The four-year Olympic cycle generates significant revenue for the International Olympic Committee (IOC) and the 28-member International Federations, with sponsors and broadcasters committing billions in rights and sponsorship fees for partnerships that are able to leverage the iconic five rings logo. The threat of the Olympics not going ahead in Tokyo has been hanging over the Games since the start of the pandemic, but without it the current sporting ecosystem could collapse, says GlobalData, a leading data and analytics company.
GlobalData’s recent report, ‘Analysing the Potential Commercial Impact of COVID-19 on the Tokyo 2020 Olympic Games’, reveals that in the cycle between 2017-2020 the IOC generated $1.6bn in revenue through its Olympic Partner programme (TOP) while broadcast revenues came in at $4.5bn. Domestic partners of Tokyo’s local organising committee have generated a further $3.3bn in revenue over the same period.
Conrad Wiacek, Head of Sport Analysis at GlobalData, comments: “The Olympic Games is the pinnacle of sporting achievement for many athletes, but the event is even more crucial in terms of supporting the International Federations whose sports make up the Games. For at least half of the 28 federations whose sports make up the Olympic programme, almost all of their funding will come from the Olympic cycle. Based on annual reports, some sports receive up to 95% of their funding from the Olympic Games with the likes of Gymnastics, Boxing and Modern Pentathlon all seeing a significant portion of their revenue coming post-Olympics.”
From a public health point of view, concerns about the hosting of a major event in Japan are valid, especially given the low rate of vaccinations in the country. Due to the restrictive nature of host city contracts, the IOC has the leverage to ensure the Games go ahead. Should the Games fail to take place, the pressure on the IOC to refund broadcast contracts and making restitution to sponsors would be immense, which in turn would mean that the 28 International Federations would see a financial hit. The IOC distributes 90% of revenue generated through an Olympic cycle to support athletes and promote world sport, highlighting how crucial the Olympic Games is to the future development of sports and athletes.
Wiacek continues: “For the likes of FIFA and World Rugby, this loss of revenue would be insignificant due to their other stronger revenue streams such as their respective World Cups. However, even for relatively financially secure sports such as Athletics and Cycling the financial hit could see their annual budgets impacted by up to 25%, which coming in the midst of a global pandemic that has already had a significant impact on revenues could be disastrous.”