Contributed by Wilsey Zahner | Tolland DECA, CT
The Olympics. An event, a competition, a show. While millions tune in to the most prestigious athletic contest in the world, few can see the business behind the scenes. This article will delve into the business side of the Olympics, from margins to media.
Business Administration
Over five years, the Olympics created over 181,00 jobs within the community. This includes event planners, security personnel, broadcasters, athletes, coaches, etc. While the decreased unemployment rate is only temporary, the Olympics help to create a more skilled workforce in a competitive business environment.
Additionally, a solid human resources department ensures effective on-site training, recruiting and performance management. To demonstrate internal responsibility, the IOC Ethics Commission routinely revises its code of ethics to ensure it best reflects the needs of all staff and patrons.
Finance
Contrary to popular belief, the Olympics are not a non-profit. They generate 91% of their income from selling broadcasting rights to companies like E! and NBC. They also obtain substantial income from sponsorships. The Olympics has 15 top sponsors, including brands like Coca-Cola and Airbnb. These brands also stand to profit from the Olympics, whether buying an onsite Coke or renting an Airbnb apartment in Paris.
In 2024, the Olympics is predicted to profit $12.2B, rivaling 2032’s $13.4B. While profits have been on a staggering increase, medalist’s awards have not. In the US, each gold medalist receives $37,500. This number might seem sizable. However, it pales in comparison to Singapore’s $753,000 prize. While this number has increased since 2014, many speculate about the effect it could have on American participation in the future, considering the extensive cost of travel and training in recent years.
It’s undeniable that the Olympics put a strain on the city they’re hosted in. Between local displacement and infrastructure issues, the financial burden is increasing for each chosen city. However, the home of the Olympics also amasses a significant boost in tourism and increased international visibility, boosting their economic growth in the short term.
Hospitality and Tourism
As mentioned, the hosting country is privileged to a considerable amount of local tourism. In 2020, Tokyo reached a broadcast audience of nearly 3 billion people, with more than 90% of those viewers being from other countries. Additionally, there's a surge in demand for accommodations like hotels, restaurants and travel agencies, helping to boost local business. This can have a lasting impact on the city's reputation as a tourist destination.
While the games are a serious and honorable competition for athletes, entertainment aspects come into play. This encompasses opening and closing ceremonies and a wide range of cultural performances spanning multiple days. These aim to engage spectators and honor the heritage and culture behind the Olympics.
Marketing
Recently, the Olympics have gained a large following on media platforms such as Instagram and TikTok. Not only does their official page post, but athletes like Evy Leibfarth have been creating user-generated content, boosting the game's social media presence, and creating amplified word-of-mouth marketing. This content helps to create buzz and garner a sense of community surrounding the Olympics, encouraging more people to tune in - whether from miles away or countries away.
The Olympics have also collaborated with well-known brands to create new Olympics-themed merchandise. You might have noticed medal-shaped Reese’s in your local grocery store or USA-themed crewnecks in Target. These partnerships help to fund the games, promote the Olympic brand, and create a more memorable experience for everyone involved.
In a billion-dollar industry, the Olympics skillfully navigates aspects of commerce, blending sports with business. Their multifaceted enterprise has and continues to influence economic growth and global media trends, changing the business landscape forever.
Read more about the business of the Olympics in this article.
