The Olympic Games are the standard-bearer of sporting events. They reach all four corners of the world, are equally as attractive to men and women, teams and individuals and like any class act, have overcome their fair share of woes and come out stronger the other side, most notably the financial and political nadir of the 1980s.
However, following the exponential growth of the past two decades the Olympics now faces a new dilemma: has it become a victim of its own success? Pressure is growing on the International Olympic Committee (IOC) to find new ways to grow and avoid what has been described by some as inevitable decline.
The IOC, for example, last month sealed a $4.38 billion deal with NBC for the US rights for four Games from 2014 to 2020, a huge figure but only representative of a modest increase on the $2 billion the broadcaster paid for the rights for the 2010 and 2012 Games. And although Annecy, Munich and PyeongChang all fought long and expensive campaigns to win the right to host the 2018 Winter Games, the bid race represented the lowest number of bidding cities since the 1988 Winter Olympics.
“In terms of size and scope, the Olympics is at the point of diminishing returns,” says Terence Burns, president of sports marketing firm Helios Partners. “It already reaches nearly every country in the entire world and there are not many economies in the world that can take on an event on this scale.
“The Olympics has nothing to prove. For such a long time the Games have been the gold standard for any major global event. But they do face a challenge now of avoiding stagnation, or even decline.”
Burns has been involved with the Games ever since the mid-90s. He was recruited by the IOC to handle its sponsorship programme originally when he became embroiled in one of the biggest blots in the event’s copybook – the Salt Lake City bribery scandal.
“In 1998-99, I was at my lowest ebb following Salt Lake,” adds Burns. “Prior to then the Olympics appeared to be bulletproof. The timing could not have been worse.
“We were just about to renew eleven deals with our TOP sponsors. I remember we were in Munich and delivered our presentation and got a standing ovation. We went home so happy that night. The next morning everything changed.
“Salt Lake really scared a lot of our TOP sponsors as nobody saw it coming. That year was a lot of hard work. It was really touch-and-go for a long time. However, each and every deal was renewed by the end of the year. I think the sponsors basically said by and large they believed in the Olympics and they were going to stay with us.
“I can look at the Olympics objectively now that I no longer work with an Olympic committee or TOP sponsor. For me, the biggest appeal of the Olympics are the ideals they represent. For a sponsor it is not so much about the sport but things like hope, friendship and fairplay.
“Compared to something like the football World Cup, the Olympics have a completely different appeal because it is not all about team sports. The individuals make fantastic stories.
“I think the IOC has a responsibility now to only encourage bids from countries that can feasibly afford to host a Games.
“You have to remember that the on-Games budget typically is two-and-a-half billion dollars, plus that amount and more to spend on off-Games issues such as tourism and infrastructure.”
Ex-financial advisor and IOC committee member Sir Craig Reedie believes the Games have the scope to avoid becoming a victim of their own success by exploiting growth through digital media and younger audiences: “In 2008 everybody saw the greatest celebration of the biggest sports event in the biggest country in the world and thought ‘how do you beat that?’
“I think we can beat that in London, where they have totally revamped one of the most deprived areas of the capital. Also, in London we have noted constant interest from younger people talking about the Games on stuff like Facebook and Twitter.
“This is great news for the IOC as a few years ago we were concerned that our audience – especially in America – was getting older, so this response through digital media is encouraging.”
For the full insight see the latest edition of SportBusiness International published July 1.
