IOC eyes healthy profits from Beijing Games

From its dangerously empty coffers in the late 1970s to the multibillion-dollar revenues from the Beijing 2008 Games, the International Olympic Committee (IOC) has managed a remarkable commercial transformation of its prime product, the Olympic Games.

With broadcasting revenues for the period 2005 to 2008 reaching about $2,5-billion and a top sponsorship programme adding about $900-million, the IOC’s future certainly looks bright—a far cry from the looming financial collapse of three decades ago.

The IOC is now a financially robust organisation, having reinforced its position as a key player in the lucrative world of sport. It is run by professional managers as opposed to the amateurs with a love of sport who were in charge in the past.

Its financial overhaul in the 1980s, credited to then IOC chief Juan Antonio Samaranch, laid the foundations for its current growth that is expected to continue in the next Games.

IOC president Jacques Rogge told his organisation in 2006 that the finances were so healthy the IOC could afford not to stage one edition of the Olympic Games, if forced by some external factor, and still have enough money to organise the Games eight years later.

“The financial prospects are very good,” he told a meeting in Seoul. “The financial future of the Olympic movement is secured.”

Total Olympic revenues for the most recent completed four-year period (2001 to 2004) exceeded $- billion with 53% coming from broadcasters, 34% from sponsors, 11% from ticketing and 2% from licensing.

About 92% of that amount was distributed to the IOC partners—national Olympic committees, international sports federations and Games organising committees—while 8% stayed with the IOC for operational and administrative costs.

Sponsorship programme

For the 2005 to 2008 period alone the IOC will receive about $2,5-billion from broadcasters, $866-million from its TOP sponsors’ programme, a worldwide sponsorship programme managed by the IOC, plus money from tickets and licensed programmes.

An additional $1-billion will flow into the coffers of the Chinese organisers from their own local marketing contracts.

The IOC will pay out just over $1-billion for half of the Beijing Games’ organisational budget, as it does with every host city.

Income from broadcasting and new media rights for the Vancouver 2010 Winter Games and London 2012 Olympics has already risen nearly 40% from the previous two-Games package of Beijing and Turin, and will be in excess of $3-billion.
The IOC estimates this figure to reach about $3,3-billion.

It has said about 15% of that will come from new media including the internet and mobile phones.

Broadcasting was the most important factor in turning the tide for the IOC in the past decades. Television rights revenues for the 2004 Athens Olympics saw a five-fold increase from the Los Angeles 1984 Games that brought in $287-million.

New media, including the internet and mobile telephony, have opened up a new field of expanded lucrative financial deals.

Live broadcasts

Former IOC president Avery Brundage, a staunch supporter of amateurism in sport who ran the organisation from 1952 to 1972, could not have been more wrong when he said in 1956 that the IOC did not need television, coinciding with the first live broadcasts from the Cortina d’Ampezzo Winter Games.

“We in the IOC have done well without TV for 60 years and will do so certainly for the next 60 years too,” he said.

Compared with the Soccer World Cup, the Olympic Games are bigger in terms of finances.

For 2003 to 2006 Fifa posted revenues of just over $3-billion with 92% of revenues being event-related, mainly from the 2006 World Cup in Germany. Net four-year results stood at $774-million.

Television broadcasting rights for the 2006 World Cup were 1,6-billion and marketing rights income was 714-million, compared to the IOC’s 2,5-billion and 1,866-billion including Beijing’s local marketing deals.

From the one thousand guineas the BBC had to pay for the 1948 London Games broadcasting rights to the billions for August’s Beijing Games, the IOC can deservedly claim to have become the richest international sports organisation. - Reuters

Client Media Releases

UKZN backs its team at Comrades
Dean makes history