The doping scandals of recent years, the unjustified high cost and the inflexible policy of the IOC have turned the Western world away from the desire to host the Olympics. Since 2013, six European countries have successively (often as a result of referendums) withdrawn from the fight for the right to host the 2022 and 2026 Games. The pandemic has finally shown that if the IOC does not carry out urgent reforms, the Olympic movement may suffer irreversible consequences.
The Tokyo Games have become the most undesirable in modern history: in Japan, more than 80% of the country’s population supported their cancellation or rescheduling, while in another 28 countries where the analytical company Ipsos conducted a survey, 57% were against. This is a record low interest in the Olympic Games since the revival of the Olympic movement.
Despite public opposition, the Japanese authorities decided to hold the Olympics, not least because of pressure from the IOC, investors, and the threat of large fines for disrupting the Games.
Previously, the IOC had great difficulty “placing” the 2022 Winter Games: after Poland, Sweden, Germany, Switzerland and Norway withdrew their applications, they had to choose between the two remaining candidates – Almaty and Beijing. Then Switzerland and Austria withdrew their candidacies to host the 2026 Winter Olympics.
“The delayed, indirect, economic effect is very important in the Olympic Games. This means that the place where the Olympics are held becomes more popular for holding further events, including political ones. The economic potential of the capitals of the Winter Games is usually less. The popularity of winter sports is also limited; they do not have such a large audience in Africa or South America,” the expert explains.
Sports spectacles are still the most popular on the planet, but arguments are increasingly being made that the Olympics are unjustifiably expensive, their legacy is overvalued, and sporting achievements are no longer a component of prestige on the international stage.
Can what is happening be considered a wake-up call for the IOC and the Olympic movement and how can the situation be saved?
Huge costs and a dubious legacy
According to official data, Japan spent more than $15 billion from the treasury on the 2020 Games, not counting contributions from private investors. In total, according to the Wall Street Journal, citing the Japanese College of Auditors, the costs of the Tokyo Games exceeded $25 billion with an initially announced budget of $7.4 billion.
This is the most expensive Summer Olympics in the history of the modern Games. The year-long postponement only added $2.8 billion to the cost, so the pandemic’s intervention cannot be considered the main reason for the cost overrun.
The most expensive Olympics in history were the 2014 Winter Games in Sochi – 40-50 billion dollars (according to various sources).
Since 1960, no Olympics have managed to stay within their original budgets. In 2016, Oxford University analyzed Olympic spending statistics in different countries, and here are just some of the data:
- Montreal 1976 – 720% over budget (it took the city 30 years to pay off its debts)
- Barcelona 1992 – 266%
- Lake Placid 1980 – 324%
- Rio 2016 – 352%
- Sochi-2014 – 289%
The 2004 Summer Olympics in Athens largely provoked the economic crisis that began in Greece three years later.
Against this backdrop, the 76% overspending of the 2012 London Olympics seems like a minor error.
“Unfortunately, the legacy of the Olympic Games is increasingly one of debt and a plethora of abandoned sites. This is the case, for example, in Sarajevo, Athens and even in Beijing and Rio, although these cities hosted the Games relatively recently. Dilapidated stadiums and abandoned Olympic villages are becoming symbols of financial failure,” says journalist Niall McCarthy, who studies the topic of expenses in big-time sports.
Digital times – new audiences
In the United States, fewer than 17 million people watched the Tokyo Olympic opening ceremony on television, down 36 percent from the 2016 Rio opening and the smallest audience for such ceremonies in 33 years.
And while the situation may be different in other countries, the American media services market, with its largest television channels in the world, is usually taken as a basis for assessing changes in audience habits.
Recent observations have shown that the audience of streaming digital platforms has grown by more than 70% compared to the broadcast of the opening of the Olympics in Rio and in Pyeongchang, South Korea in 2018. At the same time, interest in live broadcasts is rapidly falling.
Usually the highest-rated television broadcast of the year on American television, the Super Bowl (the final game of the National Football League) in February attracted a record low audience since 2006. The same thing happened with the Oscars, Emmys and Grammys.
“Nowadays, no one will plan their life around a live broadcast of something when they can watch it on record. 68% won’t even watch the recording, but will simply find out the results of the missed event in a couple of seconds. 83% of people in the 18-32 age group are not interested in the process at all, only the result. The exceptions are Formula 1 races, the Super Bowl and royal weddings,” says digital content expert Yuval Mladov.
“Advertisers just need to draw the right conclusions. They need to regroup their advertising flows in favor of social networks and digital platforms. In this sense, a reorientation is currently taking place,” comments Andrey Mikhailichenko.
Technology has advanced at a breakneck pace since Apple launched the first smartphone with direct internet access in 2007, but it wasn’t until 2019 that the IOC created a Chief Digital Engagement Officer position, bringing in veteran marketer and communications specialist Christopher Carroll.
For the Tokyo Olympics, his team developed a couple of apps and launched a virtual fan zone where fans from all over the world can chat and take part in quizzes on their knowledge of the history of the Olympic Games.
“How the IOC manages to retain its partners and sponsors despite being so behind the times is a mystery,” says Jans Mons.
What’s next?
Recent polls have shown that 62% of respondents across countries still see the Olympics as an exciting and unifying event.
In general, experts also believe that the Olympic movement is not threatened with an imminent end, but Generation Z will demand radical reforms from it – from technology to the role of the individual and the distribution of roles. The previous complete subordination of countries to the rules and requirements of the IOC will have to give way to a flexible dialogue between the parties.
According to sports marketing specialist Andrey Mikhailichenko, the structure also needs to reform the scheme for attracting financial flows.
“The IOC has an entrenched, conservative system of general sponsorship. But it is high time for it to pay attention to a scattering of small investors, rather than concentrating on a dozen super-mega-investors. Small investors are interchangeable, and not as much depends on each of them individually as on Coca-Cola or Alibaba,” the expert believes.
