Playing the Games

Houston Olympic advocates are fond of the word billion. Several of them, they say, will be spent and respent in the city if we manage to convince the world to converge here in 2012 for the Summer Olympics. Every sector of the economy will benefit, and they brandish studies to prove it.

If the thought of bundles of dollars rolling around town like tumbleweeds makes locals drool with anticipation, they might consider the facts: Many of the hundreds of millions spent on construction, consulting fees and other activities in Atlanta wound up in a few choice pockets. Contractors, banks and investment banking firms, lawyers, engineering companies, promoters, food and concession brokers -- the ones with connections, that is -- made off with most of the prime contracts, leaving the masses to fight for the leftovers.

The little guys, the mom-and-pop types and young entrepreneurs epitomized by the vendors who lined the streets, were left picking bones. "A lot of those people really struck me as being the small businessmen and women who were trying to achieve the American dream," says Dana White, an Emory University urban historian. "But the money went to the contractors who were friends of the mayor."

The solution to the problem, says Houston Olympic promoter George DeMontrond III, is to learn from past mistakes and stay on top of social and political concerns. "One of the things that's clear -- and it's part of the political process -- we want to have a very broad buy-in from all over the community," he says. "We're going to be very sensitive to that."

That's the same line that was used to help pitch the new baseball park, but that project hasn't been as inclusive as advertised: No sooner had it been finalized than the sports authority started backing away from its pledge to set aside a certain percentage of the deal to minority contractors. Led by the ham-fisted Jack Rains (who is on Houston's Olympic committee), the authority hasn't hesitated to steamroll individual property owners who stand in the way of its vision, condemning their property and tying them up in court.

Of course, minority set-asides in Houston pose the same insider-trading hazards: Would-be airport popcorn vendors -- state Senator Rodney Ellis and attorney Zinetta Burney -- might try to team up for the official Olympic popcorn concession. And who could be the ice cream man? John Peavy, whose double-dipping forced his resignation from City Council?

It's traditional for big projects in Houston to attract advance work, such as feasibility studies, which is generously donated by specialists. As the ballpark project showed, it's another tradition for those donating the work to get a payback down the line.

For example, Brown & Root helped prepare a ballpark construction plan and is now the general contractor. Goldman Sachs limited partner Pete Coneway was chairman of Bob Lanier's sports facilities committee several years back; Goldman Sachs later brokered ballpark bond sales. Enron, which spearheaded ballpark fund-raising efforts, got naming rights to the facility, land for a parking garage and the park's energy management contract.

Payback to donors is what Houston's Olympic bid team had in mind in its initial strategy, as a September memo from Jack Kelly indicates. The donor company, Kelly wrote, should keep track of the value of its services. At the appropriate time, "these contributions will be acknowledged and provided benefits" commensurate with the agreed-upon value.

A glance at the Houston bid organization's board of directors offers further clues as to who may be in line when it's time to award contracts and funnel business: Greg Brennerman, president of Continental Airlines; Pete Coneway; Richard Everett, whose development company could tie in to the Olympics in any number of ways; restaurateur and hotel owner Tilman Fertitta; Craig Lieberman, CEO of a major ice cream and snack distributor; Michael Stevens, who has his fingers in just about every city real estate project; Enron executive Rebecca Mark; and numerous lawyers, accountants, public relations people and small-business owners.

But not to worry, says Susan Bandy, executive director of the bid group. Because of concerns raised by quid-pro-quo deals in Atlanta and elsewhere, USOC has now forbidden such arrangements. Any money or time donated to the cause will go unrewarded. "These people are going to have to give money just out of their community spirit," Bandy says.

-- Bob Burtman