Olympics, Inc: Inside The Secretive, $6 Billion World Of The International Olympic Committee

[image url="http://static.businessinsider.com/image/4b7424cc0000000000ce7337/image.jpg" link="http://www.businessinsider.com.au/olympics-inc-inside-the-business-of-the-ioc/technically-the-ioc-is-an-organisation-that-promotes-olympism-1" caption="" source="" alt="IOC rogge" align="left" size="xlarge" nocrop="true" clear="true"]

Hundreds of thousands of people have descended on Vancouver for the 2010 Winter Olympics. Three billion are projected to follow on TV and 75 million more on vancouver2010.com.

And people around the world are learning to love obscure sports like curling and biathlon for a couple of weeks.

But before you get too caught up in the sports, remember that the Olympics have little to do with sports.  They’re mostly about money.

In the United States, NBC demonstrates this every day — ruining the Olympics for millions of sports fans by tape-delaying events so it can show a highlight reel during prime time.  (To their credit, other countries don’t do this: Our readers remind us every day how great the coverage is in Canada).

But NBC is just a small part of the global industry known as Olympics, Inc.

In the last four years (2005-2008), the International Olympic Committee (the owners and controllers of “Olympics, Inc.”) generated nearly $6 billion of revenue. For the next cycle, revenues are on track to be significantly higher, with Vancouver already doubling Turin for domestic sponsorship.

It’s enough to make you look twice at the IOC, which is based conveniently in tax-haven Switzerland.

Although the IOC is a non-profit organisation, employment (“membership”) in the organisation is a cushy job with many benefits. 

Where does all that money come from and go? Is anyone making a profit? And who put the IOC in charge anyway?

We bring you the answers here.

See the secret $6 billion world of the IOC >

[slideshow]
[slide
permalink=”technically-the-international-olympic-committee-is-an-organization-that-promotes-olympism-it-makes-more-than-1-billion-a-year-doing-it-1″
title=”Technically, the International Olympic Committee is an organisation that “promotes Olympism.” It makes more than $1 billion a year doing it.”
content=”It’s true that the Olympics began in ancient Greece, but the games as we know them have only been around for a little more than a century. The International Olympic Committee was created in 1894 by Pierre de Coubertin and the first modern Olympic Games were held in Athens in the summer of 1896.

The Winter Olympics took a few more years to take off. organisers added skating to the Summer Games in 1908 but eventually decided that winter sports should be separate, according to the Vancouver organising Committee.

The first Olympic Winter Games were held in 1924 in Chamonix, France. In that first Olympic Winter Games, 16 nations participated, bringing 258 athletes (11 women, 247 men) to compete in 16 events. By comparison, during the 2010 Vancouver games, approximately 2,500 athletes will compete in 15 sports and more than 86 medal events.

Behind all the modern games is the IOC. Based in Lausanne, Switzerland, the non-profit’s mission is to ‘promote Olympism throughout the world and to lead the Olympic Movement.'”
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[slide
permalink=”ioc-headquarters-the-fabulously-rich-count-rogge-counts-the-money-and-writes-the-checks-2″
title=”IOC Headquarters: The fabulously rich Count Rogge counts the money and writes the checks”
content=”Behind all the games is the powerful International Olympic Committee.

recognised as supreme authority of the Olympic Movement, the IOC convenes once a year to elect members and host cities.

Some members play a more active role than others, working year-round to negotiate broadcast contracts and international sponsorship. They also oversee and fund subsidiary organisations, like the local organising Committees of the Olympic Games (OCOG). In addition to committee members, the group employs nearly 1,000 at the headquarters in Lausanne, according to PlayTheGame.org.

The IOC enjoys many benefits of being located in Switzerland, including non-disclosure of financial transactions and significant tax exemption for non-profits. So we can’t tell you how much IOC members and employees pay themselves to promote Olympism.

Still, the IOC’s revenue gives a sense of just how much money is involved.

Income (2005-2008)

  • $3.44 billion from broadcast and international sponsorship.
  • $2.01 billion from OCOG for domestic sponsorship, licensing, and ticketing.

Expenditure:

  • 90% funds subsidiary organisations.
  • 10% covers operational costs. (That’s about $600 million for the four years, or $125 million a year. )

Photo: IOC President Jacques Rogge

Source: The IOC

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[slide
permalink=”want-to-join-the-ioc-and-get-free-tickets-to-all-the-events-sorry-youre-just-not-membership-material-3″
title=”Want to join the IOC and get free tickets to all the events? Sorry, you’re just not membership material”
content=”The 115-member IOC ‘membership’ is composed of royalty, Olympic athletes, and organizational leaders. Most of them are wealthy, including many corporate executives.

President Jacques Rogge is a former chairman of the Belgium Olympic Council, an Olympic sailor, and an honorary count.

The elite club perpetuates itself through internal control of membership. Old members nominate and elect new members to eight-year terms, which are typically renewed for life. The presidency and other executive positions are also elected by the IOC.

Royal ‘members’ include:

  • Frederick, Crown Prince of Denmark
  • Prince Nawaf of Saudi Arabia
  • Princess Tamim of Qatar

Corporate executives include:

  • Richard Carrion, CEO of Popular Inc.
  • John Coates, director of Grosvenor Group Limited
  • Gerhard Heiberg, former CEO of Norcem

Source: The IOC

Photo: Crown of Denmark from Wikimedia Commons

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permalink=”not-much-pay-but-ioc-membership-has-many-perks-4″
title=”Not much pay, but IOC membership has many perks”
content=”Although not paid more than a stipend, IOC members get the royal treatment, especially when cities are trying to be picked as a host site. (And they don’t need the money anyway).

Members have been controversially allowed to accept first-class plane tickets, accommodation in five-star hotels, and lavish dinners from bidding cities, according to TIME.

As we recently noted, Salt Lake City officials bribed Olympic officials to win its 2002 bid. They spent millions on gifts, trips, scholarships, and plastic surgery for IOC members, and even gave family members jobs. The bribery was uncovered in 1998, and the two heads of the SLOC, as well as several members of the IOC, resigned.

IOC members still continue to demand benefits from their own organisation with minimal accounting. According the CBC, un-salaried Count Rogge requested accommodation in Vancouver at a five-star hotel room equipped with floor-to-ceiling TV sets with video feeds ‘enabling simultaneous viewing of all events of the game.’

(So there’s a perk for you: He doesn’t have to deal with NBC’s infuriating tape-delay.)

Source: The IOC

Photo: Rogge attends a 2007 countdown-to-the-Olympics celebration in China.
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[slide
permalink=”ioc-subsidiary-1-the-national-olympic-committees-that-build-the-teams-in-each-country-5″
title=”IOC Subsidiary #1: The National Olympic Committees that build the teams in each country”
content=”Most of the big money raised by the International Olympic Committee flows down from the IOC to various subsidiaries in each country.

First, there are 205 National Olympic Committees (NOCs) in each country, which train and recruit the teams that compete in the Olympics.

The NOCs nurture athletes from a young age through the main event. In countries that lack sophisticated sports programs, building a team costs extra money, which the IOC provides.

The US Olympic Council also gets extra money because of their standout market value with regards to TV and sponsorship.

International Olympic Committee support to National Olympic Committees (2005-2008): $370 million (not counting US and host countries). The IOC also provides travel and accommodation for Olympic teams.

Photo: USOC Chairman Larry Probst.

Source: The IOC
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[slide
permalink=”ioc-subsidiary-2-international-federations-that-preside-over-the-sports-6″
title=”IOC Subsidiary #2: International Federations that preside over the sports”
content=”Next are International Federations.

IFs organise international rules and tournaments for sports. The IOC provides financial support to 28 IFs for summer sports and 7 IFs for winter sports. For many, like the World Curling Association, this constitutes the majority of their revenue. Only a few, such as FIFA, could survive without the IOC.

IOC support (2005-2008): $0.42 billion

IFs for winter:

  • International Biathlon Union
  • Fédération Internationale de Bobsleigh et de Tobogganing
  • World Curling Federation
  • International Ice Hockey Federation
  • International Skating Union
  • Fédération Internationale de Luge de Course
  • Fédération Internationale de Ski

Photo: Juan-Antonio Samaranch, former IOC President, Rene Fasel, centre, President of IIHF and Joseph Blatter, President of FIFA, right, pose in front of the new sculpture unveiled on occasion of the 100th anniversary of the International Ice Hockey Federation IIHF, Wednesday Feb. 6, 2008, in Zurich, Switzerland.

Source: The IOC
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[slide
permalink=”ioc-subsidiary-3-local-organizing-committees-for-the-olympic-games-ocogs-run-the-big-show-7″
title=”IOC Subsidiary #3: Local organising Committees For The Olympic Games (OCOGs) run the big show”
content=”In the host country, an Organizational Committee for the Olympic Games (OCOG) takes the lead in everything from construction planning to ceremony design, coordinating resources from local government and the IOC.

OCOGs also generate their own revenue through domestic sponsorship, ticketing, and licensing (under the oversight of the IOC).

The Vancouver committee includes 20 members, nominated by the Canadian Olympic Council, the City of Vancouver, the Government of Canada, and others.

IOC support (2005-2008): $700 million

OCOG revenue (2005-2008): $2.01 billion

Photo: Members of the Torino 2006 organising committee.

Source: The IOC
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[slide
permalink=”revenue-1-the-broadcast-bidding-war-8″
title=”Revenue #1: The Broadcast Bidding War”
content=”The biggest revenue source for Olympics, Inc. are broadcast licensing contracts, which the IOC negotiates directly. TV contracts have increased every four years, and are subject to fierce bidding wars in some markets — like the U.S.

Summer Olympics generate nearly double the revenue of the Winter Olympics. However, the IOC contracts networks to cover both.

IOC revenue from broadcast deals (2005-2008): $2.57 billion

Select contracts (2010-2012):

  • NBC is paying $2 billion for the US broadcasting rights.
  • EBU is paying $768 million for Europe broadcasting rights.
  • Sky Italia is paying $154 million for Italy.
  • CTV is paying $153 million for Canada.
  • Nine is paying $112 million for Australia.
  • CCTV is paying $99 million for China.

Photo: NBC CEO Jeff Zucker

Source: The IOC
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[slide
permalink=”revenue-2-a-prestige-event-for-international-sponsors-9″
title=”Revenue #2: A prestige event for international sponsors”
content=”Companies like Coke and McDonald’s have developed permanent associations with the Olympics — by paying through the nose to become ‘Worldwide Partners.’

They hope it pays off, because Worldwide Partner status does not come cheap.

These hefty contracts are negotiated directly by the IOC.

Revenue from global sponsorships (2005-2008): $870 million

Worldwide Partners:

  • Coca-Cola
  • Acer (new in 2009)
  • Atos Origin
  • GE
  • McDonald’s
  • Omega
  • Panasonic
  • Samsung
  • Visa

Photo: Coca-Cola CEO Muhtar Kent

Source: The IOC
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[slide
permalink=”revenue-source-3-a-mandatory-event-for-domestic-sponsors-10″
title=”Revenue Source #3: A mandatory event for domestic sponsors”
content=”The largest source of advertising revenue comes from domestic sponsorship, which is managed by the local organising Committee for the Olympic Games (OCOG).

Vancouver already reports record-high sponsorship revenue for a Winter Games. Who wants to be the Canadian company that doesn’t support the Games?

Revenue from domestic sponsors (2005-2008): $1.55 billion

Vancouver revenue (2010): $760 million, according to Money.

Photo: Hudson’s Bay Company

Source: The IOC
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[slide
permalink=”revenue-source-4-endless-licensing-11″
title=”Revenue Source #4: Endless licensing”
content=”You’ll see a lot official 2010 Vancouver hats and t-shirts over the next few years. These and the other hoard of Olympics-related merchandise constitute a major source of revenue for the IOC.

Licensing is managed by the local OCOG during the games, and by the IOC in the off-season.

Licensing is higher during the summer and was ridiculously high in Beijing.

Revenue from ‘Olympics’ licensing rights (2005-2008): $190 million

Past licensing revenues:

  • 2008 Beijing generated $163 million
  • 2006 Turin generated $22 million
  • 2004 Athens generated $61.5 million
  • 2002 Salt Lake City generated $25 million
  • 2000 Sydney generated $52 million

Photo: Sonic and Mario at the Olympic Winter Games
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[slide
permalink=”revenue-5-tickets-12″
title=”Revenue #5: Tickets”
content=”Vancouver is on course to sell all of its 1.6 million tickets, an Olympic first according to Bloomberg.

That will be the most visitors to a Winter Games since 1.6 million attended 1988 Olympics in Calgary. Summer numbers are higher, peaking at 8.3 million at the 1996 Olympics in Atlanta.

Standard ticket prices reached over $1,000 for the opening ceremonies. Getting tickets now for the sold out show will be insanely expensive.

Revenue from ticket sales (2005-2008): $270 million

Vancouver ticket revenue (2010): $247 million, according to Bloomberg.

Photo: People wait in line to pick up Olympic tickets in Vancouver on Wednesday, Feb. 10, 2010.

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[slide
permalink=”bottom-line-it-doesnt-suck-to-be-count-rogge-or-another-member-of-the-ioc-13″
title=”Bottom Line? It doesn’t suck to be Count Rogge or another member of the IOC.”
content=”We especially love the part about not having to watch the games on tape delay…
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