The time has come once more to revel in the rollercoaster that is the Olympic Games. This storied event brings with it a global call to attention, and for two weeks the world is enamored as the best athletes each nation has to offer give all that they have in order compete for honor, glory, and round pieces of metal.
The Olympics began as part of an ancient religious Greek festival as early as 776 B.C. It didn’t become the event that we know it to be until 1896, when 13 nations came to Athens, Greece to partake in international competition. The idea came from a French baron named Pierre de Coubertin, who brought it up at an international sport conference in Paris during June of 1894.
After Mr. Coubertin introduced the idea, 79 delegates from nine countries unanimously approved, and the International Olympic Committee (IOC) was formed. Coubertin would go on to serve as the IOC president until 1925. Since its inception, the Olympics have become an entirely different beast.
Now boasting participation from over 200 countries and total viewership in the billions, the Olympics are quite the lucrative venture, and believe me when I say that there are those doing everything in their power to cash in.
I know that many people enjoy the Olympics and consider the idea of uniting the world under a common umbrella to be an amazing thing. I don’t disagree on the conceptual merit of the idea, but I dislike, well, just about everything else.
Here’s why.
(Nearly) Everyone Runs Over Budget
Fortune wrote an interesting piece yesterday on the seven biggest financial disasters in modern Olympic history, and they really didn’t even have to look that hard. Both the IOC and host countries do everything in their power to tout the event as a profitable venture for their country’s future, but rarely do things work out that way.
Before the beginning of the Rio Olympics, I took a look at how hosting the Olympics has affected each respective country since China did in 2008. It is quite difficult to reach a conclusion, since there are plenty of driving forces behind economic movement. However, I noticed that every time, a majority of each country's Olympic facilities became white elephants (or in other words nothing more than an expensive maintenance project).
In 2004, Greece went 97% over budget, spending $11 billion on events. Although Greece’s economic slowdown cannot be solely attributed to this horrid fiscal mismanagement, it certainly did not help either. The 2014 Winter Sochi Olympics were the most expensive in history, costing the country $51 billion. However, the city resembles a ghost town more than it does the year-round, global resort that President Putin aimed for it to become.
If you break down the budget each host city had and how much was actually spent, you’d see that most ran over budget, and created a deficit rather than profit. The 1984 Olympics in Los Angeles were incredibly unusual, in that the city actually managed to turn a $200 million profit. The fact that it hasn’t really been replicated is a testament to the useless financial burden that the Olympics have come to represent.
The Olympics are Profitable, for a Select Few
Bloomberg points out that although the Olympics bring in billions of dollars in ticketing, sponsorships, and broadcasting revenue, athletes get very little of it. There are 11,551 athletes competing in the 2016 Rio Olympics, and a good chunk of them can’t even afford to be there. More athletes than ever before have used crowd funding to get to the 2016 Olympics, a startling trend.
We constantly hear the names of popular athletes such as Michael Phelps and Usain Bolt, who have multiple sponsorships to cover their training and travel expenses, amongst other things. However, many other athletes struggle just to get by financially as they prepare for and ultimately make their way to the Olympics.
Granted, I’m not saying that it’s the responsibility of the IOC to ensure the financial stability of athletes, but the discrepancy between the amount of money it earns versus the struggles that many athletes endure is ludicrous.
If you’re going to propagate the idea of global unity and understanding, maybe consider doing so without calling yourself a non-profit and then raking in hundreds of millions of dollars, both legally and illicitly.
Lots and Lots of Corruption
For years now, IOC corruption accusations have been brought up in various courts. As of recently, French police are investigating the bidding processes that awarded Brazil and Tokyo the 2016 and 2020 Summer Olympics respectively.
Leading up to this investigation, reports of corruption in the International Association of Athletic Federations (IAAF), which works in tandem with the IOC, have led to multiple arrests. These arrests include those of high profile figures such as former IAAF president Lamine Diack. He had taken bribes in order to cover up Russia’s doping scheme, which was revealed before the Olympics and led to the banning of 118 athletes from the event.
Oh and by the way, members of the IOC have actually been caught before too. In 1999, the organization had to expel six members who were caught taking hundreds of thousands of dollars worth of bribes to bring the 2002 Winter Olympics to Salt Lake City, UT.
There are other cases as well, such as when Japan provided IOC members with luxury hot spring resort accommodations, first-class tickets, and other amenities before ultimately winning the 1998 Winter Olympics bid in Nagano.
This type of behavior has gone on for quite some time, and will only continue. The Olympics are an excuse for executives to get their palms greased, break rules, and destroy what it means to create a platform for fair competition
Bottom Line
At the end of the day, I watch a decent amount of Olympic coverage just like anyone else. The events are still entertaining, and I too cheer for the athletes who have worked their entire lives to make their friends, families, countries, and themselves proud. However, I can’t cheer for the damage that the Olympics does to local taxpayers and their economies.
The Olympics have transformed into a business, and while generally speaking that isn’t necessarily a bad thing, here it totally transforms what the event means, and I can’t bring myself to appreciate that.
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Image: Bigstock
3 Reasons Why the Olympics are Overrated
The time has come once more to revel in the rollercoaster that is the Olympic Games. This storied event brings with it a global call to attention, and for two weeks the world is enamored as the best athletes each nation has to offer give all that they have in order compete for honor, glory, and round pieces of metal.
The Olympics began as part of an ancient religious Greek festival as early as 776 B.C. It didn’t become the event that we know it to be until 1896, when 13 nations came to Athens, Greece to partake in international competition. The idea came from a French baron named Pierre de Coubertin, who brought it up at an international sport conference in Paris during June of 1894.
After Mr. Coubertin introduced the idea, 79 delegates from nine countries unanimously approved, and the International Olympic Committee (IOC) was formed. Coubertin would go on to serve as the IOC president until 1925. Since its inception, the Olympics have become an entirely different beast.
Now boasting participation from over 200 countries and total viewership in the billions, the Olympics are quite the lucrative venture, and believe me when I say that there are those doing everything in their power to cash in.
I know that many people enjoy the Olympics and consider the idea of uniting the world under a common umbrella to be an amazing thing. I don’t disagree on the conceptual merit of the idea, but I dislike, well, just about everything else.
Here’s why.
(Nearly) Everyone Runs Over Budget
Fortune wrote an interesting piece yesterday on the seven biggest financial disasters in modern Olympic history, and they really didn’t even have to look that hard. Both the IOC and host countries do everything in their power to tout the event as a profitable venture for their country’s future, but rarely do things work out that way.
Before the beginning of the Rio Olympics, I took a look at how hosting the Olympics has affected each respective country since China did in 2008. It is quite difficult to reach a conclusion, since there are plenty of driving forces behind economic movement. However, I noticed that every time, a majority of each country's Olympic facilities became white elephants (or in other words nothing more than an expensive maintenance project).
In 2004, Greece went 97% over budget, spending $11 billion on events. Although Greece’s economic slowdown cannot be solely attributed to this horrid fiscal mismanagement, it certainly did not help either. The 2014 Winter Sochi Olympics were the most expensive in history, costing the country $51 billion. However, the city resembles a ghost town more than it does the year-round, global resort that President Putin aimed for it to become.
If you break down the budget each host city had and how much was actually spent, you’d see that most ran over budget, and created a deficit rather than profit. The 1984 Olympics in Los Angeles were incredibly unusual, in that the city actually managed to turn a $200 million profit. The fact that it hasn’t really been replicated is a testament to the useless financial burden that the Olympics have come to represent.
The Olympics are Profitable, for a Select Few
Bloomberg points out that although the Olympics bring in billions of dollars in ticketing, sponsorships, and broadcasting revenue, athletes get very little of it. There are 11,551 athletes competing in the 2016 Rio Olympics, and a good chunk of them can’t even afford to be there. More athletes than ever before have used crowd funding to get to the 2016 Olympics, a startling trend.
We constantly hear the names of popular athletes such as Michael Phelps and Usain Bolt, who have multiple sponsorships to cover their training and travel expenses, amongst other things. However, many other athletes struggle just to get by financially as they prepare for and ultimately make their way to the Olympics.
Granted, I’m not saying that it’s the responsibility of the IOC to ensure the financial stability of athletes, but the discrepancy between the amount of money it earns versus the struggles that many athletes endure is ludicrous.
If you’re going to propagate the idea of global unity and understanding, maybe consider doing so without calling yourself a non-profit and then raking in hundreds of millions of dollars, both legally and illicitly.
Lots and Lots of Corruption
For years now, IOC corruption accusations have been brought up in various courts. As of recently, French police are investigating the bidding processes that awarded Brazil and Tokyo the 2016 and 2020 Summer Olympics respectively.
Leading up to this investigation, reports of corruption in the International Association of Athletic Federations (IAAF), which works in tandem with the IOC, have led to multiple arrests. These arrests include those of high profile figures such as former IAAF president Lamine Diack. He had taken bribes in order to cover up Russia’s doping scheme, which was revealed before the Olympics and led to the banning of 118 athletes from the event.
Oh and by the way, members of the IOC have actually been caught before too. In 1999, the organization had to expel six members who were caught taking hundreds of thousands of dollars worth of bribes to bring the 2002 Winter Olympics to Salt Lake City, UT.
There are other cases as well, such as when Japan provided IOC members with luxury hot spring resort accommodations, first-class tickets, and other amenities before ultimately winning the 1998 Winter Olympics bid in Nagano.
This type of behavior has gone on for quite some time, and will only continue. The Olympics are an excuse for executives to get their palms greased, break rules, and destroy what it means to create a platform for fair competition
Bottom Line
At the end of the day, I watch a decent amount of Olympic coverage just like anyone else. The events are still entertaining, and I too cheer for the athletes who have worked their entire lives to make their friends, families, countries, and themselves proud. However, I can’t cheer for the damage that the Olympics does to local taxpayers and their economies.
The Olympics have transformed into a business, and while generally speaking that isn’t necessarily a bad thing, here it totally transforms what the event means, and I can’t bring myself to appreciate that.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>