Do the Olympics make money?
Lionel Price, who played basketball for the British Olympic team at the 1948 London Olympics, carries the Olympic torch July 22, 2012, in London, England. / Shaun Botterill/Getty Images
(MoneyWatch) LONDON - As the 2012 Summer Olympics have kicked off, it's easy to imagine that all the activity, the pageantry, the swarms of purple-clad volunteers must be engaged in some highly profitable activity. Otherwise, why would so many people get sucked in?
Except the Olympics aren't a great money-spinner. Why?
Sponsors. Companies sponsoring the games don't make a ton of money because they tend to be large, well-known corporate brands, like Coca-Cola or McDonald's, that have bought into these gigantic deals for no other reason than to keep their chief competitors out. There's no question of raising brand-awareness; after all, these are the most familiar brands in the world. Given such companies' existing sales, even major public events aren't going to budge the needle and may not even cover the travel costs of all the executives who, of course, must be present for the games. So no big profits here.
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Product providers. The International Olympic Committee has stringent rules governing how many and what logos athletes can wear, so the competitors' bodies themselves can't be used as human billboards (as uniforms are, say, in professional soccer in Europe). The IoC is also determined to eradicate any attempts at so-called flash-mob advertising. So the chances of hugely increasing the sales of tennis rackets, swimming suits, or running shoes are pretty slim.
Athletes. Will the competitors themselves make much money? For most, there's a huge cost in taking part in the Olympics at all. Few have sponsorship or even government support. Athletes who win a gold medal in popular sports are more likely to make their careers, but the rest will gain little beyond memories.
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Tourism. Whether London or the U.K. will see a net increase in tourism as a result of the games remains to be seen. Certainly at Heathrow today there seemed to be more people leaving the country than arriving. The Queen's Jubilee and the younger royals have done what they can to attract visitors, but leaders of arts organizations, museums, theaters, and heritage sites are despondent about the huge disincentive to visit Britain at a time when congestion and queues are all that seem to be on offer to cultural visitors. Meanwhile, the Brits themselves don't want to hang around for the traffic jams.
Residents. Boris Johnson, the media-crazed mayor of London, has recently been spouting all kinds of nonsense about how important it is that people not stay home during the Olympics, but instead fight their way through traffic and transportation jams to get into work. He's fighting a lost and stupid cause. If anything can help the British economy, it will be the productivity boost generated when executives decide to work from home. Maybe a morale boost too.
Ad agencies. This is a tricky one. London currently is festooned with sports-themed ads, making it clear that every company on earth had the stunningly original idea of doing ads around winning, performance, achievement. Most of the people I know in advertising have booked their full-year's revenue by now. So they're happy. What does the rest of the year look like? They don't care.
Ad agencies aside, I've managed to find no reputable research indicating that the Olympics makes money for anyone. That doesn't mean the games are bad. The Olympics are, after all, supposed to represent the virtues of amateur competition (even as the games themselves are dominated by pros of on stripe or another). Still, maybe what they are good for is to remind us that there are others things that matter in life beyond making money.
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of east London.
Long-term regeneration of east London at the heart of plans
75p in every £1.5 spent by the Olympic Delivery Authority (ODA) is being invested in the long-term regeneration of east London.
Speaking at a Foundation for Science and Technology debate on what will happen to the area after the Games, ODA Chairman John Armitt explained that the ODA is working closely with the London Development Agency (LDA) to create a Park that benefits local communities after 2012.
John also confirmed that good progress is being made to clean and clear a previously neglected and contaminated area to create the largest new urban park in Europe for 150 years.
Work has started on building over 30 new permanent bridges and 20km of roads. Transport links will also be improved to create one of the best-connected areas of the capital.
Two new Energy Centres will be at the heart of a new utilities network being installed in the Park, providing sustainable heating and cooling both during the Games and to local communities after the Games.
The London 2012 project is also providing training, employment and career development to local and previously unemployed people, as well as providing opportunities for local businesses.
John added: 'The investment in the regeneration of this area is not coming just from the public sector. London 2012 is also acting as a catalyst for significant private sector investment and last week Westfield announced the green light on the £1.5 billion Stratford City retail-led development adjacent to the Olympic Park.
- taken from London Olympics press release.
The impact when an Olympics finds a sponsor home is greater than simply the immediate dollars which often is a loss, but the community redevelopment, which economic impact for the local job market, the sustainability of the environment (more mindful in recent years with the exceptions of the debacles at Beijing) and the social impact are enduring results of Olympics and generally world events.
The other missing link is the impact on all the countries that send teams and the impact on their development,both short and long term.
The Olympics has been a world gathering that had a world impact that sometimes superseded the politics of the times - don't you find it amazing that countries in the middle of civil and national wars would come to London and be in the glare of the world view...what are the real ramifications of the courage to compete and its effect on those who are in their home countries. Does this provide a thoughtful moment to breath and consider...truly the whole world is watching.
so bottom line is that beyond measuring the "profit/loss" quotient it might be to consider the bigger story.
/thenewnormalinanutshell
You've missed the two biggest moneymakers for cities who host - you need to go deeper.
1) Corporate Entertainment/Deep Backstage
There are hundreds and hundreds of Key VIPs being entertained backstage at the Olympics, and if you don't have a specific credential to get back there, you won' see it. Sponsors, goverment heads of state and major finacial players are getting to know each other, which will likely result in investment and business deals. That's the best reason to become a high level Olympic sponsor.
2) Long-term Tourism Image and Infrstructure Building
Host Cities host the Olympics primarily as a catalyst and mother-of-all deadlines for infrstucture projects that require civic willpower. Need to get a new airport (Beijing) waterfront (Barcelona), transit lines (Athens, Mexico City) or urban renewal (London, Sydney, Atlanta) built? The Olympics speed the process, and those improvements lead to long term investment.