By David Owen

I was starting to see it as one of life’s, or at least accountancy’s, great mysteries.

Why should a deal between two parties as ineffably British as the British Olympic Association (BOA) and LOCOG, the London 2012 Organising Committee, be denominated in US dollars?

For days on end, nobody could furnish me with a convincing answer.

But when it came, the explanation afforded a small but revealing insight into the intricacies of British sport’s administrative landscape.

The deal was struck as part of BOA chief executive Andy Hunt’s unstinting efforts to balance the books of a body that had been bleeding red ink.

To boost income in 2009 - and, as it turns out, 2010 - the BOA decided to forward-sell its rights to sell tickets to future Olympic Games in the 2013-2020 period.

So, as I have now been informed, it struck a bargain with a US company to sell the rights for $4.5 million (£2.8 million).

So far so relatively simple.

However, as Hunt tells it, "LOCOG then agreed that actually this made sense for them to buy that deal, package our rights with their ticketing rights in effect, so when bidders were actually bidding for 2012 ticketing rights - [Thomas Cook became a Tier Two sponsor of London 2012, providing UK short breaks and trips to the Games, in October 2009] - they actually then bought also the 2013-2020 rights from the BOA".

Fine, said the BOA, as long as you match the price tag.

And so the $4.5 million (£2.8 million) figure stuck, although both buyer and seller were British sports bodies.

"For all of us it was quite synergistic in terms of delivering extra value," Hunt now reflects, sitting in the BOA’s swish new central London premises just up the road from Saatchi & Saatchi , the iconic ad agency (and opposite Squat & Gobble, a rather less iconic purveyor of toastie melts).

"It was beneficial to us in that we achieved a price which was multi-fold whatever had been achieved before.

"It was beneficial to LOCOG in that it enhanced the ticketing travel and tours proposition.

"It was beneficial to the [ultimate] buyer because they’ve now got extended Olympic association."

The deal was part of the reason BOA was able to report a post-tax profit of £550,018 ($863,473) for 2009 after two years of heavy losses.

It has also played its part in keeping the body’s head above water in the current year.

According to Hunt (pictured), the BOA is "on target to break even or better this year" and $2 million (£1.2 million) of the ticketing rights proceeds are being recognised in 2010.

The move to bright, open-plan Charlotte Street from the BOA’s quaint but pokey former Wandsworth base was another big factor in the below-the-line improvement in the 2009 numbers.

A £2.11 million ($3.31 million) gain on the disposal of its Wandsworth properties, enabled the BOA to report £1.61 million ($2.52 million) of exceptional income, turning a £1 million ($1.5 million)-plus operating loss into that half-million-plus post-tax profit.

The BOA’s delicate financial predicament results, on the cost side, from the need to gear up for a domestic Olympics, and on the revenue side, from the sale of commercial sponsorship rights up to and including London 2012 to LOCOG under the so-called Joint Marketing Programme Agreement (JMPA).

This produced just over £3 million ($4.7 million) for the BOA last year, as opposed to more than £5 million ($7.8 million) in 2008, the year of the Beijing Olympics.

When I spoke to him last year, Hunt conveyed his feelings about the JMPA with an image so colourful it bears repeating.

"I am horribly constrained," he told me.

"I describe it as my hands are handcuffed behind my back. They are then tied with bailing twine over the top of my head and then I’m bound in a straightjacket, put in a metal cage and it’s called the Joint Marketing Programme Agreement with LOCOG."

Now, furthermore, it looks increasingly as if British sport has a post-2012 bloodbath of public spending cuts to look forward to - although, as a privately-funded body, this may be more of an opportunity than a threat for the BOA.

Hunt’s strategy for assuring the BOA’s long-term strength is, in part, to make the most of the sort of access to important sponsors that being a host National Olympic Committee (NOC) confers to try to ensure that as many of these companies as possible want to stay on board post-2012, when the rights put into the JMPA return to the BOA.

"To make sure we’re in the best possible financial position, actually we need to be out there now negotiating all of our post-2012 rights deals," he says.

"We need to gear up the commercial team to make sure we maximise the opportunity for the post-2012 rights.

"If you look historically, most NOCs have come out of a home Games in a stronger financial position than they’ve gone in, for that very reason.

"The [Organising Committee] has developed a number of relationships…where organisations typically want to continue.

"They don’t want to fall off a cliff at the end of the Games.

"They want to continue a form of Olympic association to give them the ability to exploit their brand investment up to the point of the Games."

One potential problem with this approach - as careful scrutiny of the BOA’s employee costs could be said to bear out - is that you incur new costs before the additional revenue, if any, starts to arrive.

But when I suggest that such an approach constitutes a bit of a gamble, Hunt denies the organisation is taking undue risks.

"We are a private-sector organisation that is reliant on sponsorship and donations," he tells me.

"We have to be very entrepreneurial in the way we work, which is something obviously that Government agencies are inhibited from doing.

"That does require some element of - albeit minor - investment ahead of the curve to make sure we can realise that goal.

"The reason that Hugh [Chambers, Chief Commercial Officer] and I were brought into this organisation is exactly to make sure, coming out of these Games, not only have we given our team the best possible opportunity to succeed at the Games, but actually we have created and developed a brand that truly is one of the most respected, valuable, important brands in British sport going forward.

"You will have seen a lot of work we have done on repositioning the Team GB brand.

"That for me is the essence of this: we could sit on the sidelines and have just done more of the same, or we could have truly, utterly raised our game to make a difference for British Olympic sport - and that is what we have chosen to do.

"We are not taking undue risks.

"Very much all the time everything we do is continuously checking and balancing that we are not investing too far ahead of the curve, that we can’t actually meet our objectives of, in the run-up to 2012, having a breakeven outcome within our budget.

"We have done our business planning through to 2012, so we are investing ahead, but all the time, we are check and balancing.

"We have significantly increased the governance of the organisation since we last met. We have an audit committee, a [remuneration] committee, a deal committee, a resource committee. We have structured governance reporting which is as good as you probably find in most major organisations.

"We have proactively taken the decision to utilise some of that income that has come from that one-off item to invest in the development and management of that brand asset which will ultimately potentially lay the golden egg.

"For me, that’s controlled, measured, well-managed investment of an exceptional gain or an exceptional one-off opportunity."

A further source of funding for the BOA is the Team 2012 initiative launched in an effort to plug a £50 million ($78.5 million) shortfall in funding for British athletes hoping to compete in the London 2012 Olympics.

The scheme brings together the BOA, LOCOG, UK Sport and the British Paralympic Association, all of whom have pooled rights and aligned fundraising ambitions in an attempt to present as compelling a marketing proposition as possible to existing Olympic sponsors.

According to the accounts, licence fee income of £944,271 ($1.4 million) and management fee income of £50,000 ($78,500) was receivable from Team 2012 in 2009. A further £720,468 ($1.13 million) was received for development of the British Olympic Coaching Programme, deferred to be recognised later.

Asked whether anyone but presenting partner Visa had come onboard in recent months, Hunt told insidethegames: “We continue in discussions with a small number of other Olympic partners about Team 2012."

He went on: "There are three elements of the Team 2012 programme - the sponsorship element; the appeals element, which segments into the small and medium-sized enterprises, the high-net-worth individuals and potentially, if we choose to do it, a public appeal.

"The sponsorship element has delivered £10 million ($15.6 million) to date; the high-net-worth individuals element has delivered roughly £2.5 million ($3.9 million) to date, which has been a huge success; and the small and medium-sized enterprise element…is starting to build.

"We have a number of campaigns planned to drive the growth of the small and medium-sized enterprise programme, which is targeted at delivering something like £2.5 million ($3.9 million) overall by the time we get to 2012."

If there is a public appeal closer to Games time, no doubt patrons of Squat & Gobble will chip in generously.

David Owen is a specialist sports journalist who worked for 20 years for the Financial Times in the United States, Canada, France and the UK. He ended his FT career as sports editor after the 2006 World Cup and is now freelancing, including covering the 2008 Beijing Olympics and the 2010 World Cup. Owen’s Twitter feed can be found at