michael phelps with gold medalEvery 4 years the media tells us which Summer Olympics athlete we should fall in love with.  This year, as in 2004, we are to fall in love with Michael Phelps.  This is fine by me, as I was a swimmer myself at one point.  In high school I was a Varsity swimmer, and was even captain me senior year.  While I never won any big races (except in summer league) I wasn’t bad either.  Because of my past I always watch swimming with a greater enthusiasm than the typical viewer.  Every flip turn and touch finish excites me just a bit more than others.  I’m also one of the few that can watch a race that lasts 10 minutes without getting bored.  I swam distance myself.

But of course what fascinated me most about the Olympics in 2004 is not my top interest in 2008.  These days I’m all about the money.  So with this year’s games in full swing, I wondered, “Who pays for all of this?”  I couldn’t seem to find any one source that explain the funding for the games, so I had to do research.  Ugh.  At least you won’t have to.  Here’s what I found:

Starting from the top, we have the International Olympic Committee (IOC).  They organize the games, set up the distribution of tickets, and most importantly take bids on where it will be hosted.  Once that’s known television networks around the world start the bidding for rights to distribute.  This is the primary source of revenue for the IOC.  NBC has been involved with distribution in the US longer than I’ve been alive, and they pay big bucks for it.  I couldn’t find figures for 2008, but they’re paying $2.2 billion for distribution in the winter games of 2010 in Vancouver, Canada and summer of 2012 in London.

Of course NBC expects to make their money back.  Advertising is everywhere for the Olympics, and you’d better believe they make their money back every time.  The only exception was in 1980 when Jimmy Carter pulled the American team and NBC had to cancel a lot of broadcast coverage.

birds nest stadium chinaAnd what about that fancy stadium in China appropriately called “The Bird’s Nest” ?   Along with the many other structures put up for the Olympics, the Chinese government hired contractors to build them.  The government expects to make money back on their investment, just a bit more indirectly.  Think of all the money that will flow into their economy by international travelers.  They built a new airport just for the games.  All that cash will boost up the Chinese economy, and its also their chance to show off the finer aspects of the country.  I love all the overhead shots they’ve shown of the country and want to go there now, so its working.

Alright, we know how those buildings are up and how the Olympic Committee is funded, but how do we get all those athletes to China?  Well what’s in a sponsor?  Visa, Home Depot, Coke, AT&T, and Bank of America are just a few of many corporate sponsors.  Not only do they contribute money to the US Olympic Committee to pay for things like food and plane tickets, companies like Speedo and Nike make their best products available to the athletes.  Since the US Olympic Committee is also non-profit, they gladly accept donations from the populous.  Its probably a good feeling to help some of the smaller programs like Ping-Pong or synchronized swimming get to the games.  The IOC will also contribute funds to the respected country-based Olympic Committees.  This is great because it really increases the international presence of the games.  Many countries are too poor to send their athletes to the games, and so the contributions from NBC and other networks for broadcast rights go a long way to giving other countries their fair shots.

In conclusion we all pay for the Olympics.  Whether its directly by donations or indirectly by buying the products advertisers paid NBC to show during the games, who paid the IOC billions for television rights we contribute the funds that make it all possible.  As someone who really enjoys the Olympics but didn’t know about donations, I will certainly donate a few bucks to all the future games.  Until then, its back to watching the US do what they still do best, DOMINATE!

categories: business, economics, government, investing, Uncategorized