May 11, 2008 / 12:20 AM / in 10 years

IOC eyes healthy profits from Beijing Games

ATHENS (Reuters) - From its dangerously empty coffers in the late 1970s to the multi-billion-dollar revenues from the Beijing 2008 Games, the International Olympic Committee (IOC) has managed a remarkable commercial transformation of its prime product, the Olympic Games.

<p>International Olympic Committee (IOC) President, Jacques Rogge, smiles as he answers a question at a news conference after the IOC Executive Board meeting in Beijing in this April 11, 2008 file photo. The IOC can expect record revenues for the four-year period 2005-2008 which includes the Turin 2006 Winter Olympics and August's Beijing Games. REUTERS/Jason Lee/Files</p>

With broadcasting revenues for the period 2005-2008 reaching about $2.5 billion and a top sponsorship program adding some $900 million, the IOC’s future certainly looks bright -- a far cry from the looming financial collapse of three decades ago.

The IOC is now a financially robust organization, having reinforced its position as a key player in the lucrative world of sport. It is run by professional managers as opposed to the amateurs with a love of sport who were in charge in the past.

Its financial overhaul in the 1980s, credited to then IOC chief Juan Antonio Samaranch, laid the foundations for its current growth that is expected to continue in the next Games.

IOC President Jacques Rogge told his organization in 2006 that the finances were so healthy the IOC could afford not to stage one edition of the Olympic Games, if forced by some external factor, and still have enough money to organize the Games eight years later.

“The financial prospects are very good,” he told a meeting in Seoul. “The financial future of the Olympic movement is secured.”

Total Olympic revenues for the most recent completed four-year period (2001-2004) exceeded $4 billion with 53 percent coming from broadcasters, 34 percent from sponsors, 11 from ticketing and 2 percent from licensing.

Some 92 percent of that amount was distributed to the IOC partners -- National Olympic Committees, international sports federations and Games organizing committees -- while 8 percent stayed with the IOC for operational and administrative costs.

SPONSORSHIP PROGRAMME

For the 2005-2008 period alone the IOC will receive about $2.5 billion from broadcasters, $866 million from its TOP sponsors’ program, a worldwide sponsorship program managed by the IOC, plus money from tickets and licensed programs.

An additional $1.0 billion will flow into the coffers of the Chinese organizers from their own local marketing contracts.

The IOC will pay out just over one billion dollars for half of the Beijing Games’ organizational budget, as it does with every host city.

Income from broadcasting and new media rights for the Vancouver 2010 Winter Games and London 2012 Olympics has already risen nearly 40 percent from the previous two-Games package of Beijing and Turin, and will be in excess of $3.0 billion. The IOC estimates this figure to reach about $3.3 billion.

It has said some 15 percent of that will come from new media including the internet and mobile phones.

Broadcasting was the most important factor in turning the tide for the IOC in the past decades. Television rights revenues for the 2004 Athens Olympics saw a five-fold increase from the Los Angeles 1984 Games that brought in $287 million.

New media, including the internet and mobile telephony, have opened up a new field of expanded lucrative financial deals.

LIVE BROADCASTS

Former IOC president Avery Brundage, a staunch supporter of amateurism in sport who ran the organization from 1952-72, could not have been more wrong when he said in 1956 that the IOC did not need television, coinciding with the first live broadcasts from the Cortina d‘Ampezzo Winter Games.

“We in the IOC have done well without TV for 60 years and will do so certainly for the next 60 years too,” he said.

Compared with the soccer World Cup, the Olympic Games are bigger in terms of finances.

For 2003-2006 FIFA posted revenues of just over $3 billion with 92 percent of revenues being event-related, mainly from the 2006 World Cup in Germany. Net four-year results stood at $774 million.

Television broadcasting rights for the 2006 World Cup were 1.6 billion and marketing rights income was 714 million, compared to the IOC’s 2.5 billion and 1.866 billion including Beijing’s local marketing deals.

From the one thousand guineas the BBC had to pay for the 1948 London Games broadcasting rights to the billions for August’s Beijing Games, the IOC can deservedly claim to have become the richest international sports organization.

Editing by Clare Fallon

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