Competitor-led movement Global Athlete has published an explosive report into the way the International Olympic Committee distributes its revenues, accusing the organisation of a lack of financial transparency and claiming that it spends just 0.5 per cent per cent of its income directly on Olympic athletes.
The report, Olympic Commercialization and Player Compensation, also estimates that, when taking into account money distributed to National Olympic Committees which is then passed on to competitors, 4.1 per cent of IOC revenues “end up directly in the pockets of athletes”.
The study was compiled by the athlete body together with Ryerson University and the Ted Rogers School of Management, and calls for the introduction of collective bargaining agreements so that Olympians can be “appropriately compensated” for appearing at the Games.
Contacted by SportBusiness, the IOC disputed the results of the study, stating that the claim that athletes receive just 4.1 per cent of revenues is “plain wrong”.
The report states: “Since its inception, the IOC has transformed from a charitable organisation operating with donations from individuals and governments to a multinational non-profit funded entirely by broadcasting and licensing deals, with average annual revenues exceeding $1.4 billion (€1.2bn).
“By maintaining its non-profit status and shedding the largest expense of most sports leagues, their athletes, the IOC has become hugely profitable with its fund balances rising by an average $140 million annually since the IOC began making their finances publicly available in 2014.”
The IOC retains its non-profit status by maintaining that its sole purpose is to “foster international amateur sports”. It does not compensate athletes directly for competing at the Olympics, diverting its funds instead through a variety of disbursements to its five Continental Programmes and 206 individual National Olympic Committees through the Olympic Solidarity Programme.
The 33 summer Olympic sports federations and seven Olympic winter federations also receive IOC funding, channelled through their respective associations ASOIF and AWOIF. The largest sports like athletics, swimming and skiing receive the largest sums, while the most recent additions to the Olympic programme receive a much smaller share in a tiered system based on audience and size.
All of these organisations are charged with spending the money to promote sport and the Olympic Movement and divert a proportion of the funds to supporting athletes either directly or indirectly. But many NOCs, for instance, differ in commercial structure making it difficult to make exact comparisons as to how they allocate the money. Some receive government funding in addition to IOC money. Others, like the US Olympic and Paralympic Committee, include Paralympic funding in their accounting which also muddies the picture.
The paper states: “There is limited information on these affiliates considering many of them do not report their financial information publicly, which makes it even more difficult to decipher where this money is going.”
Through analysing the latest IOC annual report, the study says that although the IOC claims to invest 90 per cent of its revenues on sport and athlete development, only 0.5 per cent of its funds were allocated directly to athletes in the form of labelled scholarships in its most recent accounts.
The authors then use tax filings from the USOPC to extrapolate the overall proportion of IOC revenues that are spent directly on athletes by other NOCs. Based on an assumption that the other 205 NOCs allocate similar proportions to competitors as the USOPC, the study estimates that 4.1 per cent of IOC revenues “end up directly in the pockets of athletes” through these affiliate organisations.
“For-profit sports league”
The paper goes on to argue that the IOC’s large dependence on private funding, namely from selling broadcast and sponsorship rights, sets it apart from other charitable organisations and makes it more akin to a “for-profit sports league”.
Were the IOC to be compared with the biggest for-profit sports leagues in the world, the report says it would rank eighth for the period from 2013 to 2016 with an average annual revenue of $1.74bn. However the paper argues that the 4.1 per cent of IOC revenues it estimates athletes to have earned during this period compares unfavourably with athlete compensation in other organisations such as Major League Baseball (50.1 per cent of total revenue) and the English Premier League (60.3 per cent of revenues).
The report continues: “The estimated 4.1 per cent which does end up directly in the pockets of athletes is mostly through scholarships, grants, and awards for successful competition, numbers which athletes cannot negotiate.
“Instead of spending its privately earned revenues compensating athletes, the majority of these funds go towards financing the many internal and external organisations affiliated with the IOC.”
The report reserves particular criticism for the IOC’s five Continental Olympic Committees which divert Olympic Solidarity (OS) funding to support individual NOCs and promote the Olympic Movement.
The study says: “OS spends just over half of its funding on Continental Programmes which act as a mediator between OS and NOCs to allocate finances. Excluding their facilitation of statutory meetings of NOCs on each continent, it is unclear how the Continental Programmes aid the NOCs in their goal of promoting the Olympic Movement.
“The IOC website states the programmes may set aside funds to develop specific programmes for the specific needs of their continent but there are no examples readily available. Perhaps directing this money to the NOCs would be more useful to aiding the development of athletes and the NOCs.”
There is also criticism for the disparity in funding received by the USOPC in comparison other NOCs. The paper claims that the body received $404m from the IOC in the last quadrennial, leaving $740m to be shared by the other NOCs.
It states: “The United States Olympic [and Paralympic] Committee represents one of the most lucrative markets in the world and receives a disproportionate amount of funding in consideration of its population at 35 per cent of total NOC revenue.
“Yet, this allocation of funding places NOCs with less financial clout at a funding disadvantage in terms of training resources they can provide their athletes and their relative success. Directly compensating athletes equally or reimbursing them for their own training expenses could alleviate these discrepancies in funding allotments.”
The IOC began publishing its accounts in 2014 as part of a drive to increase transparency under president Thomas Bach’s Agenda 2020 reforms, but the study calls on the organisation to go further.
The report reads: “Although disclosing its internal finances is a huge step forward for the IOC, most public companies required to distribute these types of filings must then answer to shareholders regarding their publications.
“Unfortunately, the organisation is not obliged to undergo this type of review due to its lack of shareholders. If the IOC is a non-profit organisation with the goal of contributing to the world of sport, it can go much further to reassuring the public and all of its stakeholders of its values.”
The IOC and some NOCs have faced mounting calls in recent years to give athletes a greater say in the Olympic movement and allow them to derive more commercial benefit from competing in the Olympics.
Last June, the IOC was forced to amend its controversial Rule 40 clause which governs athlete endorsement deals when competing at the Olympic Games and which serves to protect the exclusivity of Olympic Programme sponsors.
A ruling by the German Cartel Office deemed that the clause was “too far-reaching” and lifted the obligation on German athletes to clear their personal marketing activities with the German Olympic Sports Confederation ahead of the Games.
Subsequently, the IOC has devolved responsibility for setting Rule 40 guidelines to each of its 206 National Olympic Committees. However, Global Athlete said just 10 out of 206 NOCs have relaxed their Rule 40 restrictions since, and that the resulting patchwork of conflicting guidelines creates an uneven playing field for Olympians.
The report referenced a 2013/14 study that Canadian athletes spent approximately $15,000 in excess of their annual income pursuing their Olympic ambitions and raised the prospect that athlete groups could threaten to boycott the Olympics to secure collective bargaining agreements. But the paper also acknowledged the difficulty in organising athletes into unified action given the huge number of nationalities and sports involved.
The report states: “All of the largest sports leagues in the world feature collective bargaining agreements and unions which clearly define the rights [of] both the players and the leagues, yet these examples feature players in similar geographical locations playing the same sports who have the ability to change teams to increase their ability to negotiate.
“The difficulties of organising the thousands of athletes from around the world competing in numerous sports at the Olympics is much more complex by comparison but it is not insurmountable.
“Organisation could begin at a sport or national level in order to level the playing field between amateur and professional athletes in similar situations. In addition, the threat of all the athletes within a sport or national team to abstain from an Olympics would provide similar or greater leverage to the ability of professional athletes to switch team for better compensation.”
SportBusiness forwarded some of the key points made in the report to the IOC prior to its publication.
The IOC said in response: “The IOC has not received a copy of the study. But the claim that the IOC only spends 4.1 per cent of its revenue on the athletes is just plain wrong.
“It redistributes 90 percent of all its income generated from the Olympic Games to assist athletes and develop sport worldwide. As a result, every day the IOC distributes about $3.4m around the world to help athletes and sporting organisations.
“As well as direct funding and scholarships to athletes and coaches, the IOC supports the staging of the Olympic and Paralympic Games, the International Sports Federations, without whom there would be no competitions, the National Olympic Committees who send the teams to the Olympic Games and support athletes in their preparation for the Games.
“The IOC also funds 50 percent of the budget of the World Anti-Doping Agency (WADA) which is the equivalent of the total funding provided by all governments around the world. The IOC contribution and the contribution of the International Summer and Winter Federations to the international fight against doping is $260m per Olympiad (four-year cycle). Without all of this funding there would simply be no Olympic Games and no competitions for international athletes.”
To download the Global Athlete report, click here.