At the conclusion of each Olympics, there are views on the importance and relevance of the Games. Opinions are always wide ranging, from those praising the movement as a global humanitarian forum to others criticizing the Games because of its concerns about sustainability, the environment and human rights.
International Olympic Committee President Thomas Bach called the Tokyo Games “the most challenging Olympic journey” during his speech at the closing ceremony. The Games were postponed for a year, held during a pandemic emergency that has barred fans from the stands and there was reluctant support from the host country. And there are other challenges ahead for the Olympic movement.
Given all the problems facing the Olympic movement, what is the relevance of the modern Olympic Games from a consumer, marketing, media and economic point of view?
Olympic viewership has dropped significantly this year, with some estimates approaching a 50 percent drop from the 2016 Rio Games — including by major television partner NBC Universal, which has decided to expand its US broadcast rights for the Olympics. paid over US$7 billion for through 2032.
Despite parallel streaming arrangements with all major Olympic Network partners, viewers in North America and Europe were largely fragmented, if not disappointed, several time zones away while major events were going live. Canada’s rights holder for the Games, CBC, said it had a record number of views through its digital platform after initial reports of declining ratings on traditional broadcast channels.
What is more troubling for the International Olympic Committee is growing evidence of a general decline in interest in the Olympics from young people, including Generation Z.
Support from major sponsors is also dwindling. Toyota announced on the eve of the Games that it would not broadcast any Olympic-themed TV commercials in Japan, even though it signed a US$1 billion sponsorship in 2015. Other sponsors are reducing their Olympic commitments, raising questions about its perceived value. Huge partnership deals.
The Olympic Games are a huge social and financial undertaking. It is estimated that the Tokyo Games will cost more than US$20 billion.
While cities once competed fiercely for the right to host the Olympics, the enormous costs, coupled with a dwindling public sentiment, have few countries prepared to take on the multi-billion dollar commitment. Case in point: When Brisbane, Australia, was recently announced as the host of the 2032 Olympics, there were no other rival bids.
The economics and expenses of the Olympic Games have generally been well supported by highly structured means of revenue, led by significant broadcast contracts, followed by the Olympic Partners (TOP) program which led to the highly successful 1984 Los Angeles Games. was established after the Olympics. Play. A small group of international partners in the TOP program pay approximately US$200 million per four-year cycle to become Olympic partners, including multinationals such as Coca-Cola, Dow and General Electric.
The main benefits from both media and marketing partnerships ultimately depend on the interest and consumption of the Olympics.
Corporate and media investments are based on the premise that consumers around the world are engaged with the Games (and major corporate partners are seeing the message), that major corporate partners want to be affiliated with the Olympics and that they represent everyone, and that that hundreds of thousands of tickets will be sold to those who wish to take part in the competitions.
Given the recent lack of interest in the Olympics and global awareness, the revenue model of this traditional sport will face considerable challenges going forward.
It was recently reported that Olympic advertisers are negotiating with NBC again, with less than promised viewing numbers. The US broadcaster expected to generate over US$1 billion in advertising sales during these games. Similarly, sponsors have sought good provision from broadcasters and sports stakeholders to safeguard their expenses.
What now for the economic model of the Olympics?
Given the changing consumer, corporate and geopolitical sentiments, the current model of the Olympic Games is out of date. As Pulitzer Prize winning journalist John Branch recently wrote new York Times: “In some ways – in many ways, critics argue – the Olympics are stuck in time, a 19th-century creation floating in a 21st-century world.”
The Olympic movement, which has been called “the most complex sporting event in the world”, will have to dramatically rethink its current strategy and economic model to remain relevant to its partners and fans.