- [Ad Voiceover] At Intel, we're bringing Tokyo 2020
to the world in a way they've never experienced before.
(dramatic music)
We will host the world.
- [Narrator] These brands paid
hundreds of millions of dollars
to be associated with the Olympics.
And all this money goes
to the International Olympic Committee or the IOC,
which runs all the marketing programs for the Olympic Games.
But it takes more than marketing.
The IOC powers one of the most valuable sporting events
in the world through media deals.
- The International Olympic Committee
has tried to monetize these games
since the very first Olympics back in Greece in 1896.
And they've evolved every time
to get more TV broadcasters, for instance,
and other sponsors.
- [Narrator] So how does the IOC generate
billions of dollars in revenue from these rights?
And what do companies get in return?
This is The Economics of The Olympics.
The IOC generates billions in revenue
through the sale of broadcast and sponsorship rights.
It made a total of about $4 billion
from the 2006 and 2008 games,
over $5 billion from 2010 and 2012,
and almost $6 billion from the 2014 and 2016 games.
In comparison, FIFA, which runs the World Cup
made about $4 billion from the sale of television rights
and marketing rights for the 2014 World Cup.
In London in 1948, the IOC awarded broadcast rights
for the first time to the BBC.
Today, the sale of broadcast rights makes up nearly 75%
of the IOC's total income.
This year, the Beijing Olympics is being broadcast
in more than 220 countries.
China Media Group is airing the games in China.
Discovery is airing it across Europe,
and CBC is airing it in Canada.
Since 1997, North American companies have paid more
for broadcast rights than the rest of the world combined,
according to IOC data.
NBC has televised every Olympics since 2000
and every Summer Games since 1988.
- I've come to associate NBC
as being the channel of the Olympics,
and I'm sure many other Americans do so as well.
- [Narrator] In 2014, NBC entered into a $7.75 billion deal
to secure exclusive broadcast rights in the US through 2032.
That means the company will pay an average
of over $1 billion for each Olympics.
The deal covers all media platforms, including TV,
internet, and mobile rights,
and also restricts other media from broadcasting
the opening and closing ceremonies
and athletic competitions.
- When it comes down to getting these broadcasting rights,
it comes down to one thing which is money.
- [Narrator] These multi-year broadcast deals
include both Summer and Winter Olympics.
For example, NBCUniversal made
about half a billion dollars more in revenue
from the 2016 Summer Olympics
than it did from the 2014 Winter Olympics,
according to the company's financial statements.
- The Summer Games are a lot bigger
than the Winter Olympics.
There's about 200 countries
that compete in the Summer Games,
about only 100 in the Winter Games.
There's a quarter of the athletes in the Winter Olympics
compared with the Summer ones.
- [Narrator] After broadcasting rights,
brand partnerships are the next income driver for the IOC.
The Olympic Partner Program, which was launched in 1985,
grants exclusive marketing rights
to a select group of corporate sponsors.
There are currently 13 top tier sponsors in this program.
- So you have companies like Coca-Cola, been around forever.
♪ So give me a Coke with a smile ♪
♪ And I promise ♪
♪ To pass it along ♪
- But you also now have tech companies
like Airbnb and Alibaba in China who have signed up
in the past decade for these multi-year deals
to be one of the elite sponsors.
- [Ad Voiceover] Alibaba believes in the power of small.
We are proud to be the worldwide partner
of the Olympic Games.
- [Narrator] According to the latest IOC data,
top tier sponsors collectively paid around $1 billion
for the 2014 and 2016 Olympics.
So what do these brands get in return?
- They get to use the Olympic logo
so the iconic rings, the five interlaced rings
are probably the best example,
but also there's an official logo
for the Beijing Games and the Tokyo Games,
and all that, too.
- [Narrator] But buying sponsorship rights
is just the first step.
- They spend a lot of money,
tens of millions of dollars per Olympics
just to get the rights to use these Olympic logos.
And then they gotta spend even more money,
maybe triple that, to tell everybody
that they have these rights via TV advertising that say,
"Hey, look, we're helping to put up these feel good games
that brings the world together."
Or if you're Coca-Cola, they might want an athlete
to go around drinking a Coke at the Olympics.
And it also costs money just to put the rings
on a can or a bottle of Coke.
- [Narrator] These brand partnerships are multi-year deals,
often spanning four or five Olympics,
which means the IOC doesn't have to scramble
to find a new sponsor every two years.
- Airbnb just a couple of years ago, signed a 10-year deal.
So that'll take them
through the 2028 Olympics in Los Angeles.
- [Narrator] This year, several Olympics sponsors
are keeping a relatively low profile
around the Winter Games in Beijing
due to escalating tensions between the US and China.
- In a normal Olympic year, these companies
that already spent a lot of money
to be a top Olympic sponsor
would be normally be bragging about it.
The 100-day countdown is usually a big thing.
- [Narrator] For example, ahead of the 2018 Games,
Coca-Cola put figure skating star Nathan Chen
on a billboard in Times Square
to mark the 100-day countdown to the games.
And Visa, which sponsors athletes
through its Team Visa program tweeted about its athletes
and promoted its wearable payment devices
in the weeks leading up to the 2018 Games.
- [Ad Voiceover] You dream of amazing.
We dream of amazing ways to pay.
- [Narrator] Companies make million dollar investments
in these sponsorship deals.
But this year, sponsors may risk
missing global marketing opportunities
that money bought them.
US officials, some Western lawmakers,
and human rights activists have said
Beijing's years long campaign
a forcible assimilation against the mostly Muslim minorities
in Xinjiang amounts to a form of genocide.
Beijing denies the allegation and has protested
what it calls attempts to politicize the games.
- These top tier Olympic sponsors
are trying to balance their business in China on one hand
with their reputation in the rest of the world on the other.
And they think the smartest thing to do right now
is to just not bring any attention
to the fact that they're sponsors outside of China.
- [Narrator] Coca-Cola, for example, hasn't done
any major advertising campaigns related to the Olympics,
except in China, according to a company spokesman.
He declined to say why the company made that decision.
Visa and NBC didn't respond to requests for comment.
The IOC says it recognizes and upholds human rights,
but it takes no position on the political structure,
social circumstances, or human rights standards
in the host country.
The committee says it must remain neutral
on all global political issues.
Looking ahead, NBC is promoting
its streaming service, Peacock,
especially as more and more people ditch cable,
and TV ratings for the Olympics
continue on a downward trend.
In January, Comcast said over 9 million people
were paying to watch Peacock.
The company said it would spend $3 billion this year
on content for Peacock, double what it spent last year.
The Beijing Olympics are an important opportunity
for Peacock, which has been called out by analysts
as being slow to gain traction.
Viewers have also complained
that Peacock didn't have enough live coverage
during the Tokyo Summer Games.
This time around, NBCUniversal said
the entirety of its Olympic broadcast
would be available live on Peacock's premium tiers
for the Beijing Games.
- Next step will be to see
whether these online broadcasting services like Peacock
are gonna become a bigger part
of Olympic deals in the future.
(bright music)