How Do the Olympics Make Money? The Olympics Business Model, Explained | WSJ The Economics Of

Summary

The International Olympic Committee (IOC) generates billions from broadcasting and sponsorship rights, with the 2014 and 2016 games alone earning nearly $6 billion. Broadcast rights contribute about 75% of IOC's income, with NBC securing exclusive US rights for the Olympics through 2032 in a $7.75 billion deal. The Olympic Partner Program, initiated in 1985, offers exclusive marketing rights to top-tier sponsors like Coca-Cola and Alibaba, who collectively paid around $1 billion for the 2014 and 2016 Olympics. However, geopolitical tensions have led some sponsors to maintain a low profile during the Beijing Winter Games.

Takeaways

• 💰 The International Olympic Committee (IOC) generates billions in revenue from the sale of broadcast and sponsorship rights.
• 🏅 The IOC's income from the 2006 and 2008 games was about $4 billion, over $5 billion from 2010 and 2012, and almost $6 billion from the 2014 and 2016 games.
• 📺 Broadcast rights account for nearly 75% of the IOC's total income, with NBC entering into a $7.75 billion deal for exclusive broadcast rights in the US through 2032.
• 🌐 The Beijing Olympics was broadcast in over 220 countries, with China Media Group airing it in China, Discovery in Europe, and CBC in Canada.
• 🏙️ North American companies have paid more for broadcast rights than the rest of the world combined since 1997.
• 🔝 The Olympic Partner Program, launched in 1985, grants exclusive marketing rights to a select group of corporate sponsors, with 13 top-tier sponsors currently.
• 💼 Top-tier sponsors paid around $1 billion for the 2014 and 2016 Olympics, and they get to use the Olympic logo in their marketing.
• 📈 Sponsors often enter into multi-year deals spanning four or five Olympics, providing stability for the IOC's sponsorship income.
• 🏆 Several Olympics sponsors kept a low profile around the Winter Games in Beijing due to escalating US-China tensions.
• 📱 NBC is promoting its streaming service Peacock, especially as TV ratings for the Olympics decline, with the entirety of its Olympic broadcast available live on Peacock's premium tiers for the Beijing Games.

Q & A

How much did Intel contribute to bring the Tokyo 2020 Olympics to the world?

The script does not specify the exact amount Intel contributed. However, it mentions that brands like Intel pay hundreds of millions of dollars to be associated with the Olympics.

What is the primary source of revenue for the International Olympic Committee (IOC)?

The primary source of revenue for the IOC is the sale of broadcast and sponsorship rights.

How much revenue did the IOC generate from the 2014 and 2016 Olympic Games?

The IOC generated almost $6 billion from the 2014 and 2016 Olympic Games.

How much did NBC pay to secure exclusive broadcast rights in the US through 2032?

NBC entered into a $7.75 billion deal to secure exclusive broadcast rights in the US through 2032.

What percentage of the IOC's total income comes from the sale of broadcast rights?

The sale of broadcast rights makes up nearly 75% of the IOC's total income.

How many countries is the Beijing Olympics broadcast in?

The Beijing Olympics is being broadcast in more than 220 countries.

What is the significance of the Olympic Partner Program for sponsors?

The Olympic Partner Program grants exclusive marketing rights to a select group of corporate sponsors, allowing them to use the Olympic logo and associated branding.

How much did top-tier sponsors collectively pay for the 2014 and 2016 Olympics?

Top-tier sponsors collectively paid around $1 billion for the 2014 and 2016 Olympics.

Why are some Olympic sponsors keeping a low profile around the Winter Games in Beijing?

Some Olympic sponsors are keeping a low profile due to escalating tensions between the US and China, and the desire to balance their business in China with their reputation in the rest of the world.

What is the IOC's stance on political issues in the host country?

The IOC states that it recognizes and upholds human rights but takes no position on the political structure, social circumstances, or human rights standards in the host country, aiming to remain neutral on all global political issues.

How does NBC plan to promote its streaming service, Peacock, during the Olympics?

NBC is promoting its streaming service Peacock, especially as TV ratings for the Olympics are on a downward trend, by making the entirety of its Olympic broadcast available live on Peacock's premium tiers for the Beijing Games.