As the 2018 Winter Olympic Games transcends upon us, it is an interesting time to research the Olympics business model and gain an understanding of their past successes and cloudy future
When Budapest, a frontrunner to host the 2024 Summer Olympic Games dropped out of the running, an unofficial signal was shown to the Olympic Committee that changes need to be made for the current Olympics business model. The reason being, “to avoid a loss of international prestige” as said by parliament leader, Lajos Kosa. On top of this, the 2022 Olympic Winter Games bids came down to two prospective bidders. Almaty, Kazakhstan and Beijing, China. This was due to a fair amount of potential cities failing to compete for an Olympic bid. Events like this make the rest of the world wonder, what is happening to the prestige of the Olympics?
Past Olympic sites have shown difficulty maintaining their multimillion dollar facilities and rarely generate enough revenue from tourists after the games are over. The Harvard Business Review states that the logistical, security, and financial pressures while hosting a mega-event aren’t worth whatever (if any) economic benefits the games might bring. With this being said, there is a surplus of companies willing to sponsor or broadcast the Olympics, but a lack of cities and countries willing to host the Olympics. NBC Universal shelled out $7.75 Billion for the rights to broadcast the games from 2022-2032.
The first modern Olympic games were held in 1896 in Athens and were led by a man named Pierre de Coubertin. After building the infrastructure for the events, the King of Greece asked Coubertin to hold the events in Athens every four years. However, Coubertin was committed to a rotational business model in order to allow individuals around the globe to experience the games in person. Coubertin visioned cities around the world to compete for the right to host the games in order to prove that they too could host such a large-scale international event.
The unknown question that exists today is what actions can the Olympic Committee take in order to have successful Olympic games. In the past, there have been stories of successful cities. When Los Angeles hosted the games in 1984, they created a profit of $215 million for the city by cutting costs and reducing the number of taxpayer dollars spent. With this being said, the most recent Olympics in Rio have appeared to be a financial disaster and many of the $12 Billion worth of modern facilities have deteriorated. In the future, it appears as if Thomas Bach, the president of the International Olympic Committee will have to make revolutionary decisions on the future of these international events.