Coe takes up Olympic baton as Cassani bows out, saying: 'What matters is that we win'

At a restaurant on Lake Geneva on Tuesday, Barbara Cassani set out London's battle plan, the city having just been named among the five remaining candidates to stage the Olympic Games in 2012.

Against a backdrop of the snow-capped Swiss Alps she explained the need to win increased public support back home, drive forward transport improvements and learn everything possible from this year's Games in Athens.

What she did not reveal until a carefully orchestrated press conference in London yesterday - barely 24 hours after the British bid had been criticised on several fronts - was that she was standing down as its leader after less than a year in post.

Ms Cassani explained that her successor, Sebastian Coe, was simply better suited to the schmoozing with Olympic officials in vital period before the announcement of the winning bid in Singapore in July next year.

But the surprise announcement, which followed talks in the past week with Tony Blair and Tessa Jowell, the Secretary of State for Culture, Media and Sport, has left some wondering whether it is the first sign of the bid unravelling. London has been ranked third of the five Olympic contenders, with concern expressed over a lack of public support and its "obsolete" transport system.

When applications were invited for the £150,000-a-year job, Ms Cassani was not seen as one of the favourites, partly because of her nationality. But the Boston businesswoman impressed with her drive and organisation and was believed to be winning over International Olympic Committee members before her resignation yesterday.

One veteran IOC member said: "The reaction I have heard today is that this move could cost London dearly. She was a woman who was starting to get liked and now we need time to get used to the idea. It was a mistake for London to appoint an American but it may be a greater one to appoint someone whose ability is unproved."

London hopes that the changeover will be a seamless transition. Ms Cassani said: "I asked myself whether I was the best person to be chairman and I concluded that [Lord Coe] was the perfect person to lead us into success next year. I must say that it is a decision that I have come to after much reflection. I love what I am doing, I enjoy it immensely, but what is more important than enjoying what I do is also winning."

Asked if she had stepped down because she was an American, she replied: "I think it will be easier to sell the bid with a world champion, double gold medallist person who was born in London."

Rumours that Ms Cassani was considering an exit had been circulating in the gossipy world of Olympic politics for several months. At the beginning of this year the founder of British Airways' budget airline Go began to consult public relations experts on how she could withdraw from such a high-profile job without damaging the "Cassani brand".

The 43-year-old, who has two children, had concluded that she was not suited to the next and critical phase of the bid, which often requires hours of hobnobbing with IOC members in hotel lobbies and bars across the globe.

After consulting other bid directors last week she presented Ms Jowell with what one source described as a "fait accompli". The deal was put to the Prime Minister at the weekend, who accepted it immediately. Instead of leading the campaign, she will work for three days a week as a vice-chairman focusing on technical details prior to its submission in November. Lord Coe becomes chairman and president while Keith Mills, the millionaire founder of Airmiles, adds to his role as chief executive the title of president international.

A source close to the bid denied any suggestions that Ms Cassani was under pressure to quit from the backers of the bid - the Government, the British Olympic Association and the London Mayor, Ken Livingstone, who proposed her for the job. He said: "It was certainly her decision and there was no pressure from anyone. She felt that if the vote got close she would not be able to look herself in the eye if it was her fault.

"Her nationality may not have been ideal for the bid but the main issues were that she was not a natural at lobbying and does not understand how the movement works as well as Seb does."

Leading the bid for London represents the fulfilment of a burning ambition for the Tory peer, who it is believed was overlooked initially because of party politics and the fact that he worked as an aide to William Hague when he was Leader of the Opposition.

As arguably Britain's greatest athlete, he is a familiar and respected figure among the 126 members of the IOC. His credentials for the job include friendship with the political operator and former IOC president Jose Antonio Samaranch, international contacts and his membership of the influential council of the International Association of Athletics Federations.

But Lord Coe has yet to convince that he can match the feats of Russian pole vaulter Sergey Bubka, who has turned from great athlete to master sports politician.

An IOC source said: "The qualities of Coe are known to everyone, but that was 20 years ago. Maybe this will be the best performance of his sporting life. It will need to be."

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