Where Does Olympic Funding Come From?
More than half of the Olympics since 1992 have cost the host country $5 billion or less, according to Statista, but none have cost less than $2.2 billion. On the other end of the spectrum are cautionary tales like London, which spent $15 billion on the 2012 Summer Games; Sochi, Russia, which spent $21.9 billion on the 2014 Winter Olympics; or last year’s $28 billion, year-late Summer Olympics in Tokyo.
It’s well known that the Olympics never stay on budget and almost never turn a profit, so who comes up with all the billions of dollars that are needed put on these events that don’t pay off financially?
You, mostly — or some other country’s version of you.
The yearlong COVID-19 postponement that pushed back the 2020 Summer Olympics in Tokyo to 2021 cost billions of dollars in everything from construction delays to expired TV advertising contracts. In April 2020, Tokyo Olympic organizers and the International Olympic Committee (IOC) began openly feuding about who would get stuck with the bill, according to ESPN.
The IOC, based in Switzerland, wrote on its website that Japanese Prime Minister Shinzo Abe agreed that his country should pay the tab for the delay, which Japan denied while demanding a retraction. The IOC complied and changed the wording — but the wording didn’t matter. There was never a question as to who would get stuck holding the hot potato: the Japanese taxpayer.
The IOC Covers Some Costs, but Not Much
The IOC was founded in 1894, two years before the first modern Olympic Games in Athens in 1896. A nonprofit organization, it’s funded entirely with private money. According to the IOC’s own numbers, 73% of its revenue comes from broadcasting rights, 18% comes from marketing rights and 9% comes from other rights and revenue streams. The IOC keeps 10% to fund its own operations and redistributes 90% — about $3.4 million per day — to worldwide athlete development and the Olympic Games.
The IOC provides most of the budget for the Organizing Committee for the Olympic Games (OCOG), which contributes to some expenses. For context, the OCOG gave $1.5 billion to the 2016 Rio Games, which cost $13.7 billion, and it plans to distribute $880 million to the 2022 Games to pay for things like the Olympic Broadcast Services and host broadcast operations.
It’s not fair to call the IOC/OCOG contribution a drop in the bucket, but it’s hardly enough. In the end, it’s public money that pays for the Olympic Games.
Host cities and countries incur two kinds of expenses. The first is capital investment, or infrastructure, which includes things like improving subway lines and building stadiums and other facilities. The second is operational costs, like immigration and customs, security, medical services and sanitation.
Those costs, along with any unforeseen related expenses that pop up — as Tokyo and so many other cities learned the hard way — land on the city and country where the games play out. According to ESPN, the IOC’s “Host City Contract” puts the cost of virtually everything not expressly stipulated squarely on the shoulders of the host city and the host nation’s Olympic committee.
When (Not If) Budgets Overrun, Host Cities Have Nowhere To Pass the Buck
The Washington Post interviewed experts who compared Tokyo to Montreal in 1976, an Olympic disaster that ran over budget by 720% and took 30 years for the city’s residents to pay off. Japan was officially spending $12.6 billion to organize the Summer Games by the time the postponement was announced, but a government audit found that the real cost was already double that by spring 2020. A privately funded organizing committee kicked in $5.6 billion, but every other dollar was public money.
Although the host cities pay for the cost of infrastructure and operations, it’s almost impossible for local planners to cut costs because the IOC makes most of the business decisions. The Post estimates each resident of Tokyo will end up paying $940 to cover the cost of its pandemic-year Olympic debacle.
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For Better or Worse, It’s Different in the US
The pandemic revealed that the finances of America’s Olympic governing bodies are as precarious as those of the many Olympic athletes who live and work and train in a constant state of financial insecurity.
In 2020, nearly all of America’s Olympic sports organizations applied for coronavirus relief money, which the Tampa Bay Times said runs contrary to “the long-held and distinctly American tradition of not using taxpayer funds to pursue Olympic glory.”
America is by far the world’s most successful and dominant Olympic system, but its finances proved to be dangerously fragile. In most countries, Olympic programs are propped up by government funding, but the U.S. Team relies almost solely on sponsorships, charity, revenue from programming and memberships, and broadcast fees.
When day-to-day revenues dried up in 2020, the national team of a country that won a world-leading 653 medals between 2000-2020 was reduced to applying for government assistance meant for struggling small businesses.
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