Ex-banker Paul Deighton stays bullish about staging the Olympics
Paul Deighton is one of the few ex-bankers still on Gordon Brown's Christmas
card list. As the Prime Minister distances himself from the once high-flying
City financiers now blamed for sparking a collapse in the British economy,
the former Goldman Sachs partner continues to bask in a warm glow radiating
from No 10.
This may be because Mr Deighton, 53, left investment banking three years ago,
when it was still an esteemed profession; it probably has more to do with
his commercial guardianship of the 2012 Olympic Games. As chief executive of
the London Organising Committee of the Olympic Games (Locog), Mr Deighton is
in the rare position in his Canary Wharf office of being able to offer
people jobs as thousands every day are losing theirs.
Over the next year, as the recession probably deepens, he will double the
staff of Locog from 300. By 2012, the privately run organisation responsible
for staging the Games will have about 3,000 staff and will employ more than
In addition, there are 70,000 volunteers to recruit for what will be the
largest logistical exercise in peacetime Britain. No politician worth his
soundbite would miss the obvious opportunity to ride such a counter-cyclical
wave of good news.
Mr Deighton is in a gloriously unique position and, modestly, for a man whose
wealth is estimated at £110 million, he knows it. “I can't think of an
organisation that will essentially double every year in its size, regardless
of the economic environment,” he said.
His is not strictly a Keynesian theme, because, unlike the rest of the Olympic
project, it is not public money that he is using to help to stimulate a
flagging economy. Locog has a mandate direct from the International Olympic
Committee (IOC), which, as the keeper of the five Olympic rings it
conditionally lends to a host city every four years, worries little about
economic boom and bust.
Flush with billions of dollars in sponsorship and television revenues raised
six years ago for the 2010 Winter Games in Vancouver and the 2012 Summer
Games in London, the IOC's contribution will cover a third of Locog's £2
billion operational budget — which is separate from the publicly funded £9.3
billion infrastructure budget.
The balance of Locog's budget will come equally from ticket and merchandise
sales and sponsorship deals struck domestically with the likes of Lloyds
TSB, BT and adidas.
Mr Deighton is credited with getting the big commercial backers on board
before the credit crunch began. Perhaps it was his time as a financial
controller for Goldman Sachs in New York in the early 1990s that taught him
to bank the easy money while he could and worry about the clever stuff later
— but in hindsight his execution looks impeccable.
He negotiated an £80 million sponsorship deal with Lloyds TSB in March 2007
when the financial services sector was booming, signed up British Airways
when executives were still travelling business class and did a £50 million
deal with BP last July, a week before oil hit a record high of $147.27 a
Now, as Mr Deighton steadily agrees £10 million value-in-kind agreements from
service providers such as Adecco, the recruitment company, he is weeks away
from passing the significant milestone of £500million in sponsorship
Again, comparison with his previous life is hard to resist. What would his
former banking colleagues not give to be able to say, in this market, that
they had raised half a billion pounds?
Maybe Mr Deighton's timing was purely coincidental. He does, after all, have
to raise another £150 million to £200 million to balance Locog's budget and
avoid going cap in hand to the Government — which has underwritten the 2012
extravaganza with a blank cheque. In the worst economic environment in
living memory, it will be an uphill task
Yet Mr Deighton, a Cambridge economics graduate, gives the impression that
everything he does is perfectly planned and not simply lucky. Even as the
economy shrinks, he sees the upside for the Olympics. In his view, a decline
in a company's order book is an opportunity for it to give millions of
pounds of free products and services in exchange for an association with the
“We're seeing real interest from companies offering goods and services because
they're providing us with spare capacity,” he said. “Now it's quite
attractive because otherwise it wouldn't be used and the alternative is to
downsize their business.
“We've been able to explain that this is an investment that will yield a
return and is, therefore, not a waste of money, but will differentiate their
business in difficult times.”
Furthermore, contrary to perceived logic, existing sponsors have not drawn the
shutters on the marketing money they need to spend to bring their
sponsorships alive. “Sponsors are looking hard at what they're doing, but
they're putting new money in,” Mr Deighton said. “Those that have already
invested recognise that to optimise the yield, they have to continue to
Stripped bare, Locog is a jumped-up event management company. Then again,
there is no bigger event than the Olympics.
Mr Deighton believes that it is an investment not only in the people around
him but in the future of British business as a whole.
Like Sydney before it, London will have the opportunity to export its Olympic
expertise not only in bidding for large sports events, but, if the 2012
Games prove a success, in actually running them. Packaged in the right way,
this could be a boon for UK plc.
“It's like in any business, if you've done the last big thing you're then the
expert,” Mr Deighton said. “We've got Glasgow 2014 and hopefully the 2018
World Cup to keep people going locally, let alone opportunities around the
world in places like the Middle East that are building facilities and will
need expertise. I expect this will be the first place they look.”
In the meantime, Mr Deighton also expects to roll with the punches that will
be thrown at the London Games in the three years to the opening ceremony.
The political nature of a sports event that doubles as the largest urban
regeneration project in Europe makes this inevitable. Few private companies
attract so much public scrutiny.
“We'll get a lot criticism and it will be tough,” he said. “We're a dynamic
private sector organisation getting stuff done, but we realise we are the
stewards for something that the whole country is very keen on succeeding.”
Mr Deighton may prove to be even more of a rare species if he stays in the job
all the way to July 27, 2012. History is not on his side. Sydney went
through three chief executives and Athens endured a flurry of high-level
resignations amid disagreements with ministers over construction delays.
“We're only halfway,” Mr Deighton pointed out cautiously. As an Arsenal fan,
he knows something of the risks of not leaving enough in reserve. So, in
old-fashioned football parlance, he's taking things as they come. He says
that he is still aiming to achieve the £100 million operational cash surplus
promised in London's bid book, which would be reinvested in Olympic sport,
but denies being under pressure to do so. “I don't want the [government]
guarantee called — that's really important — but I'm much more focused on
delivering a brilliant Games than on saving money to create a surplus,” he
said. “I want to make sure we invest properly in the Games.”
Mr Deighton is adamant that what has been achieved so far is “extraordinary”,
despite the economic slump that has taken £500 million of private capital
from the Olympic construction project. The £355 million media centre has
been nationalised and the £1 billion athletes' village is headed the same
way as ministers chomp through a £2 billion contingency fund that once
“It's not the fact that we couldn't get the village and media centre financed
by the private markets because no one is getting private financing,” Mr
Deighton said. “The interesting bit is that we have a structure that
provided for that degree of dislocation and we soldier on. The costs ... are
“For this to be on track financially in an unprecedented economic decline is
quite something. The corollary is that during this period we can create
jobs, skills and economic investment.”
Career Bank of America: manager, corporate banking; Security Pacific
National Bank: vice-president, corporate banking; Goldman Sachs: joined in
1983 and made a partner in 1996, his last role being chief operating officer
of European operations.
Locog: joined as chief executive in 2006, a year after London was awarded the
Games by the IOC
Personal Lives in Central London with wife, Alison, and has two sons
If you could change one thing in the financial and commercial environment,
what would it be?
Not to panic and react with very short-term initiatives, but to have
confidence in our core values.
Who is or was your mentor?
I've been fortunate to have had many inspiring mentors. The key to these
relationships was their total faith in me at all times.
Does money motivate you?
No - it sounds ridiculously clichéd, but making a difference is a much bigger
What is most important in your working life?
The satisfaction from working as part of a great team that produces an
What gadget must you have?
Anything that connects me to the internet - phone, BlackBerry, PC.
What does leadership mean to you?
Hiring good people, giving them clear goals and getting the best out of them —
and communicate, communicate, communicate.
Which business person do you most admire?
Arsène Wenger — as a leader and manager rather than a pure business operator.