Profitability of the

OlympicsMBA 592-WAlex Czopek

What Is Going To Be Discussed• Olympic History• Major Venues• Bid Process• Construction Process• Aftermath• Sponsorship• SWOT Analysis

• Hosting• Sponsoring

• Conclusion• Sources

Olympic History• The ancient Olympic Games were initially a one-day event until 684

BC, when they were extended to three days. In the 5th century B.C., the Games were extended again to cover five days. The ancient Games included running, long jump, shot put, javelin, boxing, pankration and equestrian events• Athens 1896 Olympic Games. The inaugural Games of the modern

Olympics were attended by as many as 280 athletes, all male, from 12 countries. The athletes competed in 43 events covering athletics (track and field), cycling, swimming, gymnastics, weightlifting, wrestling, fencing, shooting, and tennis

Researched Venues• Atlanta – 1996

• Athens – 2004

• Beijing – 2008

• Rio - 2016

Atlanta• Population• 1995: 400,620• 1996: 400,727• 1997: 401,072

• Climate• Subtropical: Mild winter with hot and humid summers

Athens• Population• 2003: 764,155• 2004: 751,650• 2005: 739,111

• Climate• Mediterranean: Hot summer months (June-September), also consist of rainy

months (fall to winter months in US)

Beijing, China• Population• 2007: 16.33 Million• 2008: 16.95 Million• 2009: 17.55 Million

• Climate• North Temperate Zone with a monsoon Climate: Cold months of 23.54

Degrees Fahrenheit – 78.98 degrees in warmer months Fahrenheit

Bidding Process• 2 Stage procedure comprised of non-formal and formal

phases.• Invitation Stage (non-formal)• Candidature Process (formal)

Invitation Stage• Non-formal start to entering the bidding process.• Focuses on discussion between the International Olympic Committee

and the candidates that want to host future Olympics.• What’s discussed during this phase?• Sharing of best practices• What materials are needed• Focus on understanding the Olympics themselves to best suit the cities long

term developmental needs

• Olympic Committee will provide different levels of assistance and feedback before officially submitting cities into candidature.

Candidature Process• Formal Step• 2 year process• 3 Separate Phases:• Learning Opportunities and TOK• Learning Opportunities and TOK stage 2• Games Delivery, Experience, and Venue Legacy

Construction Process• Heart of any Olympics is the Athletes• Needs to ensure positive experience for the athletes• Need world class venues• Full media and great sports presentation• Living accommodations close to the venues

• General Public Construction• Fair and equitable access to venue tickets• Volunteer opportunities• Minimal disruption to normal city operations

Construction Process cont.• Ceremonies• Olympic torch relay• Cultural programs• Live sites• Opening Ceremonies

• Media Construction• Facilities that are secure and have fast and accurate information services• Current international standards telecommunication technology• Open access to venues• Reasonably priced living accommodations located close to the venues

Aftermath• What happens to these billion dollar investments?• Most expensive Olympics to date is the Sochi Olympics: upwards of 51

Billion dollars.• Major Pitfall of most Olympics is this time period.• One of the worst being Athens 2004

• Most facilities are left abandoned or rarely used.

Aftermath Failure• One of worst being Athens in 2004• Beijing China:• Birds Nest stadium cost 471 million to build and believed that at the rate its

being used now it will take 30 years to pay it off the debt.• The Water Cube which now houses a water park lost approximately 1 Million

dollars in 2011 even after it received financial assistance. • Venues such as its kayaking river, beach volleyball courts, BMX track, and

baseball stadium remain untouched since the games.

Aftermath Success• Atlanta• 1996 Olympic Stadium transformed into the Atlanta Braves baseball field.• Other facilities were sold to a local college to use as their athletic venues.

• Barcelona 1992• Used the Olympics to reconnect the city to the water.• Olympics showcased their amazing beaches which brought an influx to

tourism.

Sponsorship• Sports apparel market is already worth around 149.6 billion dollars.

As projected by Allied Market Research that number will jump to 184.6 billion by the 2020 Olympics.

• Big 3 Sports apparel companies:• Nike• Adidas• Under Armour

Adidas• German sportwear giant.• Total sales jumped 4.9% after the Beijing Summer Olympics totaling

around 11.9 billion dollars. But fell 3.9% the following year.• In 2012, the year of the London Summer Olympics, sales jumped

again to reach 16.4 billion dollars before falling again the following year.• Expected to hold true again with the Rio Olympics.

Nike• Has used the Olympics to introduce their new products to the world.• Signed a contract that extends its sponsorship of the US Olympic teams

through the 2020 Olympics in Tokyo. This contract brings the United States Olympic Committee more than 15 million dollars.• Revenue jumped up 8% to 9.1 Billion dollars with the Rio Olympics and

their net profit increased 9% increasing their stock to .73 per share.• Sales growth was not just in America. They saw double digit growth in

places such as China, Japan, and most European regions.

Under Armour• Thanks to their small size, they were only able to partner with 225

athletes, a fraction of the athletes that Nike and Adidas could. • Michael Phelps - Swimming• Simone Biles - Gymnastics

• Shares rose 10% after the Rio Olympics.• Unfortunately because of confusing Olympic sponsorship rules Under

Armour didn’t get the recognition they should have.

SWOT Analysis (Hosting)• Strengths:• Prestige of holding the games.• Tourist influx• Can repurpose venues if planned correctly

• Weaknesses:• Difficult and costly to be part of the bidding process• Getting into the bidding process doesn’t guarantee the opportunity to host.• Financially crippling to build venues.• Usually cost more to run then cities make.• Venues usually become abandoned after the games.

SWOT Analysis (Hosting) cont.• Opportunities:• Tourism influx after the games end.• Financial growth if everything is planned out well.

• Threats:• Can be financially crippling to a city to the point of not being able to come

back.• Negative publicity seen world-wide

SWOT Analysis (Sponsoring)• Strength:• Worlds-Wide attention• People like to listen with professional athletes talk about a sports company. • A winning athlete give prestige to a sports company.

• Weaknesses:• Very expensive to have sponsorship in the Olympics.• With so many sponsors in the Olympics, it is difficult for one company to

stand out.

SWOT Analysis (Sponsoring) cont.• Opportunities:• Financial gain that can come from their athletes doing well.• Brand can get associated with a winning mentality depending on how their

athletes do.

• Threats:• Financial gain is not guaranteed• Confusing rules in sponsorship can leave companies missing our on publicity

opportunities.• Athletes finishing poorly can actually give brands a negative association.

Conclusion• Hosting the Olympics should never be done with the expectation of

financial gain. Cities need to do it for the exposure over the money.• Sponsorship is a good idea if companies have the financial ability to

do so. Exposure is larger and more concentrated that any real advertising a company could do by themselves.

Sources• International Olympic Committee (no date) Olympic Games Framework. Available at:

https://stillmed.olympic.org/Documents/Host_city_elections/IOC_Olympic_Games_Framework_English_Interactive.pdf (Accessed: 30 November 2016).

• Beijing, Beijing information, China City Information-Beijing (2010) Available at: http://www.chinatoday.com/city/beijing.htm (Accessed: 14 November 2016).

• Byrnes, M. (2012) Beijing’s Olympic ruins. Available at: http://www.citylab.com/work/2012/07/beijings-olympic-ruins/2499/ (Accessed: 14 November 2016).

• Data, U.C. (2016) Climate Atlanta - Georgia. Available at: http://www.usclimatedata.com/climate/atlanta/georgia/united-states/usga0028 (Accessed: 14 November 2016).

• Dillow, C. (2016) Hosting the Olympics is A terrible investment. Available at: http://fivethirtyeight.com/features/hosting-the-olympics-is-a-terrible-investment/ (Accessed: 14 November 2016).

• France-Presse, A. (2016) Adidas sees sales, profits rising 10-12% this year. Available at: http://www.rappler.com/business/industries/124549-adidas-2016-sales-profits-forecast (Accessed: 30 November 2016).

• IOC Olympic games framework English interactive (no date) Available at: https://stillmed.olympic.org/Documents/Host_city_elections/IOC_Olympic_Games_Framework_English_Interactive.pdf (Accessed: 1 December 2016).

• Olympic games Candidature process (2016) Available at: https://www.olympic.org/all-about-the-candidature-process (Accessed: 14 November 2016).

• Olympic games Candidature process (2016) Available at: https://www.olympic.org/all-about-the-candidature-process (Accessed: 14 November 2016).

• Tapping brazil’s Olympic opportunity (2016) Available at: https://www.businessoffashion.com/articles/global-currents/sports-nike-adidas-under-armour-olympic-opportunity (Accessed: 30 November 2016).

• U.S. Census Bureau (2016) Population [Internet]. Available at: https://www.google.com/publicdata/explore?ds=kf7tgg1uo9ude_&met_y=population&idim=place:1304000:3712000&hl=en&dl=en#!ctype=l&strail=false&bcs=d&nselm=h&met_y=population&scale_y=lin&ind_y=false&rdim=country&idim=place:1304000&ifdim=country&hl=en_US&dl=en&ind=false (Accessed: 14 November 2016).

• Yohn, D.L. (2016) Olympics advertisers are wasting their sponsorship dollars. Available at: http://www.forbes.com/sites/deniselyohn/2016/08/03/olympics-advertisers-are-wasting-their-sponsorship-dollars/#4dffec246c65 (Accessed: 1 December 2016).