There have been other less high-profile but equally telling rights defeats for
the BBC in the last year, indicating a change in priorities at White City.

The 2011 World Athletics Championships were lost to Channel 4 after the BBC
was outbid, as were the Paralympics,
an obvious corporation commodity that has always previously been a BBC
property. In both cases the rights holders were unimpressed with the level
of promotion, or the size of the cheque, the BBC was able to offer.

There is also growing speculation that the BBC’s £200 million five-year
Formula One rights deal could be abandoned.

The cuts have been noted by the IOC, as has disquiet over the BBC’s move to
Manchester. “The trouble with the BBC is that it is not the
organisation that it was,” said one senior member.

“No one knows if there is any money to spend on rights; they are cutting
across other sports, and nobody wants to move to Manchester. It is difficult
trying to deal with an organisation with these issues.” Failure to
secure the Olympics would dwarf the BBC’s other recent sporting setbacks,
but negotiations have failed to conclude a deal for the 2014 Sochi winter
games and Rio 2016.

The impasse also indicates the pressure the IOC is facing in maintaining the
value of its crucial television rights in the face of the economic downturn.

It is hoping to conclude a deal in the US by May, but with long-term partner
predicting that its £1.2 billion deal for Vancouver and London will deliver
a £245 million-plus loss, there is pressure from broadcasters to deflate
values.

That may be offset in the US by the presence of ABC, Fox and ESPN in the
market, a more competitive environment than exists in the UK.

The IOC began negotiating directly with the BBC in 2008 after deciding to
abandon its previous policy of negotiating British rights through the
European Broadcast Union (EBU), a collective of 75 national broadcasters
including the BBC, Channel 4 and ITV.

The last EBU deal, for Vancouver 2010 and London, was worth around £370
million, with the ‘big five’ nations – France, Germany, Italy, Spain and the
UK – contributing 80 per cent.

The IOC calculated it could make more money by dealing individually with the
major markets and is negotiating directly with the big five, with German IOC
member Thomas Bach leading discussions.

The IOC’s options in the UK are limited by the listed events regime, which
reserves the Olympics for free-to-air broadcasters and therefore rules Sky
out of negotiations unless it was willing to screen its coverage
free-to-air.

A review of listing last year was inconclusive and the issue will not be
examined again until 2013, but the IOC will need to secure a UK deal long
before then, meaning it has limited leverage if the BBC faces no genuine
competition from other terrestrial broadcasters.

The BBC declined to comment on negotiations, but sources said they remain
committed to the Games, but not at any price. The time difference in Rio
will also be cited by the BBC as a reason to deflate prices.

They stressed that the sports rights strategy remains to focus on major
national events that “unite the nation”, and under that definition
the summer Olympics should remain a priority.

The IOC is also facing challenges with its European rights portfolio beyond
the largest five markets. Sport Five has a contract to negotiate with the
remaining European nations and has offered a minimum revenue guarantee to
the IOC, which it is understood it may struggle to deliver.

The state broadcaster in Russia, hosts for the 2014 Games, has offered a
quarter of the anticipated £60 million.