the economic dimension of the olympic games
DESCRIPTION
The economic dimension of the Olympic Games is not easy to measure. On the one hand globalisation has increased the revenues of the Games which, vice versa, supports sports systems all over the world. On the other hand there is no tendency to describe the economic dimension of Olympic Games. There are “cheap” Games such as those from Los Angeles 1984 and Atlanta 1996 and “expensive” Games such as Barcelona 1992, Athens 2004 or Beijing 2008. These Games affect the economy of their country differently. First the Olympic Games will be compared with basic economic indicators of national accounts in order to demonstrate their economic importance for the host country, which is not very big. Then the Games are compared with other major sport event which shows their huge economic dimension. Later this lesson will focus on the two dimensions “time” and “space”. “Time” is important in order to describe the duration of economic impulses of a single Games.TRANSCRIPT
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This work has been published as part of the educational project promoted by the Olympic Studies Centre (CEO-UAB), University Lectures on the Olympics, within the framework of the International Chair in Olympism (IOC-UAB). The project aims to provide online access to texts covering the main subjects related to the written by international experts and aimed at university students and lecturers. This work is subjected to the Creative Commons’ license Attribution-Non commercial-No Derivate Works 2.5 Spain. You can copy, distribute and publicly communicate this work if you recognize its author and editor, you do not use for commercial purposes or to generate a derivate work.
To cite this work, you can use the reference: Preuss, Holger (2010): Economic dimension of the Olympic Games: university lecture on the Olympics [online article]. Barcelona : Centre d’Estudis Olímpics (UAB). International Chair in Olympism (IOC-UAB). [Date of consulted: dd/mm/yy] <http://ceo.uab.cat/pdf/preuss_eng.pdf> Content, 2002 Holger Preuss Edition, 2010 Centre d’Estudis Olímpics (CEO-UAB) ISBN: 978-84-693-6217-4
Summary
1. Introduction ................................................................................. 1
2. The dimension of Olympic Games in comparison ............................................. 2
3. The dimension “Time” ................................................................................. 5
3.1 The start and the end of economic impacts ............................................. 5
3.2 The development of revenues .................................................................. 7
3.2.1 Revenues from television rights ...................................................... 7
3.2.2 Revenues from marketing ............................................................... 9
3.2.3 Revenues from ticketing .................................................................. 11
3.2.4 Revenues from “special financing means” ....................................... 12
4. The dimension “Space” ................................................................................. 13
5. Conclusions ................................................................................. 14
Bibliographical references ................................................................................. 16
Further reading ................................................................................. 18
Related web sites ................................................................................. 20
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1. Introduction
The mechanisation and the development of telecommunication in the 1960s gave the
opportunity to a growing number of people to experience the Olympic Games live. In the
1970s, the increased interests of the TV‐audience led to huge ratings. With more private TV‐
networks competing for the rights to broadcast the Games, this forced the networks to pay
higher fees for the TV‐rights of the Olympic Games. Later, in the 1980s, borders started to
open for capital and global players intensified their efforts to reach a world‐wide market and
used the Olympic Games as an opportunity to penetrate their market through one single
platform. Since 1985 the International Olympic Committee (IOC) operates its own international
marketing program called “The Olympic Program” (TOP).
The television broadcast and the creation of the TOP program are both examples of
globalisation. Since the 1960s the IOC gradually increased its power over key financing sources.
In the 1990s the IOC was able to gain control on all television and international marketing
negotiations (Preuss, 2002). It generated 68% of all revenues for the Olympic Movement. The
IOC then distributed the money mainly to the OCOG of Nagano 1998 and Sydney 2000. The
local origin of financing sources in the past changed to a global orientation today.
The economic dimension of the Olympic Games can neither be determined by a single figure
nor by a trend through comparing several Games. On the one hand the economic dimension
depends on why the city wants to host the Games, on the other hand it strongly depends on
the development level and size of the host city. Smaller and/or less industrialised cities must
invest much more in their infrastructure than larger cities.
Therefore “expensive” and “cheap” Games have to be distinguished. Games are “expensive” if
they require extensive investments in traffic infrastructure, communication systems, housing
and sports facility construction. Sydney, Barcelona, Seoul, Montreal and Munich invested large
sums of money in the construction of sports facilities. Barcelona and Seoul used, and Beijing
will use the Games for extensive improvements to the infrastructure of the city, while Munich,
Montreal and Athens developed parts of their cities (Meyer‐Künzel, 2000). All organisers saw
the basic maxim in compensating short‐term expenditures with long‐term benefits. Games
were “cheap” if cost were largely limited to organising and staging the Games. Los Angeles and
Economic dimension of the Olympic Games Holger Preuss
2
Atlanta only built a few sports facilities while maximising the use of their existing
infrastructures. Their basic maxim was maximising short‐term profit or avoiding any deficit.
The economic dimension of the Olympic Games cannot solely be explained through the
financing of the Games and the necessary investments in infrastructure. Two essential long‐
term, and often less considered benefits, for the Olympic city are the enhancing of their image
and the creation of a higher level of awareness. These changes can stimulate tourism and bring
decisive arguments for a city to be chosen as a location for the settling of industry. However
there are also other economic and social impacts of Olympic Games.
2. The dimension of Olympic Games in comparison
The comparison of some national key figures with the costs of hosting the Olympic Games
illustrate the economic dimension of the Olympic Games for a country.
Table 1 ‐ Games costs in relation to national accounts
Games Costs in US$m 6 years prior Games
in % of GDP(6 years period)
in % of government consumption (6 years period)
Olympic Games
Atlanta 1996 2021 0,006 0,026 Sydney 2000 3438 0,102 0,553
Olympic Winter Games
Lillehammer 1994 1511 0,245 1,154 Nagano 1998 3412 0,015 0,156 Source: Preuss (2001); International Monetary Fund (2000)
Table 1 shows that Olympic Games have no important economic dimension in relation to
national accounts. A country can finance Olympic Games easily, while the same dimension is
huge for a city. For the 1976 Olympics, Canada did not give the city of Montreal a financial
guarantee. Because of a "written guarantee that the federal government would not be called
upon to absorb the deficit nor to assume interim financing for organisation" (OCOG Montreal
1976: 55) the OCOG had to stage the Games by completely financing them itself, with the sole
support of the city. In the end, the private revenues of the OCOG amounted to a mere 5% of
the funds required. The remaining 95% were provided by special financing means and the
public sector. When including the interest paid on the debt over the years and the additional
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$537 million that was required to complete the facilities after the Games, the Olympic debt
totalled $2.729 billion (Levesque, 2001). The burden of the debt has been absorbed by
municipal and provincial tax dollars with final payment scheduled for the financial year
2005/2006.
Figure 1 compares the economic dimension of the Sydney 2000 Olympic Games with those of
the Nagano 1998 Olympic Winter Games, the 1998 Soccer World Championships in France and
the 2002 Commonwealth Games in Manchester, England. Revenues from ticket sales,
sponsorship, TV‐rights and licensing were chosen to cover the business economic dimensions.
Macroeconomic dimensions are represented by the number of athletes and sports events
which indicate costs related to investments in sport facilities and the organisation.
Additionally, the number of tickets is related to spectators (Olympic tourists) who spent their
money in the host city. However, this figure does not distinguish between spectators who are
citizens who are just re‐allocating their money and tourists who bring in additional money to
the city. This distinction is important when calculating the size of the true economic impact on
a city.
Economic dimension of the Olympic Games Holger Preuss
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Fig. 1 ‐ Mega sport events in comparison to the Sydney 2000 Olympic Games
0
250
500
750
1000Events
Athletes in 10
Tickets in 10,000
Sponsor revenues in US$mTV-rights in US$m
Ticket revenues in US$m
Licencing in US$ 100,000
Olympic Games 2000 -- Olympic Winter Games 1998Olympic Games 2000 -- Olympic Winter Games 1998
0
250
500
750
1000Events
Athletes in 10
Tickets in 10,000
Sponsor revenues in US$mTV-rights in US$m
Ticket revenues in US$m
Licencing in US$ 100,000
Olympic Games 2000 -- Olympic Games 2000 -- CommenwealthCommenwealth Games 2002 Games 2002
0
250
500
750
1 000Events
Athletes in 10
Tickets in 10,000
Sponsor revenues in US$mTV-rights in US$m
Ticket revenues in US$m
Licencing in US$ 100,000
Olympic Games 2000 -- Soccer World Championship 1998Olympic Games 2000 -- Soccer World Championship 1998
Sources: IOC (1998); IOC (1999); IOC (2001a); Preuss (2000); Tourism Forecasting Council (1998); Herren (2001); Devos (2001)
The economic indicators of Figure 1 solely represent the organising committee. FIFA, for
example, does not share its revenues from the licensing or TV‐rights to the organising
committees. Thus, this makes the soccer world championships appearing smaller than the
actual revenues indicate. However, it can be seen that the Olympic Games are the biggest
event from an economic point of view.
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3. The dimension “Time”
3.1 The start and the end of economic impacts
Preparing to stage the Olympic Games is a huge effort of adopting the city’s infrastructure to
the needs of the event. This explains why the Games are awarded to the host city seven years
in advance. The economic effect begins during the bid process and increase considerably
during the preparation phase (Figure 2).
Fig. 2 ‐ Phases of economic impacts of Olympic Games
The sizes of the economic impacts are different from Games to Games because the conditions
and the aims of each host city vary (Table 2).
Table 2 – Timetable of economic impacts
Year n= Olympic Year
Situation Impact (Fig.2)
n‐11
Idea to bid – NOC decision First a bid city does feasibility studies. On the one hand money is spent for the studies, on the other hand urgent projects are started due to the fact that the studies show deficits in the structure. In some countries such as USA or Germany many cities are planning to bid for 2012. In 2003 (n‐9) one city gets nominated by the NOC to candidate internationally (IOC 2003, §37, 2).
Impact I
n‐9
NOC decision – IOC decision
The bid city has to prove that it can reach Olympic standards. Therefore, they do cost‐benefit‐analyses and finally write the bid‐book. Other activities are the start of construction projects, the support of Olympic family and to pull in international events in order to prove highest motivation to stage the Olympic Games and to reach political consents.
Impact II
n‐7
Winning the bid
N
IOC decision – Olympic Games
Construction of sport facilities and infrastructure as well as preparation for the Games.
Impact III
n+?
Olympic Games – ?
Impact IV
IOC
Olympic Games
NOC decision
Idea to bid
n-11 n-9 n-7 n
II IIII IIIIII IIVV
Time
Economic dimension of the Olympic Games Holger Preuss
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Use of structure and initiation of follow up impacts, pulling in new industry, leverage tourism effects.
The different amount of autonomous expenditures (investments) can be illustrated by using
the examples of the Barcelona, Sydney and Beijing Olympics. In this simplistic consideration,
imports and crowding out as well as any consumption expenditures are not considered. Figure
3 shows the amount of investments during the seven pre‐Olympic years in percentage. Figure
4 shows the effect of the investments based on an estimated multiplier. In the subsequent
years each investment induces further expenditures. The data refers exclusively to
investments in the host cities.
Fig. 3: Investments in Barcelona 1992, 2000 and Fig. 4: Effects of the multiplier for Sydney Beijing 2008 by index (dA=100) investments in 1992, 2000 and 2008 by index (dA=100)
n-7 n-6 n-5 n-4 n-3 n-2 n-1 n n+1 n+2 n+3 n+40
10
20
30
40
50
60
70Index (dA = 100)
Beijing'08 Sydney'00 Barcelona'92
n-7 n-6 n-5 n-4 n-3 n-2 n-1 n n+1 n+2 n+3 n+40
10
20
30
40
50
60
70Index (dA = 100)
Beijing'08 Sydney'00 Barcelona'92
Sources: Modified based on Brunet (1993:119); Arthur Andersen (1999:11), Beijing 2008 Olympic Games Bid
Committee (2000); for calculations see Preuss (2000)
In Beijing, all levels of government (municipal, regional and state) and the private sector
invested much earlier than in the case of Barcelona/Sydney. However, the final effect is the
same. Once the Olympic‐related investments stop, the economic impact decreases and
vanishes completely within a few years.
However, the economic impact IV – the Olympic legacy – lasts several years longer. For
example, hosting sporting events, tourism, and the possible settlements of new industries in
the host city are all follow up impacts resulting from the Games. Further, the positive or
revived image of the city may impact of tourists interest to the host country. It is estimated
that the Sydney 2000 Games will attract more than a million international visitors to Australia
and generate billions of AU$ in tourism export earnings between 1997 and 2004 (Tourism
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Forecasting Council, 1998:13). In different measures a 10% increase in the number of visitors
to Australia will create 30,000 jobs (Australian Tourist Commission, 1999: 10). Research
indicated that the Sydney 2000 Games have changed the image of Sydney and Australia
positively for tourism (Dennis/Wyld, 2001:12). The image changed due to the friendliness of
volunteers, the showcasing of Australian culture and the success of the Olympics and the
Paralympics. After the Games attributes such as “friendly”, “fun” or “different” were – at least
by Germans – more often associated with Australia (Preuss, 2001a).
3.2 The development of revenues
The next analysis will consist of a comparison of single financing sources over the past 30
years. There are obviously two methodological problems. First, since the Olympic Games were
staged in different years over a long period of time, the inflation makes revenue from the past
not as valuable as today. Second, the Games were celebrated every time in a different country
making the exchange rates of the host nation currency fluctuate too much to easily transfer
the revenues in one currency. In order to minimise transformation errors all currency data is
adjusted by purchasing power parities into US$. Then they are inflation adjusted by the GDP‐
deflator of the USA ( Preuss, 2000: 24).
3.2.1 Revenues from television rights
Television is the engine that has driven the growth of the Olympic Movement. The IOC created
a television policy to ensure maximum presentation of the Games to the widest possible
audience free of charge.
Fig.5 ‐ Revenues of TV rights of Olympic Games from Rome 1960 to Beijing 2008
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
*20
08*
0
200
400
600
800
1000
1200 TOTAL USA Europe Remaining countries
884
699
458419
896086
180
41
1133
2%
3.6%
2%
3.6%
* inflation rates estimated; profit share from NBC and EBU not included Source: Preuss (2002)
Economic dimension of the Olympic Games Holger Preuss
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When examining the development of the TV‐revenues (Figure 5), we note that the inflation‐
adjusted revenues rose slowly until Montreal 1976 and sharply increased afterwards until
Sydney 2000. The kink in the curve was caused by American TV stations competing for TV
rights which started at the end of the seventies. Up to Los Angeles in 1984, the networks
greatly contributed to the development of total revenue by mutually outbidding each other.
The fierce competition from the networks for the TV rights was the result of large American
enterprises who were prepared to pay huge prices for commercial TV time. At the end of the
eighties, the same situation developed in Europe as a result of the increasing number of
private networks.
The figures deviating from the linear increase since 1976 can be explained as follows: The
Moscow 1980 Games earned lower revenues than expected because the commercial contracts
were partly adjusted downwards due to the boycott of the Western world. The revenue
decrease in Seoul 1988 may be the result of the fear of a new boycott and the large time‐lag to
the financially strong regions of North America and Europe (Kim, 1990). It is expected that the
rates will fall again in the future leading to a second kink. The development of future rates can
already be foreseen, since TV rights have been sold to the decisive regions until 2008 in Beijing.
In the USA, the most significant market for the TV rights, we can note a distinct regression. The
leap for the 2000 Games is caused by the unbalanced distribution of funds made by the IOC. In
fact, the IOC will transfer a total of US$ 2.35 billion to the OCOGs from broadcasting revenue
until 2008. Even today, it is obvious that the hosts of the Athens 2004 and Beijing 2008
Olympics must accept constant or even lower revenues from selling TV rights for the USA
depending on inflation. Only a possible share of profits earn by NBC (2004 and 2008) and EBU
(2008) from the sales of commercial time could bring a further increase. This can be possible
only if a certain number of sales is reached. Since the 1960 Games in Rome, the EBU has held
the European rights for television of the Olympics. The EBU will continue to be the official
broadcaster until 2008. A total of US$'95 1.16 billion of the sales revenues are paid to the
OCOGs. It is interesting to note that the increase in revenues develops in the same way as it
did in the USA twelve years earlier.
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Fig.6 ‐ Revenues from TV rights from Squaw Valley 1960 to Salt Lake City 2002
1960
1964
1968
1972
1976
1980
1984
1988
1992
1994
1998
2002
0
200
400
600
800
1000
1200 TOTALUSAEBURemaining countries
0.2 4.8 7.5 22 25 38150
363318 367
469
594
Source: calculated by Preuss (2000); IOC (2001c)
The sales of the rights for the Olympic Winter Games developed similar to those of the
Olympic Games (Figure 6). However, traditionally, revenue for the Winter Games has been
much more dependent on American stations. This explains the kink of the Calgary Games in
1988 broadcast during prime time hours in the USA. Although in 2002 the Games will be held
in the USA and television rights will be higher, we note that it has become a more independent
source IOC (2001c: 3).
3.2.2 Revenues from marketing
Sponsoring has become the second pillar of Olympic financing. Prior to 1984 no real
international marketing existed and fewer than 10 NOCs generated any revenue from
marketing programs. Since 1996 long‐term broadcast and sponsor agreements signed through
2008 have secured the financial future of the Olympic Movement. “The Olympic Program”
(TOP), launched by the IOC in 1985, provides funding to all 199 NOCs, to the OCOGs and the
IOC. In addition, it provides a global promotional platform for the “Olympic brand” across 199
countries. It is a fact that the above mentioned payments for TV‐rights are dependent on
Olympic sponsorship. In 2000 national and international sponsors bought approx. 35% of the
advertising time during Olympic broadcasting and therefore the sponsors help refinance the
investments of the TV‐stations (Preuss, 2001b).
Economic dimension of the Olympic Games Holger Preuss
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Since Los Angeles 1984 the number of sponsors was reduced which increased the revenues
dramatically (Figures 7 and 8). Due to problems to secure exclusivity in the host country the
NOC and the OCOG started in 1996 to run joint marketing programs.
Fig.7 ‐ Number of enterprises advertising with Olympic Games (without licensees)
Fig.8 ‐ OCOG revenues from sponsoring
742
325
98 80 107 119 104
Munich
'72
Montre
al '76
Mosco
w '80
Los A
ngele
s '84
Seoul
'88
Barcelo
na '9
2
Atlanta
'96
Sydne
y '00
0
200
400
600
800Number of enterprises
0 040
219 215
550588 588
Munich
'72
Montre
al '76
Los A
ngele
s '84
Seoul
'88
Barcelo
na '9
2
Atlanta
'96
Sydne
y '00
0
100
200
300
400
500
600
Source: Preuss (2000)
An important new source of financing will be merchandising. In Atlanta and Sydney the
licensing fees were approx. US$'95 44 million. If the revenues of merchandising achieved in the
short period before and after the Games are compared to the revenues of the largest single
American sport event, the Super Bowl, the turnover of the Olympic Games is four times higher
(Ruffenach, 1996). In Sydney 2000 it amounted to approx. US$'95 500 million. The IOC is
expected to create its own international merchandising program and therefore, increase the
dimension of this source.
However, there is a concern that marketing will be to much emphasised as financing source
and therefore “over‐commercialise” the Olympic Games. Empirical data evaluated during the
Games in Sydney 2000 (n=1973) showed that 53,4% saw commercialisation as a threat for the
Olympic Games in the next 20 years. The same concern was given by 518 P.E. students from
Germany and Austria (62,2%). However, that is already lower than after the 1996 Atlanta
Games. In a survey 66% of German tourists (n=212) and 72,3% of 628 P.E. students felt this
threat (Messing/Müller, 1996; Preuss, 1997).
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3.2.3 Revenues from ticketing
Ticketing has been an important source of financing since Athens 1896 (Figure 9). It lost some
significance in the 70s and 80s because the financing was mainly done through public sources.
However, in Atlanta and Sydney ticketing was a source that contributed approximately 23% of
the OCOG budget. The growing number of events combined with the larger sport facilities has
led to an increase in the number of available tickets for the Games.
Figure 9 ‐ Total number of entrance tickets and share of tickets sold from Munich 1972 to Beijing 2008
1972 1976 1980 1984 1988 1992* 1996* 2000* 2008***0
2
4
6
8
10
12Tickets in million
0
20
40
60
80
100%
Utilization rate of venues (%) Total of tickets Tickets sold
4.4
3.3
5
3.2
6.15.3
7.8
5.34.7
3.3
4.83.8
11
8.566% 74%**
90%
80%
93%
80%77%
6.7
87%
7.6
9
7
77%
* Free tickets could not be considered in the utilization rate since they were included in
accreditation. ** ERA (1981) stated an utilization rate of 65%. *** Estimated by Beijing 2008 Olympic Games Bid Committee (2000) Sources: Preuss (2000); Beijing 2008 Olympic Games Bid Committee (2000)
A comparison of ticket sales revenues of different Olympic Games is impossible due to the
manifold factors which are influenced by location and country as well as by the policy pursued
by the respective OCOG. However, the total gained revenues through the selling of entrance
tickets should be displayed in order to show its economic dimension.
Economic dimension of the Olympic Games Holger Preuss
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Fig.10 ‐ Total ticket sales revenues from Munich 1972 to Beijing 2008
Munich
'72
Montre
al '76
Los A
ngele
s '84
Seoul
'88
Barcelo
na '9
2
Atlanta
'96
Sydne
y '00
Beijing
'08*
0
100
200
300
400
500in million US$'95
58.5 56.56
227.56
42.61
91.7
416.64
166.4
468.35
* inflation rate estimated
Sources: Preuss (2000); Beijing 2008 Olympic Games Bid Committee (2000); IOC (2001b)
Figures 9 and 10 show the financial potential of this financing source for the US$'95 468 million
achieved by the OCOG of Sydney 2000. The high revenues at the Los Angeles 1984, Atlanta
1996 and Sydney 2000 Olympics were reached due to the large number of tickets sold at
relatively high prices (Preuss, 2000).
3.2.4 Revenues from “special financing means”
Olympic commemorative coins, postage stamps and lotteries are called special financing
means (Figure 11). The government of the host country must approve them prior to their
usage to finance the Olympic Games.
Olympic coins as a finance source was used for the first time in Finland in order to finance the
Helsinki Games in 1952. However, the peek of this source was reached in Munich 1972, when
the coins financed the major part of the Games. If one considers the revenues of OCOGs from
the selling of Olympic coins, a decline in the significance of this financing source is becoming
evident.
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Fig. 11 ‐ OCOG revenue from selling Olympic coins, stamps and from the lottery
Munich
'72
Montre
al '76
Mosco
w '80
L.A.'8
4
Seoul
'88
Barcelo
na '9
2
Atlanta
'96
Sydne
y '00
Beijing
'08
0
200
400
600
800in million US$'95
*
**14.6
56.3
187.2
52.5
157.6
260.25
735.5
18.3*** 5.1
Olympic Coins
Munich
'72
Montre
al '76
Mosco
w '80
Los A
ngele
s '84
Seoul
'88
Barcelo
na '9
2
Atlanta
'96
Sydne
y '00
Beijing
'08
0
2
4
6
8
10million US$95
?6.2 millionrubles'80
OCOG did not share revenues
3.42
5.19
7.27
OCOG did not share revenues
OCOG did not share revenues
7.8
Olympic Stamps
Munich
'72
Montre
al '76
Mosco
w '80
L.A.'8
4
Seoul
'88
Barcelo
na '9
2
Atlanta
'96
Sydne
y '00
Beijing
'08
0
100
200
300
400
500in million US$'95
195.4183.6
nolottery
Rubel368 m
481.6
203.5
117
nolottery
nolottery
Olympic Lottery
* value calculated solely by means of exchange rate ** according to a letter from R. Huot (1997), indirect OCOG revenues were higher. *** estimated, according to a letter from B. Elphinston (2000) Sources: Preuss (2000); Beijing 2008 Olympic Games Bid Committee (2000)
Olympic stamps are also one of the oldest financing sources for the Games. In Athens 1896 and
Tokyo 1964 they helped finance the Games significantly. Finally, an Olympic lottery is a
financing source that collects money from the citizens such as through the sale of Olympic
coins and stamps. However, new lotteries cannot be started easily and therefore have been no
financing source for several past Games.
4. The Dimension “Space”
Space is another element that is important to consider when examining the economic
dimensions of Olympic Games. The smaller the region, the more autonomous money comes in
and the bigger is the economic impulse for the city. However, in a small region the imports are
greater and therefore the impulse loses its power sooner. The money is spent outside the
region and therefore is lost. A similar effect happens if the Games are staged in developing
countries. The other extreme is seen if the whole world is examined. Then there would be no
impulse, because no autonomous money comes in and no money leaves the world. This case
demonstrates that the economic dimension of Olympic Games is strongly dependent from the
size of the region.
At the beginning of the Modern Olympic Games, its financing was mainly done by the OCOG
and the government. The only exception had been the ticket sales and consumption
expenditures of foreign tourists, who spent autonomous money in the region. However, the
economic dimension of the Games was basically reduced to the host nation. Globalisation has
changed both the financing of the Olympic Games and the benefit a host nation can expect
Economic dimension of the Olympic Games Holger Preuss
14
through staging Olympic Games. Technology and mechanisation enabled live coverage of the
Olympic Games since Tokyo 1964. Additionally, the Internet condensed the flow of information
about the Games since Atlanta 1996. The world became a “global village”.
The three main financing sources, TV‐rights, sponsoring and ticketing mainly stem from
consumers all over the world. That secures a host city high autonomous revenues which create
a positive economic impulse. This global dimension became visible in the late 1980s and can be
seen today by the high number of bidding cities for 2012.
5. Conclusions
The run of the time is difficult to measure and the economic dimension of Olympic Games is
difficult to calculate as it varies from city to city. It has become clear that the staging of
Olympic Games from a financial point of view is much bigger than all other major sport events.
Although the Games have no crucial dimension for a state it has one for a city and a region.
Overtime the financing sources became global. In other words the financing of the Games is
mainly done by consumers from all over the world. The USA still plays a key role due to the
fact that 70% of the TOP sponsors and 55% of the TV‐rights come from that country.
The IOC has taken over the control of most major financing sources. It distributes the revenues
among the NOCs, Olympic IFs and some sports orientated organisations. As such, the
economic dimension of the Olympic Games has spread all over the world.
Since the 80s two decisive important changes occurred for a host of the Olympic Games. First,
the OCOG can be confident that the Games will have a financial surplus when subtracting the
operative costs from the revenues. Secondly, the Games have reached a dimension that
requires huge sport facilities and adequate infrastructure for the athletes, tourists and media
representatives. Although the IOC has controlled the growth concerning the number of
athletes and sports, gigantism has become obvious in other dimensions. This can be seen by
the significant larger number of ticket sales (Figure 9) and more media representatives at the
Games than athletes (IOC, 2001b: 9).
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The shift from the problem of financing the organisation of the Games to a provision of
adequate infrastructure did not change the fact that the Olympic Games are still an event that
has reached the border of being financially viable.
Economic dimension of the Olympic Games Holger Preuss
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Bibliography
Arthur Andersen (1999): Economic Impact Study of the Sydney 2000 Olympic Games. Centre for Regional Economic Research, University of Tasmania. Australia Tourist Commission (1999): Fact Sheets and Speech Notes. Sydney : Australian Tourist Commission. Beijing 2008 Olympic Games Bid Committee (2000): Bid Book, Beijing : Beijing 2008 Olympic Games Bid Committee. http://www.beijing‐2008.org/olympic_new/english/features/candidature.html Brunet, Ferran (1993): Economy of the 1992 Barcelona Olympic Games. Lausanne : International Olympic Committee. Dennis, A; B Wyld (2001): “Tourism primed for a recovery, thanks to new Olympic image”, Sydney Morning Herald, Sep. 29, p. 12. Devos, N. (2001): (Commonwealth Games – Chief Commercial Department) (Aug 29, 2001), letter. Elphinston, B. (2000): letter, Jan 17. ERA (1981): Report on costs, revenues, and economic activity which will be generated by conduct of the 1984 Summer Olympic Games in the City of Los Angeles. Los Angeles : Economics Research Associates. Herren, A. (2001): (FIFA – Division Communication) (Sep 27, 2001), letter. Huot, R. (1997): letter, Jun 20. International Monetary Fund (ed.) (2000): International Financial Statistics. Yearbook 2000. Washington (D.C.) : International Monetary Fund IOC (1998): Marketing Matters, no. 13. Lausanne : International Olympic Committee. http://multimedia.olympic.org/pdf/en_report_279.pdf IOC (1999): Marketing Matters, no. 15, Lausanne : International Olympic Committee. (http://multimedia.olympic.org/pdf/en_report_277.pdf) IOC (2001a): Marketing Matters, no. 18, Lausanne : International Olympic Committee. http://multimedia.olympic.org/pdf/en_report_274.pdf IOC (2001b): Sydney Games of the Olympiad: facts and figures. Lausanne : International Olympic Committee. IOC (2001c): Marketing Matters, no. 19. Lausanne : International Olympic Committee. http://multimedia.olympic.org/pdf/en_report_273.pdf
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IOC (2003): Olympic Charter. Lausanne : International Olympic Committee. http://multimedia.olympic.org/pdf/en_report_122.pdf Kim, Un‐Yong (1990): The Greatest Olympics: from Baden Baden to Seoul. Seoul : Si‐sa‐yong‐o‐sa. Levesque, K. (2001): “Il y a 25 ans les Jeux: une monstrueuse aventure financière”, Le Devoir, Jul 7. Meyer‐Künzel, M. (1999): Städtebau der Weltausstellungen und Olympischen Spiele. Stadtentwicklung der Veranstaltungsorte. Dissertation at the Faculty Architecture of the Technische Universität Carolo‐Wilhemina, Braunschweig. Messing, M; N. Müller (1996): “Veranstaltungsbesuch und sportpolitische Polarisation deutscher Olympia‐Touristen in Barcelona 1992”, in N. Müller; M. Messing (eds.), Auf der Suche nach der Olympischen Idee. Bonn : Kassel, pp. 219‐250. Müller, N.; M. Messing (1997): unpublished tables to report on the survey among German Olympic tourists in Atlanta'96. Sports Faculty of the Johannes Gutenberg Universität‐Mainz. OCOG Montreal (1976): Games of the XXI. Olympiad, Montreal 1976, Official Report, vol. 1. Montreal : OCOG 1976. Preuss, H. (1997): “Olympic Ideals as Seen by German and Austrian P.E. Students”, in CIPC (ed.) and N. Müller (red.), Coubertin and Olympism Questions for the Future. Report of the Congress 17th to 20th Septembre 1997 at the University of Le Havre. Niedernhausen/Strasbourg/Sydney, p. 281‐286. Preuss, H. (2000): Economics of the Olympic Games: hosting the Games 1972 – 2000. Sydney. http://www.sport.uni‐mainz.de/Preuss/eprbeitr.html Preuss, H. (2001): “Le implicazioni economiche delle Olimpiadi”, in Luigi Bobbio and Chito Guala (ed.s), Olimpiadi e grandi eventi. Verso Torino 2006: come una città può vincere o perdere le Olympiadi. Roma : Carocci, p. 37‐55. Preuss, H. (2001a): homepage: (http://www.sport.uni‐mainz.de/Preuss) Preuss, H. (2001b): “Financing Source Development of Mega Sportevents”, paper presented at the 6th Annual Congress of the European College of Sport Science. Cologne 24.‐28. July 2001. Preuss, H. (2002): Olympic economics. the Games from 1972 to 2008. Beijing : [s.n]. Ruffenach, G. (1996): "Sell, Sell, Sell," The Wall Street Journal (Jul 19), R15. Tourism Forecasting Council (1998): The Olympic Effect. A Report on the Potential Tourism Impacts of the Sydney 2000 Games. Canberra : Tourism Forecasting Council.
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Further reading Brunet, F. (1995): “An economic analysis of the Barcelona ´92 Olympic Games: resources, financing, and impact”, in M. Moragas Spà; M. Botella (eds.), The Keys to success: the social, sporting, economic and communications impact of Barcelona’92. Barcelona : Centre d’Estudis Olímpics i de l’Esport, p. 203‐237. Chalip, L. (2000): “Volunteers and the organisation of the Olympic Games: economic and formative aspects”, in M. Moragas; A. B. Moreno; N. Puig (eds.), Volunteers, global society and the Olympic Movement: International Symposium Lausanne. 24th, 25th and 26th November 1999. Lausanne : International Olympic Committee, p. 205‐214. Chappelet, J.L. (2001): “Management of the Olympic Games: the lessons of Sydney”, European Journal for Sport Management, special issue, vol. 8, p. 128‐136. Getz, D. (1997), “The impacts of mega events on tourism: strategies for destination.” in The Impacts of mega events: papers of the Talk at the Top Conference, 7‐8 July 1997. Östersund : Mid Sweden University. Guttman, A. (1984): The Games must go on: Avery Brundage and the Olympic Movement. New York : Columbia University Press Hall, C.M. (1992): Hallmark tourist events: impacts, management and planning, London : Belhaven. Häusermann, H; Siebel, W. (eds.): Festivalisierung der Stadtpolitik. Stadtentwicklung durch große Projekte, Leviathan, Zeitschrift für Sozialwissenschaft, special vol. 13, Opladen. Hill, C.R. (1996): Olympic politics, 2nd ed. Manchester : Manchester University Press. Hoberman, J. (1986): The Olympic crises: sport, politics and the moral order. New Rochelle, NY : A. D. Caratzas. Houlihan, B. (1994): “Olympic sport, politics and economics”, in Houlihan B. (ed.), Sport and international politics. New York : Harvester‐Wheatsheaf. Howard, D.R.; J.L. Crompton (1995): Financing sport. Morgantown : Fitness information technology. Kim, J. G [et al.] (1989): Impact of the Seoul Olympic Games on national development. Seoul : Korea Development Institute. King, F.W. (1991): It's how you play the game: the inside story of the Calgary Olympics. Calgary : Script. Landry, F.; M. Yerlès (1996): The International Olympic Committee: one hundred years. The idea, the presidents, the achievements, vol. 3. Lausanne : International Olympic Committee.
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Lenskyj, H.J. (2000): Inside the Olympic industry: power, politics, and activism. New York : State University of New York Press. Moragas, M; N. Rivenburgh; J.F. Larson (1995): Television in the Olympics. London : John Libbey. Park, S.J. (1991): The Seoul Olympics: the inside story. London : Bellew. Pound, R.W. (1996): “The Importance of commercialism for the Olympic Movement”, Olympic Message – Sources of Financing Sports, vol. 3, p. 10‐13. Preuss, H. (2000): “Globalization and its economic impact on the Olympic Games”, in Report of the Thirty‐Ninth Session in 1999. Athens : Hellenic Olympic Committee, p. 123‐142. Reich, K. (1986): Making it happen: Peter Ueberroth and the 1984 Olympics. Santa Barbara : Capra Press. Ritchie, B.J.R.; B.H. Smith (1991): “The Impact of a mega‐event on host region awareness: a longitudinal study”, Journal of Travel Research, no. 1, p. 3‐10. Ueberroth, P: R. Levin; A. Quinn (1985): Made in America: his own story. New York : W. Morrow.
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Related web sites Athens 2004 Olympic Games http://www.athens2004.com/ Australian Tourism Commission http://www.australia.com/ Beijing 2008 Olympic Games http://www.beijing‐2008.org/ Broadcast revenue generation and distribution http://www.olympic.org/uk/organisation/facts/revenue/broadcoast_uk.asp European Broadcasting Union http://www.ebu.ch/ FIFA http://www.fifa.com/en/index.html International Olympic Committee http://www.olympic.org/ IOC Top Program http://www.olympic.org/uk/organisation/facts/programme/sponsors_uk.asp Manchester 2002 Commonwealth Games http://213.131.178.162/home/ NCB http://www.nbc.com/ Olympic broadcasting http://www.olympic.org/uk/organisation/facts/broadcasting/index_uk.asp Olympic licensing http://www.olympic.org/uk/organisation/facts/programme/licensing_uk.asp Olympic Marketing http://www.olympic.org/uk/organisation/facts/introduction/index_uk.asp Olympic Sponsorship http://www.olympic.org/uk/organisation/facts/programme/index_uk.asp Salt Lake City Broadcast Operations http://multimedia.olympic.org/pdf/en_report_71.pdf Sydney 2000 Olympic Games information
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http://www.gamesinfo.com.au/home.html The Sydney 2000 Olympic Games broadcast http://multimedia.olympic.org/pdf/en_report_249.pdf
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