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									Economic dimension of the Olympic Games
University lecture on the Olympics

Holger Preuss




                     Holger Preuss is Assistant Professor at the German Sport University Cologne
                     preuss@coubertin.de




The contents of this document cannot be reproduced, neither in whole nor in part, without the written consent of the Centre d’Estudis
Olímpics (UAB).

This text has been published as part of the educational project of the Centre d’Estudis Olímpics (UAB), University lectures on the
Olympics, aiming to provide open access through its web site to material aimed at university students and professors about major
Olympic-related themes, written by experts on the field. Web site: http://olympicstudies.uab.es/lectures/



 of the content      2002 Holger Preuss
 of the edition      2002 Centre d’Estudis Olímpics (UAB)
                           International Chair in Olympism (IOC-UAB)
                                                                        Holger Preuss – Economic dimension of the Olympic Games




To refer to this document, you can use the following reference:
Preuss, Holger (2002): 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://olympicstudies.uab.es/lectures/web/pdf/preuss.pdf>

[Date of publication: 2002]




 2002 Centre d’Estudis Olímpics (UAB)                                                                                               2
       International Chair in Olympism (IOC-UAB)
                                                                                 Holger Preuss – Economic dimension of the Olympic Games




Summary


1. Introduction                           .........................................................................................    5
2. The dimension of Olympic Games in comparison ..........................................................                             6
3. The dimension “Time”                   .........................................................................................    7
    3.1 The start and the end of economic impacts ............................................................                         7
    3.2 The development of revenues ................................................................................                   9
          3.2.1 Revenues from television rights ..................................................................                    10
           3.2.2 Revenues from marketing ...........................................................................                  11
           3.2.3 Revenues from ticketing ..............................................................................               12
           3.2.4 Revenues from “special financing means” ...................................................                          14
4. The dimension “Space”                  .........................................................................................   14
5. Conclusions                            .........................................................................................   15


Bibliographical references                .........................................................................................   16
Further reading                           .........................................................................................   18
Related web sites                         .........................................................................................   19




 2002 Centre d’Estudis Olímpics (UAB)                                                                                                     3
       International Chair in Olympism (IOC-UAB)
                                                   Holger Preuss – Economic dimension of the Olympic Games




 2002 Centre d’Estudis Olímpics (UAB)                                                                       4
       International Chair in Olympism (IOC-UAB)
                                                          Holger Preuss – Economic dimension of the Olympic Games




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 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.




 2002 Centre d’Estudis Olímpics (UAB)                                                                              5
       International Chair in Olympism (IOC-UAB)
                                                                  Holger Preuss – Economic dimension of the 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               in % of GDP              in % of government
                                 6 years prior Games         (6 years period)         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 $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.




 2002 Centre d’Estudis Olímpics (UAB)                                                                                      6
       International Chair in Olympism (IOC-UAB)
                                                                                   Holger Preuss – Economic dimension of the Olympic Games




                          Fig. 1 - Mega sport events in comparison to the Sydney 2000 Olympic Games


        Olympic Games 2000 -- Olympic Winter Games 1998                                  Olympic Games 2000 -- Commenwealth Games 2002



                                          Events                                                                      Events
                                       1000                                                                         1000

                                        750                                                                          750
    Licencing in US$ 100,000                             Athletes in 10             Licencing in US$ 100,000                        Athletes in 10
                                        500                                                                          500

                                        250                                                                          250

                                           0                                                                           0

  Ticket revenues in US$m                                    Tickets in 10,000    Ticket revenues in US$m                              Tickets in 10,000




                  TV-rights in US$m                Sponsor revenues in US$m                     TV-rights in US$m              Sponsor revenues in US$m




      Olympic Games 2000 -- Soccer World Championship 1998


                                          Events
                                       1 0 00

                                        7 50
    Licencing in US $ 1 00,0 00                          Athletes in 10
                                        5 00

                                        2 50

                                           0

  Ticket revenues in US $m                                  Tick ets in 1 0,000




                 TV-rights in U S$ m               Sp ons or revenues in US $m




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.




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).




 2002 Centre d’Estudis Olímpics (UAB)                                                                                                                     7
       International Chair in Olympism (IOC-UAB)
                                                                         Holger Preuss – Economic dimension of the Olympic Games




                                             Fig. 2 - Phases of economic impacts of Olympic Games

           n-11          n-9           n-7                                     n

                                                                                                                Time

                   I              II                     III                                     IV

         Idea to        NOC            IOC                                 Olympic
           bid         decision                                            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                      Situation                                                                               Impact
     n= Olympic Year                                                                                                   (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       Impact I
                               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).


     n-9                       NOC decision – IOC decision
                               The bid city has to prove that it can reach Olympic standards. Therefore, they          Impact II
                               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.


     n-7                       Winning the bid


     N                         IOC decision – Olympic Games                                                            Impact III
                               Construction of sport facilities and infrastructure as well as preparation for the
                               Games.

     n+?                       Olympic Games – ?                                                                       Impact IV
                               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.




 2002 Centre d’Estudis Olímpics (UAB)                                                                                              8
       International Chair in Olympism (IOC-UAB)
                                                                                         Holger Preuss – Economic dimension of the Olympic Games




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)
     Index (dA = 100)                                                                  Index (dA = 100)
70                                                                                70
         Beijing'08                                                                        Beijing'08
         Sydney'00                                                                60       Sydney'00
60
         Barcelona'92                                                                      Barcelona'92
50                                                                                50


40                                                                                40


30                                                                                30


20                                                                                20


10                                                                                10


 0                                                                                0
      n-7     n-6       n-5   n-4   n-3   n-2   n-1   n   n+1   n+2   n+3   n+4         n-7     n-6       n-5   n-4   n-3   n-2   n-1   n   n+1   n+2   n+3   n+4


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 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).




 2002 Centre d’Estudis Olímpics (UAB)                                                                                                                              9
       International Chair in Olympism (IOC-UAB)
                                                                                            Holger Preuss – Economic dimension of the Olympic Games




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

                             1200
                                             TOTAL                                                            1133
                                             USA
                             1000            Europe
                                             Remaining countries                                        884

                              800
                                                                                                  699                       2%

                              600
                                                                                                                            3.6%
                                                                                            458
                                                                                      419
                              400                                                                                            2%

                                                                                180                                         3.6%
                              200
                                                                 60       89
                                                  8        41
                                         6
                                0
                                     60

                                               64

                                                       68

                                                                72

                                                                      76

                                                                                80

                                                                                      84

                                                                                            88

                                                                                                  92

                                                                                                        96

                                                                                                              00


                                                                                                                        *

                                                                                                                                 *
                                                                                                                    04

                                                                                                                             08
                                    19

                                             19

                                                      19

                                                            19

                                                                     19

                                                                               19

                                                                                     19

                                                                                           19

                                                                                                 19

                                                                                                       19

                                                                                                             20

                                                                                                                   20

                                                                                                                            20
                       * inflation rates estimated; profit share from NBC and EBU not included
                       Source: Preuss (2002)


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



 2002 Centre d’Estudis Olímpics (UAB)                                                                                                            10
       International Chair in Olympism (IOC-UAB)
                                                                             Holger Preuss – Economic dimension of the Olympic Games




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.


                   Fig.6 - Revenues from TV rights from Squaw Valley 1960 to Salt Lake City 2002

                        1200
                                  TOTAL
                                  USA
                        1000      EBU
                                  Remaining countries
                         800


                                                                                                                  594
                         600
                                                                                                          469
                         400                                                      363             367
                                                                                          318

                         200                                               150
                                                                     38
                                               7.5     22     25
                                0.2    4.8
                           0
                                 60


                                        64


                                               68


                                                       72


                                                              76


                                                                     80


                                                                            84


                                                                                   88


                                                                                          92


                                                                                                  94


                                                                                                          98


                                                                                                                  02
                               19


                                      19


                                             19


                                                     19


                                                            19


                                                                   19


                                                                          19


                                                                                 19


                                                                                        19


                                                                                                19


                                                                                                        19


                                                                                                                20
                                 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).


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.




 2002 Centre d’Estudis Olímpics (UAB)                                                                                             11
       International Chair in Olympism (IOC-UAB)
                                                                                                                       Holger Preuss – Economic dimension of the Olympic Games




                                                                                                                           Fig.8 - OCOG revenues from sponsoring
Fig.7 -            Number of enterprises advertising with
                   Olympic Games (without licensees)
      Number of enterprises
800
                          742
                                                                                                                600
                                                                                                                                                                                                     588            588
                                                                                                                                                                                      550

600                                                                                                             500


                                                                                                                400

400
                                       325                                                                      300
                                                                                                                                                          219          215
                                                                                                                200
200
                                                   98                         107            119          104
                                                                80                                              100
                                                                                                                                           40
               0
  0
                                                                                                                            0
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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).


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.




 2002 Centre d’Estudis Olímpics (UAB)                                                                                                                                                                                    12
       International Chair in Olympism (IOC-UAB)
                                                                                           Holger Preuss – Economic dimension of the Olympic Games




                               Figure 9 - Total number of entrance tickets and share of tickets sold
                                                    from Munich 1972 to Beijing 2008

                         Tickets in million                                                                                                %
                    12                                                                                                                         100
                                                                              93%                       11
                                                     90%                                                             87%
                    10                                                                                      77%                      77% 80
                                                                 80%                          80%                               9
                                                                                                              8.5
                           66%               74%**
                     8                                          7.8                                                 7.6
                                                                                                                                       7       60
                                                                                                                          6.7
                                                    6.1
                     6
                                        5                 5.3         5.3
                                                                             4.7           4.8                                                 40
                          4.4
                     4                                                                            3.8
                                3.3          3.2                                    3.3

                                                                                                                                               20
                     2


                     0                                                                                                                         0
                           1972         1976         1980        1984         1988            1992*     1996*       2000*       2008***
                           Utilization rate of venues (%)                         Total of tickets            Tickets sold

                     *    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.


                         Fig.10 - Total ticket sales revenues from Munich 1972 to Beijing 2008
                                in million US$'95
                         500
                                                                                                                     468.35
                                                                                                        416.64
                         400



                         300

                                                            227.56
                         200
                                                                                                                                     166.4


                         100                                                                  91.7
                                      58.5     56.56
                                                                            42.61

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                                    2




                                                           6




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                         * 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).




 2002 Centre d’Estudis Olímpics (UAB)                                                                                                               13
       International Chair in Olympism (IOC-UAB)
                                                                                                                                                                                      Holger Preuss – Economic dimension of the Olympic Games




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.


                                                  Fig. 11 - OCOG revenue from selling Olympic coins, stamps and from the lottery
      in million US$'95                                                                                                  million US$95
800                                                                                                                 10                                                                                                                     in million US$'95
           735.5
                                                                           Olympic Coins                                       Olympic Stamps                                                                                        500
                                                                                                                                                                                                                                                       481.6                                  Olympic Lottery
                                                                                                                     8
                                                                                                                                                                                                                               7.8
600                                                                                                                                                                                         7.27                                     400


                                                                                                                     6
                                                                                                                                                                            5.19                                                     300
400
                                                                                                                     4
                                                                                                                                                                                                                                             203.5                                            195.4
                                                                                                                              3.42                                                                                                   200                                           183.6
                    260.25
                                         *               187.2                                                                                                                                                                                                                                                                        117
200                                  157.6                                                                           2
                                                                                                                                                                                                                                     100
                                                                                                                                                                OCOG did                           OCOG did OCOG did
                                                  52.5                       **
                                                                          56.3                                                                      6.2 million not share
                                                                                                   ***                                                                                             not share not share                                         Rubel   no                                    no      no
                                                                                       14.6     18.3          5.1                           ?        rubles'80 revenues                            revenues revenues                                           368 m lottery                               lottery lottery
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*        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 through staging Olympic Games. Technology and




 2002 Centre d’Estudis Olímpics (UAB)                                                                                                                                                                                                                                                                                           14
       International Chair in Olympism (IOC-UAB)
                                                            Holger Preuss – Economic dimension of the Olympic Games




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).


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.




 2002 Centre d’Estudis Olímpics (UAB)                                                                            15
       International Chair in Olympism (IOC-UAB)
                                                          Holger Preuss – Economic dimension of the Olympic Games




Bibliographical references

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

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.




 2002 Centre d’Estudis Olímpics (UAB)                                                                          16
       International Chair in Olympism (IOC-UAB)
                                                            Holger Preuss – Economic dimension of the Olympic Games




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.
                                                                                             th      th
Müller (red.), Coubertin and Olympism Questions for the Future. Report of the Congress 17 to 20
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.




 2002 Centre d’Estudis Olímpics (UAB)                                                                            17
       International Chair in Olympism (IOC-UAB)
                                                           Holger Preuss – Economic dimension of the Olympic Games




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.

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.



 2002 Centre d’Estudis Olímpics (UAB)                                                                           18
       International Chair in Olympism (IOC-UAB)
                                                         Holger Preuss – Economic dimension of the Olympic Games




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
http://www.gamesinfo.com.au/home.html

The Sydney 2000 Olympic Games broadcast
http://multimedia.olympic.org/pdf/en_report_249.pdf




 2002 Centre d’Estudis Olímpics (UAB)                                                                         19
       International Chair in Olympism (IOC-UAB)

								
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