $500 million or more, though he still won't provide details on costs or which insurer would underwrite a policy on a hugely expensive event that won't occur for seven years.

And Mr. Ryan points out that the global financial downturn affects the other finalists as well. He's betting that the historic strength of the U.S. economy will give Chicago an edge.

'AGGRESSIVE' BUT 'DOABLE'

Even in a strong economy, Chicago's plan would be audacious. It calls for raising almost $1.8 billion from private sponsors, a record. Beijing raised almost $1.5 billion, experts estimate, but the global economy was much stronger and the 2008 games presented a unique opportunity to market directly in fast-growing China. London already has scaled back its sponsorship goal from more than $1.1 billion to about $850 million.

Chicago hopes to raise about $110 million from each of 10 big sponsors, with more than 50 sponsors spending another $10 million to $40 million.

"It's aggressive for sure, and the IOC's going to hold their feet to the fire," says Jim Andrews, senior vice-president at IEG LLC, a Chicago-based company that tracks corporate sponsorships. "But it's doable."

The Olympics become a tougher sell as the cost of sponsorships rises and the economy puts pressure on marketing budgets, says Terrence Burns, president of Atlanta-based Helios Partners LLC, which advises companies on Olympics deals and worked on Doha's unsuccessful bid for the 2016 games. Some longtime Olympics sponsors, including Johnson & Johnson and Home Depot Inc., recently dropped out.

Organizations and neighborhood groups marched on the Near South Side last summer, demanding jobs, housing and transportation for communities near the proposed sites of Olympics venues. Photo: Erik Unger

Mr. Ryan, who stepped down as Aon's chairman last year after Chicago was chosen as a finalist, responds that the environment is likely to improve by 2016. "We can make the case to the IOC that because of our timing, the decision by sponsors will have to be made at a time" when the economy is better, he says.

Costs also are a concern. The biggest single project in Chicago's bid is a $1.1-billion Olympic Village to house participants. It will be handled by private developers who hope to later sell it as condominiums, rental units and student housing.

Similar projects in Vancouver, British Columbia — host to the 2010 Winter Games — and London have faltered in the real estate slump, requiring hundreds of millions in government bailouts. But Mr. Ryan says Chicago will succeed by spreading the risk among multiple developers and lenders.

The city bought the former Michael Reese Hospital site on the South Side and has backed the creation of a tax-increment financing district that would help pay for infrastructure required to redevelop the land.

The massive project will require more than a TIF, says a developer who has expressed interest in the project.

Ms. Healey says: "There may be other things we might look at and want to get creative on. We've had some initial ideas," such as special-assessment bonds that would be paid by future owners rather than taxpayers.

SKEPTICISM IN CHICAGO

But the primary job of Ms. Healey, a former city planning commissioner who will oversee the village project, is selling the games to skeptical Chicagoans who doubt the city will escape shouldering Olympic costs.

"You know darn good and well there will be city and state tax dollars involved," Christine Svenson, a Chicago attorney, said last week after attending a Chicago 2016 presentation at the Union League Club.

Some community groups have complained about specific Olympic sites — such as the proposal to build tennis courts near a bird sanctuary in Lincoln Park — as have a few South Side aldermen. Criticism has been leveled at the Chicago 2016 team for charging ahead without community input.

That's where Ms. Healey comes in. One of Mayor Richard M. Daley's most loyal soldiers, she enjoys a hard-won reputation among aldermen and community groups as a straight shooter who will hear them out.

"Most of the leadership of 2016 were strangers," says John Paul Jones, director of community relations for Friends of the Parks. "That's why shifting Lori over there, who everyone knows, is a good response. It shows that they care about our concerns."

While insisting that Chicago 2016 has "had good community outreach," Ms. Healey acknowledges that her job is to "kind of improve those efforts."

Despite their tough odds, Mr. Ryan and Ms. Healey may have an ace in the hole: President Barack Obama. Mr. Obama's presence at the final vote in Copenhagen in October could trump nearly all other factors, says Dick Pound, an IOC member from Canada.

Marc Ganis, a sports consultant with Chicago-based Sportscorp Ltd., agrees: "You have someone who will be president when the bid is voted on and, potentially, when the games are held. That just doesn't happen."

Mr. Ryan says he hasn't yet asked the president for a formal commitment to come to Copenhagen. "He knows we want him."