The Olympic Games – a unique business model
The intent of the Olympic Games is to provide the premier global athletic competition
in which athletes from around the world can compete on a quadrennial basis.
Concurrently, since the change of funding criteria following the 1976 Montreal Games,
the Olympics have also developed into a highly successful business process through
which the International Olympic Committee (IOC), in partnership with host cities,
obtains high levels of funding from a variety of international corporations as part of
their communications strategies. The IOC grants a specific edition of the Games to a
particular city, not country. In theory, this separates the Games from the politics of the
country. However, the culture, social, ethnic, and economic aspects of the country are
embedded within the city and thus are considered in the selection of the mascot. For
example, the 2010 Olympics were awarded to Vancouver, a city in British Columbia,
Canada. The Federal Government informed the City of Vancouver that they would not
underwrite any debts incurred by hosting the Games, thereby exemplifying the
separation of responsibility between nation state and city. Thus the city of Vancouver
chose to demonstrate and visually reflect a culture that extends beyond the city
boundaries, and reflected the myths and traditions of British Columbia’s indigenous
First Nations inhabitants.
There are no guarantees of economic success via hosting an edition of the Olympics;
this was clearly demonstrated by the $1.5 billion CDN debt legacy of the Montreal
Games (Howell, 2009). However, post-Montreal, the IOC introduced significant changes
to the economic model on which the Games are based. These changes included greater
levels of more focussed sponsorship, higher levels of merchandizing, and greater
control over broadcast images which resulted in the television rights being valued
much more highly (UK Olympic Committee, n.d.). These revenue streams provide a
considerably more solid foundation on which the overall financing of the Games can be
arranged. The benefits of these IOC revisions is witnessed in the provision of
additional levels of private enterprise funding, coupled with the general trend of
expansion witnessed in both Summer and Winter Games, resulting in a widespread
impression that hosting the games has an overall positive economic benefit (Raco and
Tunney, 2010). Olympic sponsorship is coordinated via The Olympic Program (TOP)
whereby agreements are negotiated between the IOC and a small number of high
profile, global businesses. TOP generates significant revenues from these sponsors
who, in return, gain access to a global audience through the linkage of corporate
brands and products with the Olympic brand; itself one of the most recognized and
positively perceived brands on the planet (Short, 2003).
There are many other reasons why there is an expensive competition among cities
looking to host the Games including an impetus for urban renewal, as exemplified
with the Barcelona Games (Newman, 1999), the provision of additional athletic and
entertainment facilities and civic infrastructure as exemplified with most Games,
increased employment opportunities via Games site construction and in services
during the Games. There are also many intangible benefits to be gained, such as
raising the international profile of the city. For example, London recognized the
increasing competition for business investment from other European cities and saw the bid for the Games as crucial to promote London as an international business destination.
Such brand enhancement would continue to attract national and international investment
in the post-Games phase thereby raising the city profile even further. Another example of
these benefits can be witnessed in reports from the Athens Games in 2004. Positive
legacies include the construction of a metro and light rail system, a new toll ring-road
around the city, improved walkways in the older section of the city, and housing for 3,000
in the Olympic Village (Raco and Tunney, 2010; Poynter, 2012). However, despite the
estimated cost of $11.2 billion for the Games preparation the sports facilities have fallen
into disrepair due to the costs of their upkeep (Kasimati and Dawson, 2009; Raco and
Tunney, 2010). Similarly, the Millennium Games in Sydney resulted in significant benefits
including inward business investment and showcasing, as well as sports infrastructure,
service contracts (Pricewaterhouse Coopers, 2001) and social and cultural assets (Clark,
2008). However, a lesser-recognized outcome of the Games for the inhabitants of Sydney
was the long-term benefit of gaining skills in general management, transportation
planning, and the delivery of a global event (Pricewaterhouse Coopers, 2001). For both
cities, the Olympic Games also provide a national and international platform for advocacy
by the city and national sports organizat