PARIS – The most visited modern summer Olympic Games were those held in London in 2012. During this manifestation, the capital of Great Britain was visited by more than eight million guests.
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Four years later in Rio de Janeiro, the attendance decreased, while the last, 32nd Olympic Games were held a year late in Tokyo, during the pandemic and with poor attendance.
In all likelihood, the record will not be broken this time in Paris either, primarily due to frequent threats from Hamas and the partly bewildered organizers. Immediately before the official opening of this year’s games, it was estimated that there were more than 270,000 unsold tickets for watching sports competitions in all disciplines.
Historically speaking, as far as direct income to the host country is concerned, the 1984 Los Angeles Olympic Games are considered one of the most profitable sports events, i.e. a turning point in their organization, media coverage and sponsorship.
They brought in large revenues thanks to efficient cost management and lucrative sponsorship deals. Los Angeles then managed to make a net profit of about 680 million today’s dollars, which set a new standard for the commercial success of the Olympic Games.
The impact on the local economy, of course, is much greater, and since then it has grown in nominal amounts with each successive organization.
Expenses that make your head hurt
The most expensive modern summer Olympic Games in terms of infrastructure construction and organization were those in Beijing in 2008. It is estimated that the total costs for the organization of these games were between 40 and 44 billion dollars. This includes the construction of stadiums, sports facilities, transport infrastructure, as well as other preparations for the event.
Beijing 2008 set high standards for spectacular sports facilities and event organization, but at the same time it was one of the most expensive events in the history of the Olympic Games.
But when it comes to total costs as a loss that leaves long-term consequences, the infamous leaders are Athens and Tokyo.
Namely, the Olympic Games in Athens in 2004 cost about nine billion dollars, but a large part of the infrastructure was not built on time, with the taking of unfavorable loans, which a few years later – with the mortgage bubble that triggered the global financial crisis – was reflected in multi-year remediation of the consequences, social unrest, new borrowing for refinancing, European Union schemes to rescue failed Greek banks, and analysts believe that the “tails” of these costs have not been resolved to this day.
Tokyo, on the other hand, officially spent about 25 billion dollars, without counting on any profit. The Japanese economy, however, is much better equipped to restructure or fully cover such costs compared to Greece’s.
Although Paris has chosen a more conservative approach – with construction, preparation and organization costs below ten billion dollars, with the mentioned fear of attacks and even protests by a part of French citizens, the question is whether there will be a profit this year as well.
Monetization of the Olympics
The International Olympic Committee (IOC) and the host country monetize the games in several ways. The revenue from the broadcasting of live broadcasts and recordings of the competition, generated by the sale of exclusive media rights for television and digital platforms worldwide, is the most lucrative financial aspect of the income – the US NBC paid 7.75 billion dollars for the broadcast rights for the period from 2021 to 2032.
When it comes to sponsorships, the so-called Olympic Partner Program (TOP) includes multinational corporations that provide exclusive global sponsorship rights to the Olympic Games, such as Coca-Cola or Airbnb in partnership with the IOC for several Olympics.
At the same time, the host country can negotiate sponsorship contracts with local companies, as was the case when the Tokyo Games secured a partnership with Japanese companies, such as Asics, Japan Airlines or Canon.
The IOC and the host country collect revenue from the sale of tickets for Olympic events, but in the final total they are smaller items on the earnings side. The Olympic brand can also be licensed for use in various products, including T-shirts, badges and caps, which are sold as souvenirs.
Revenues from domestic advertising, licensing and ticket sales go to the host country, offsetting the logistical challenges of hosting the event, while all other earnings are distributed to the IOC.
Since the early 1990s, the Olympics have grown revenues from $2.6 billion to $10.8 billion, a growth rate that significantly outpaces inflation. Biznis.rs
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