- Paris local sponsorship programme predicted to generate $1bn (€850m)
- US one of the few markets that could drive an uplift in the IOC TOP programme
- Regions rather than cities could host in the future
Winning and losing, or at least the perception of who has won and lost, is clearly important to Thomas Bach.
Having once said the procedure to host the Olympic Games produced ‘too many losers’, the IOC president struck a much more optimistic tone when he described the agreement of an outline host city contract for Los Angeles to stage the 2028 Olympics as a ‘win-win-win situation’ for the three parties affected by the deal.
In announcing its candidature for the 2028 Games, Los Angeles had effectively conceded the race to host the 2024 Games to the only other candidate city, Paris, and the IOC could finally start to congratulate itself on securing two excellent future hosts for the Summer Games.
Although the two cities were reluctant to take Bach’s triumphant lead – Casey Wassermann, chair of the LA bid told SportBusiness International he would ‘celebrate on September 13th when everything is official’ – the wider sports industry has been readier to see the tripartite agreement as a done deal, and quicker to examine the implications.
“The Olympic Games is the No.1, so when something happens at the top level it will send signals to the market,” says Lars Haue-Pederson, managing director of LA bid advisor, TSE Consulting. “The big question for the market, meaning the rights holders, the supply side and all the host cities, the demand side, is really: is this a good decision?”
So who are the real winners and losers in this unprecedented race and what does the heavily flagged outcome mean for sports event hosting as we know it?
In the rush to examine the inducements that LA has secured for accepting the 2028 Olympics, Paris’ success in securing the Games that it wanted has almost been overlooked.
Beaten by Beijing and London for the rights to host the 2008 and 2012 Olympic and Paralympic Games respectively, the French capital has finally managed to land the big prize.
The city learnt from the failure of previous campaigns – which were criticised for featuring a high proportion of politicians at the expense of sportspeople – by putting athletes at the heart of the 2024 bid.
The personification of this strategy was three-time Olympic canoeing champion Tony Estanguet who ran a disciplined campaign that refused to take anything for granted and was closely aligned with Olympic values of inclusivity and sport for all.
IMAGE: French athlete Pierre-Ambroise Bosse leads the support the Paris 2024 Olympic bid (Getty Images)
The campaign’s steadfast insistence that it could only secure the land for the proposed site of its Olympic Village up to 2024 made it the more likely recipient of the earlier Summer Games in any deal with the IOC. Equally, the repetition of the message that 2024 would mark the centennial of the city’s last hosting of the Olympics improved the rationale for awarding the city the first edition of the Games in any carve up.
But perhaps the greatest factor in its success was one beyond its control.
“LA was thrown by the unstable political climate in the US, which spooked the IOC and the possibility that Trump could win a second term and be president in 2024,” says Rob Prazmark, president, 21 Sports & Entertainment Marketing Group. “From the US election in November it was clear [which way the bid would go] – they would have had a shorter putt to make if Clinton had got in.”
The Paris bid played on LA’s misfortune by dialling up the inclusivity messages at the time of Trump’s travel ban – not to be underestimated given the fact that several IOC voting members are Muslim and any Games in LA would be expected to welcome visitors from the countries blacklisted by Trump.
The French bid also stated its support for the conveniently-named Paris Climate Accord after the US President withdrew his country from the international deal.
When the city decided to deploy its political assets, it did so in a much more effective way than in previous campaigns. Where president Jacques Chirac had hindered Paris’ bid for the 2012 Olympics by appearing aloof in comparison to Tony Blair in the build up to the IOC vote in Singapore in 2005, Emmanuel Macron proved a much more useful addition to the Paris 2024 campaign.
Macron was the charismatic counterpoint to Trump, offering himself up for photo opportunities modelling the bid’s culturally inclusive ‘made for sharing’ hand gesture and rolling his up sleeves for the benefit of the bid. At one stage he was even pictured attempting to play wheelchair tennis during the campaign.
Now that the city has secured the Games, it is under pressure to deliver the build component of its bid on budget so that it validates Agenda 2020.
While much has been made of the long-term cash inducements and incentives revealed in LA’s draft Host City agreement with the IOC (see below), Paris will have a much more conventional timeframe and host city contract to prepare for the event.
The IOC has predicted it will contribute $1.7bn of its broadcast and sponsorship revenues to Paris, but unlike LA, there would be less opportunity for this figure to increase.
“There would be less upside potential for Paris because there are certain TV deals and others that are already locked in so there’s no room for upside,” says former IOC marketing director and LA bid adviser Michael Payne.
However, Tim Crow, CEO of Synergy, which advises Olympic sponsors, thinks Paris’ local programme will perform well. “Paris will be the same as London. I’d imagine that they’d generate the same kind of revenue as London,” he says. “The markets are very similar so they’re forecasting around about $1bn in revenue and I’d expect them to do that.”
In floating the idea that esports could feature at the Paris Olympics, the future host has also showed its determination to prove that Los Angeles doesn’t own the patent on re-imagining the Games for future generations.
“I can look people in the eye and say this is a much better deal financially,” Los Angeles mayor Eric Garcetti told the assembled press as he presented the series of concessions from the IOC that persuaded the city to accept the 2028 Games.
When the IOC took the commendable decision to publish the yet-to-be-signed 2028 host city contract (see below), observers were able to judge for themselves whether the deal was as good as Garcetti was claiming.
While parts of the press have focused on the IOC’s headline commitment to contribute $1.8bn to the Los Angeles organising committee, this figure is not that much higher than the sum Paris will receive for hosting the 2024 Games.
The principle benefit of the deal appears to be that it will provide LA with advanced cash flow of $180m to put towards its operating costs for the next five years and that there is also a potential uplift in the city’s cut of IOC revenues if, as expected, its commercial programme thrives in the 11-year interregnum.
According to the wording of the contract, the IOC estimates its International Programme will jump by £200m owing to “potential renegotiations or renewals of current agreements” and some suspect this will be driven by having a Games on US soil.
“I think with LA it’s going to be very interesting because what Tokyo has done is it’s helped bring Eastern brands into the TOP [programme]: Toyota, Bridgestone, Alibaba,” says Crow.
“Now will LA bring American brands into TOP and into new categories generally? That clearly is going to be one of the key dynamics. Of course, it doesn’t really matter where they come in because everybody benefits.”
Meanwhile, Los Angeles has earmarked $160m of the advanced cash flow from the IOC to invest in the development of youth and sport-orientated activities, which allows the city to deliver impact and legacy upfront and build audiences for the 2028 Games.
“We will have two luxuries no LOCOG has ever had and that’s time and money,” Casey Wasserman, chair of the LA bid, tells SportBusiness International.
“We can begin to deliver the impact of the Games and right away to the Los Angeles community which we think is a tremendous benefit to the kids of Los Angeles and it’s likely there’s a future Olympian in that group and that Olympian could be competing in 2028.”
Another favourable term of LA’s contract with the IOC is that it includes the right to keep any surplus derived from the Games, 20% of which will go to the US Olympic Committee (USOC) and 80% to the local organising committee.
This could prove to be a significant benefit given that all of the Los Angeles 2028 venues are already built and the bid estimate includes a $487.6m contingency.
“I think the potential for surplus in 2028, bearing in mind that they already have a $500m contingency in the bank, will be game-changing for the future health of the Olympic movement in showing how fiscal discipline can deliver a great Games in the same way LA 1984 [was],” says Payne.
Although, LA didn’t get the Games it originally bid for, it is widely thought to have fought the more innovative campaign and earns points for once again riding to the rescue of the IOC and for being amenable to the idea of a compromise.
“The LA [bid was] more about re-imagining the games and turning the Games on for a new generation which is kind of interesting,” says Crow.
“I predicted that it was going to be Paris 24 and LA 28 but I thought the one thing that might sway it in LA’s favour was if the IOC thought we need LA first because we need to ignite the passion of a new generation for the games and re-imagine it.”
Because the US advertising market is eight times bigger than the one in France, Crow expects the LA’s local sponsorship programme to perform better than Paris’.
“I would expect them to do $2bn as an absolute certainty,” he says. “I would not be surprised at all if it did over $3bn, because they have such a long run at it.”
Smaller host cities (and Lima)
In taking the summer Games to Paris and Los Angeles, the IOC has shored up its position until 2028 and minimised its liabilities with two cities that are known quantities and which have hosted the Games before.
But where does the more prescriptive selection process leave smaller cities or first-time bidders and their chances for a future tilt at the Olympics?
Haue-Pederson retains the hope that they will continue to come forward for the big events, even if the IOC and other major rights-holders are likely to review their host selection models.
“We know from research that the cities that benefit most from hosting major events, whether it is an Olympic Games or other events, are the cities that are known but not that well-known,” he says.
The IOC will be heartened to hear that Budapest, the last of the European cities to pull out of the race for the 24 Games, has confirmed that many of the venues and facilities that formed part of its Games plan will still be built, positioning the city for a more Agenda-2020-friendly bid when conditions are more favourable.
But former IOC marketing director and LA bid consultant Michael Payne argues that things still need to change to encourage more left-field cities to come forward.
“Do you think Lillehammer could have taken place under the current environment? In my view Lillehammer is still the greatest Winter Olympic Games ever, but there’s no way they would even got past first post,” he says.
He recommends that the IOC assist prospective hosts by educating politicians and local press that a tilt at the Olympic Games does not have to cost the $50bn spent by Vladimir Putin on the Sochi Winter Games. Haue-Pederson proposes a more radical solution that could still bring smaller cities into the equation.
“Why couldn’t – and I’m just giving an example – Wales bid for the Olympic Games? Why couldn’t an Emirate like Abu Dhabi host the Olympic Games? Why couldn’t a province like Alberta province in Canada host?” he asks.
Neither Payne, nor Haue-Pederson, subscribe to the view that the IOC deprived other cities of the chance to bid for the 2028 Games because none had come forward at the time the deal for LA was agreed.
The greatest loser, according to Haue-Pederson is the city of Lima which will host the anti-climactic IOC Session in September and for which his firm has been providing consultancy services.
“How many media will go to this [IOC] Session? he asks. “I already see that some high level politicians might not go there. But I mean that’s part of the game; you can’t get it all. But I just feel that’s it’s one big loser, which is a pity. It’s a wonderful city.”
Also in this series:
- IOC Dual Award | Winners & Losers – Part 2: THOMAS BACH AND THE IOC
- IOC Dual Award | Winners & Losers – Part 3: EUROSPORT
- IOC Dual Award | Winners & Losers – Part 4: BID CONSULTANCIES
- IOC Dual Award | Winners & Losers – Part 5: SPORTS FEDERATIONS
Download a PDF of the LA 2028 Host City Contract Principles: