Rio 2016: 16 things to know about the business of the Olympics

Budget overruns, ‘proud sponsors’, sportswear battles and other ‘stuff that matters’

 

1. The price tag may have broken Brazil, but it hasn’t broken records

The official cost of Rio 2016 is $4.1 billion (€3.7 billion), the organisers say. This is modest by recent standards and most of the $4.1 billion for the running of the games comes from private funds. The real problem for recession-afflicted Brazil, and the state of Rio de Janeiro in particular, is its $7.5 billion in “legacy spending”, which puts the full price tag closer to $12 billion. This outlay on Olympic infrastructure projects has intensified anger about deep social inequalities and prompted the state government of Rio to declare a financial emergency.

2. The cost of the Olympic Games always goes over budget

An independent estimate by the Oxford University business school places the cost of the games at $4.6 billion rather than $4.1 billion, or some 50 per cent over the original budget submitted by the bidders. The Oxford study confirmed that every Olympics going back to 1960 have cost more than was originally stated during the bidding process, with the lavish Sochi games overrunning by 289 per cent and London 2012 costing 76 per cent more. So the gold medal for back-of-an-envelope Olympic calculations has been fiercely contested over the decades.

3. Olympic ideals tend to clash with reality

When the International Olympic Committee (IOC) talks about “Olympic ideals”, or “Olympism”, it probably doesn’t have in its mind the image of a dismembered foot washing up near the volleyball venue on Rio’s Copacabana beach, and nor is it clear how the Brazilian riot police’s tear-gassing of protestors fits in. “The goal of the Olympic movement,” the IOC says, “is to contribute to building a peaceful and better world by educating youth through sport practised without discrimination of any kind and in the Olympic spirit, which requires mutual understanding with a spirit of friendship, solidarity and fair play.”

And definitely no drugs.

4. At the greatest show on Earth, some seats will be empty

On Wednesday, the women’s football teams of Sweden and South Africa kicked off the games to “scarcely more than a few hundred fans”, as the Press Association put it, in the 60,000-capacity Olympic Stadium. “Huge swathes of blue seats remained empty all around the deathly-quiet venue,” it reported. The same teams attracted a much bigger crowd during London 2012.

Organisers originally planned to sell 7.5 million tickets, but they have since pared back the sale to about 6.1 million and said earlier this week that 1.3 million remain unsold. On Thursday they said they would give away 240,000 free tickets to local children.

5. Rio’s opening ceremony will be a “cool party”

“Athens was classical, Beijing was grandiose, London was smart – ours is going to be cool,” says creative director Fernando Meirelles. It will also be cheap, with a budget estimated to be 12 times smaller than Danny Boyle’s ode to James Bond, Shakespeare and the NHS at the London 2012 opening ceremony and 20 times smaller than the Beijing extravaganza. Meirelles has said he felt bad at first when he had to “cut, cut, cut” the theatrics he had planned. “In the end I feel good that I am not spending money Brazil hasn’t got.”

6. There may be a taxi queue at the airport

“But it will be good for tourism,” is the usual reply to residents who object to hosting the Olympics on the grounds that their countries can barely afford to provide basic services to citizens. So what can Brazil expect? According to market researchers Euromonitor International, arrivals will increase 7 per cent this year to 6.3 million, despite public unrest and fears about the effect of the Zika virus. The charms of the Copacabana await. But because of “the challenges facing the country”, the bounce in tourist numbers won’t be as high as the 10.6 per cent increase in arrivals recorded after the 2014 football World Cup.

7. It’s not all glamour being an athlete

The Australian delegation initially refused to move into its designated tower block in the athletes’ village, as pictures emerged of broken tiles and exposed wires. The British team also reported “some maintenance difficulties”, but acknowledged this was not uncommon with new builds. Elsewhere, organisers are staying on board a docked cruise liner, which is worryingly being portrayed as the luxury option. Owners of accommodation on dry land, meanwhile, are set to clean up. According to Bloomberg studies, Rio is currently the seventh most expensive place in the world to stay in a hotel and the costliest city for renting an Airbnb.

8. It’s a festival of sponsors

The IOC operates a sponsorship pyramid, and at the top is what is known as TOP, The Olympic Partner programme, where the likes of Coca-Cola and McDonald’s pay chunky amounts for the use of designated Olympic images and trademarks in their marketing. Samsung, Visa, Panasonic and timekeepers Omega are also Olympic partners, as is the consumer goods giant P&G, aka the “Proud Sponsor of Mums” – or “Moms”, if you are in the United States. How much these corporate behemoths pay for their association depends on when they signed their deal with the IOC. Lately there has been a “repricing”, with the cost of a four-year sponsorship jumping from $100 million to a reported $200 million.

9. Sportswear brands are battling for their podium place

In the race for sportswear revenue, Nike is always the hot favourite, but Adidas has shown signs of shaking off its recent sluggishness, while the upstart American brand Under Armour looks dangerous. The latter this week unveiled a pair of custom-made 3D-printed shoes for un-retired swimmer Michael Phelps, the flag-bearer for the US Olympic team, in a sign that it is stepping up its marketing “buzz” for $300-a-pop, 3D-printed trainers. The fastest man in the world, Usain Bolt, is sponsored by the fourth-largest sportswear company, Puma, which would prefer it if he never retired, ever.

10. Olympic brand protection is taken very seriously

Remember the great “chip ban” of London 2012? This was where some 800 food retailers at Olympic venues were told they couldn’t serve chips – unless, weirdly, they were accompanied by fish – because of sponsorship commitments to official chip supplier McDonald’s.

In the lead-up to Rio, the US Olympic committee made headlines for telling companies that aren’t official sponsors that they could not use the #Rio2016 hashtag on Twitter. It’s part of a wider trend that has seen an upsurge in US companies submit applications for hashtag trademarks. Individuals, rather than businesses, can use whatever hashtags they like.

11. Brands love “medal moments”

Team Ireland’s sponsor Electric Ireland is running a campaign called “The Power Within”, which is designed to highlight the “innate mental strength” required to be an Olympic athlete. Medals are not required for the sponsorship to succeed, according to the company. “Our story for Rio, like our story for London, is very much the story of the athletes getting on to the plane. Everything after that is a bonus,” says head of marketing Lisa Browne.

Still, expect Irish Olympic “stories” that end in medals to be seized upon. RTÉ has sold special “Medal Moments” advertising spots – “bespoke congratulory messages” – to companies who fancy capitalising on spikes in national cheer.

12. Insomniacs’ joy could spell TV ratings disaster

Look, there’s no other way of saying this: the time difference between Rio and Ireland will not be kind. Many of the blue-chip events – “the stuff that matters”, as Rory McIlroy charmingly put it – are on in the middle of the night in this time zone. The men’s 100m final, for instance, is scheduled for 2.25am on Tuesday.

The Olympics are not as good for boosting TV ratings as the major football tournaments. That said, RTÉ did very well in 2012 out of Katie Taylor’s boxing gold, with 1.1 million watching the fight and 747,000 people watching the entire build-up, fight, post-bout analysis and medal ceremony.

13. Olympic TV sports rights are on the move

Eurosport owner Discovery Communications is the new holder of Olympic Games television rights from 2018 in most European countries and from 2022 in Britain and France, after a €1.3 billion rights grab. The games will still be on public-service broadcasters such as RTÉ and BBC, however, as a result of sublicensing deals. Hurrah.

Previously, the European Broadcasting Union (EBU) bought the rights directly from the IOC, and for Rio the rights are sublicensed from an agency called Sportfive International. Local broadcasting regulations and the IOC’s desire for the games to be watched by as many millions as possible means free-to-air broadcasters will always get their share of the action.

14. Potential white elephants can be slaughtered at birth

Architect Zaha Hadid, who died earlier this year, lived to see Japanese prime minister Shinzo Abe cancel the planned Olympic stadium for Tokyo 2020, which she designed. The oversized “intergalactic cycling helmet” of a stadium was abandoned last summer after years of criticism and a near doubling of the original budget. Arata Isozaki, architect of Barcelona’s Olympic stadium, described the project as a “monumental mistake” and “like a turtle waiting for Japan to sink so that it can swim away”. Hadid was not impressed.

15. It might be Budapest 2024

It has an Olympic ring to it, but it’s just one possibility, alongside Rome 2024, Paris 2024 or token non-European candidate Los Angeles 2024. Just one of the things going against Budapest becoming the first central European host city, however, is the fact that it has bid five times to host the games in the past. This time, its chase for glory is being spearheaded by despotic prime minister Viktor “friend of Trump” Orban.

The IOC won’t be making its announcement until September 2017, so there’s still plenty of time for one or more of the four candidates to think twice.

16. Not every city wants to host the Olympics

Hamburg was the fifth candidate city for the 2024 games, but it withdrew after a referendum in which 51.6 per cent of Hamburgers said “nein, danke” to the prospect. The city’s No campaign did have the clear advantage of being able to call itself “NOlympia”.

Boston was the original US candidate, but it backed out before the final shortlist was drawn up, after it became clear that its citizens were terribly against the idea of picking up the tab. “No benefit is so great that it is worth handing over the financial future of our city,” the mayor said – something to bear in mind next time someone mentions a Dublin Olympics.