"Behind the Rings: The Financial Dynamics of the Olympic Games"
The Olympic Games have kicked off, and the world is watching. Everyone cheers for their Country's athletes, hoping they bring medals home. Conversations about medal counts and athlete performances are happening everywhere. The Olympics are more than just sports—they're a chance for countries to shine globally.
But organizing such a massive event is no small feat behind the scenes. We've already heard about some mismanagement issues at the Paris Olympics. It takes a considerable team, seamless coordination, and a massive budget to pull off an event of this scale.
In this article, we will discuss the Revenue model of the Olympics.
How does the International Olympic Committee make Money? How does the host country make and spend Money?
History of the Olympics
The First Return record of the Olympic games dates back to 776 B.C. In Ancient Greece, the game was held every four years in honor of the god Zeus and was part of religious festivals. When Rome conquered Greece, the Olympic games lost popularity. After that, the first modern Olympic Games event was held in Athens, Greece, in 1896. The Games united 14 nations and 241 athletes who competed in 43 events.
International Olympic Committee. (IOC)
The IOC was founded in 1894 by Pierre de Coubertin and Demetrios Vikelas, two years before the first modern-day Olympic game, was held in Athens, Greece. The IOC is committed to promoting sports in society, strengthening the integrity of sports, and supporting clean athletes and other sports organizations.
The IOC is a privately funded non-profit organization. It receives Funding from the Olympic games broadcasting rights, Sponsorships, and Marketing rights. Selling broadcasting rights brings 61% of Revenue for the IOC, 30% for marketing rights, 5% for other rights, and 4 % for other Revenue.
The Olympics website offers both live streaming and recent recordings of the games in selected markets; in France, Warner Bros. Discovery (formerly Discovery Inc.) owns domestic rights to the 2024 Summer Olympics via Eurosport, with free-to-air coverage sub-licensed to the Country's public broadcaster, France Télévisions. In the U.S., NBC holds rights to all Summer and Winter Olympics through 2032. In India, Broadcaster Right of Olyampic 2024 held by Viacom 18 Doordarshan. In 128 countries, T.V. channels have domestic broadcasting rights from the IOC. Apart from this, IOC gave live-streaming rights to several Streaming platforms. IOC also received Revenue from the Sponsor Partners such as
Airbnb, P&G, Alibaba, Allianz, ATOS, Bridgestone, Coca-Cola, Deloitte, Intel, Omega, Panasonic, Samsung, Toyota, and Visa are the Worldwide Partners with IOC; in addition, there are Premium partners such as Accor, Group BPCE, Carrefour Group, EDF Group, LVMH, Orange Business Services, Sanofi biopharmaceutical, and Many More. Some of these partners have partnered with the IOC for Multiple Olympic games.
All these Partners get exclusive rights to use the Olyamic Logo to Launch and promote their products and services. Through these, Medium IOC gets Funding for billions of dollars. As mentioned on the IOC Website, 90% of Funding is distributed to the Olympic Games, athlete development, and Olympic Movement, and 10% goes to IOC Operations and Other Activities.
How IOC Select Hosting Country,
Cities interested in hosting the Olympics engage in continuous dialogue with the IOC, which can happen several years before the actual selection. The IOC invites cities to express their interest and engage in informal discussions to understand better the requirements and implications of hosting the Olympics.
Cities that have expressed interest work closely with the IOC to assess the feasibility and benefits of hosting the Olympics. This involves in-depth analysis and discussions on various aspects, such as infrastructure, budget, legacy plans, and public support.
Interested cities submit detailed candidature files with their vision, concept, and strategy for hosting the Olympics. These files address vital areas such as sports venues, transportation, accommodations, security, and legacy plans. The IOC forms an Evaluation Commission that visits the candidate cities to assess their proposals. The commission considers various factors, such as technical requirements, political and social support, environmental impact, and legacy potential.
The Evaluation Commission prepares a detailed report on each candidate city, highlighting strengths and weaknesses. This report is shared with all IOC members.
Candidate cities make final presentations to the IOC members. These presentations often include speeches, videos, and endorsements from athletes and political leaders. The IOC members vote to select the host city. The voting process involves multiple rounds, and if no city receives a majority in the first round, the city with the fewest votes is eliminated, and another round is held. This continues until a city receives a majority.
The selected city is announced at an IOC session, often several years before the actual Games, allowing ample time for preparation and development. The selection process aims to ensure that the chosen city is well-prepared to host the Olympics, with the necessary infrastructure, financial stability, and support to deliver a successful and sustainable event.
Hosting the Olympic Games.
Hosting the Olympic Games is expensive; the hosting Country needs to develop new infrastructure and create a new village that includes new venues, such as residential buildings for athletes, Hotels that accommodate the audience to experience the games, and Stadiums for every game. Apart from this, the Country also needs to be very Focused on the security of the events. To simplify the Expense, IOC comes up with a sustainable infrastructure; IOC motivates the host country to maximize the available infrastructure to remove the burden of the hosting Country. However, there is still not a lot of groundwork for the hosting Country to do.
If you look at the historical data, you will see that host cities have spent more than their initial budget. The Olympic Budget is divided into two parts: Operational Cost and Infrastructure cost. Operation costs include securities, transportation, Medical Services, Immigration, Customs, etc. Infrastructure costs include building new venues for the games and Olympic Villages and developing existing roads for better transportation.
Operational Costs are still manageable; however, infrastructure is very expensive. The Required Funding for Managing Expenses comes from Public Funding and Private Funding. Public Funding is Money that comes from Revenue in the form of taxes that the government uses for the betterment of the Country; using Maximum public Funding to host the Olympics creates a lot of burden on the Country's economic health. Private Funding is the fund that comes from non-government organizations such as individuals, Businesses, Big corporations, and foundations. The host country can generate private funds by selling game tickets, getting Sponsorships, participating in marketing activities, and so on. The more Private funding hosts get, the less burden the Country's economy carries.
The ongoing Paris Olyamic games have become the cheapest Olyamic Games.
With the expense of approximately $9.7 billion. The main reason for having such a low cost of hosting is that Paris already has a developed infrastructure that helps them to save massive amounts. If we discuss the Revenue that the host country is generating against the expenses, it does not match. IOC Contributed some cash for hosting the Olympic games, and apart from this, the Hosting country May see a rise in tourism that helps them to generate some revenue; ticket selling, merchandise selling, and promoting local business may bring some revenue back as well as hosting Country received some return in the form of Marketing and sponsorship. In the history of Olyamic games, only some countries have been able to make some profit through Olyamic hosting.
The economic aspects of the Olympics are more complex than we've covered in this article. While hosting the Olympics often isn't economically beneficial for a country, it does provide a valuable opportunity to showcase the Country's culture and strength on an international stage.
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