Meet The “ELITE”Secretive Group Earning $8 Billion From The Olympic Games

Gus Lubin and Samuel Blackstone | Aug. 7, 2012, 11:29 PM | 138,645 | 27

olympia

en.wikipedia.org

The International Olympic Committee in 1896.

The secretive group that runs the Olympics is expected to earn a record $8 billion in the 2009-2012 quadrennial cycle, according to Sportcal.

Formed to promote “Olympism,” the International Olympic Committee doesn’t get rich off the Games, but they do enjoy themselves.

The 109-member Committee gets wined and dined by cities and corporations bidding for contracts, and they get treated like royalty at the Games.

Several times they’ve been caught taking bribes, but generally what happens in Switzerland stays in Switzerland.

Olympic revenue increased 47% in the latest quadrennial.

Olympic revenue increased 47% in the latest quadrennial.

Flickr/Nick J Webb

Source: Sportcal

The Committee is conveniently located in tax haven Switzerland.

The Committee is conveniently located in tax haven Switzerland.

Flickr/johnrudolphmueller

Calling Switzerland home allows the non-profit IOC to avoid a 20% income tax, and that’s just the start, according to Play The Game’s Lars Jørgensen.

“The tax exemption is very important. I have no concrete figures on how much we save in dollars and cents. But the tax exemption means that we can spend even more money on our Olympic solidarity work,” said IOC member Gerhard Heiberg in an interview with Danish newspaperInformation.

What’s more, bribery was basically legal in Switzerland until recently. Stronger anti-corruption laws are finally coming into place after another bribery scandal at the IOC and FIFA resulted in almost no convictions.

Count Jacques Rogge leads a group of 109.

Count Jacques Rogge leads a group of 109.

AP Photo/Dominic Lipinksi

A doctor, a knight, a count and a three-time Olympian in yachting, Belgian Jacques Rogge, 70, is the ideal president of the IOC.

The Committee, which can hold up to 115 members, is composed of royals, nobles, CEOs and Olympians. Since Rogge took the helm in 2001, it has opened up to a larger number of Olympians. Still the IOC’s co-option method of selecting members ensures that it remains an elite group.

Royals include Prince Faisal bin Al Hussein, Frederik, Crown Prince of Denmark, Princess Haya Bint Al Hussein, Sheikh Tamim Bin Hamad Al Thani, Prince Nawaf Faisal Fahd Abdulaziz, Prince Ahmad Al-Fahad Al-Sabah, Anne, Princess Royal, Prince Albert II and Princess Nora of Liechtenstein.

Members get many perks … and sometimes too many.

Members get many perks ... and sometimes too many.

A car leaves the IOC headquarters during the heat of the Salt Lake bribery investigation.

AP Photo/Donald Stampfli

IOC members don’t receive a salary, but they do get wined and dined by cities bidding for the Olympics and companies biding for contracts.

Committee members also get treated like royalty (which some of them are) during the Olympics, hobnobbing with VIPs, being driven around in limos to five-star hotels, drinking $30,000 bottles of Hennessy and getting front row seats and unfiltered live TV access.

Several times this treatment has crossed the line. The most notorious case was in Salt Lake City, which won the 2002 Winter Olympics in part through bribery. It was revealed that IOC members received millions of dollars worth of gifts, trips, scholarships, plastic surgery and jobs for family members.

The scandal led to the resignation of the two heads of the Salt Lake Olympic Committee and several IOC members.

Selling media rights earned $3.91 billion this quadrennial.

Selling media rights earned $3.91 billion this quadrennial.

NBC CEO Jeff Zucker

Media rights revenue increased 52 percent in the past quadrennial.

Sportcal attributes the remarkable rise to:

  • Emerging TV markets, especially China, which paid $99.5 million for TV rights to the London Games
  • Increased competition in already powerful markets like the U.S., where NBC paid $2 billion
  • The increasing role and market for broadband and mobile rights
  • The added marketability of London and its time zone congruence with many of the Olympic games largest markets

Summer is worth about twice as much as winter, but the two are sold together.

International sponsorships earned another $957 million.

International sponsorships earned another $957 million.

The Olympic Partners sponsorships were worth $957 million from 2009 to 2012.

Eleven companies paid to join this prestigious group, including McDonald’s, Coca-Cola, Proctor & Gamble, Ator, Atos Origin, Dow Chemical Company, General Electric, Omega, Panasonic, Samsung Electronics and Visa.

These companies also nabbed exclusive deals to supply and advertise at the Olympic Games.

An estimated $3.1 billion was raised by Summer and Winter Organizing Committees

An estimated $3.1 billion was raised by Summer and Winter Organizing Committees

YouTube

London’s organizing committee earned an estimated $2.14 billion, according to Sportcal. This includes $1.1 billion from domestic sponsorship; $931 million from ticket sales; and $125 million from licensing

Another $989 million was raised in 2010 by the Vancouver Organizing Committee.

Organizing Committees put on the Games with this money plus funding from the government.

That’s $8 billion in revenue in four years.

That's $8 billion in revenue in four years.

Where does the money go? Around 10 percent ($800 million) pays for operations at the IOC.

Where does the money go? Around 10 percent ($800 million) pays for operations at the IOC.

Around 70 percent ($5.56 billion) goes to the Summer and Winter Olympic Organizing Committees

Around 70 percent ($5.56 billion) goes to the Summer and Winter Olympic Organizing Committees

NBC Olympics

Organizing Committees receive around half of broadcast revenue, half of international sponsorship revenue, and all revenue from domestic sponsorship, ticket sales, and licensing. (At least that’s our best understanding of this opaque organization.)

The larger and more popular Summer Games receive a larger share of the money.

Fun fact: Mitt Romney was the CEO of the Organizing Committee in the 2002 Salt Lake City Games.

The remaining ~ 20 percent ($1.6 billion) goes to athlete organizations

The remaining ~ 20 percent ($1.6 billion) goes to athlete organizations

(Photo by John Moore/Getty Images)

National Olympic Committees receive the largest part. These organizations are in charge of training and developing Olympic teams.

The US Olympic Committee receives more than other Olympic Committees since US media rights bring in by far the most revenue. Poor National Olympic Committees also receive extra money through the Olympic Solidarity program.

Some money goes to the International Federations, including small organizations like International Archery Federation and large ones like Fédération Internationale de Football Association.

Money also goes to organizations like the International Paralympic Committee and the World Anti-Doping Agency.

Not much goes to the athletes.

Not much goes to the athletes.

Al Bello / Getty Images

Athletes receive no money directly from the IOC, but most receive bonuses from their National Olympic Committee for medaling. The USOC hands out $25,000 goes for gold, $15,000 for silver, and $10,000 for bronze.

Malaysia promises $600,000 to any gold medal winner in the form of a gold bar, though they haven’t won one since 1956.

The real money for athletes is in endorsements. Lochte is expected to take home around $2 million is endorsements from these games. Unfortunately most athletes aren’t famous enough to earn much if any from endorsement deals.

Who benefits from the Olympics?

Who benefits from the Olympics?

(AP Photo/Themba Hadebe)

Critics have questioned whether hosting the Olympics really has a positive effect on a city. On the upside it generates spending and infrastructure investment. On the downside it can be expensive (the UK will spend up to $14.5 billion on the Games) and lead to overbuilding and other problems.

The bottom line is that we all enjoy the Olympics.

Count Rogge and his friends just enjoy it a little more.

Read more: http://www.businessinsider.com/finances-of-the-ioc-2012-8?op=1#ixzz2304PU1G1

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

Gus Lubin and Lawrence Delevingne | Feb. 17, 2010, 11:51 AM | 37,936 | 9

IOC rogge

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 organization, employment (“membership”) in the organization 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 >

Technically, the International Olympic Committee is an organization that “promotes Olympism.” It makes more than $1 billion a year doing it.

Technically, the International Olympic Committee is an organization that "promotes Olympism."  It makes more than $1 billion a year doing it.

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. Organizers added skating to the Summer Games in 1908 but eventually decided that winter sports should be separate, according to the Vancouver Organizing 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.”

IOC Headquarters: The fabulously rich Count Rogge counts the money and writes the checks

IOC Headquarters: The fabulously rich Count Rogge counts the money and writes the checks

Behind all the games is the powerful International Olympic Committee.

Recognized 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 organizations, like the local Organizing 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 organizations.
  • 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


Want to join the IOC and get free tickets to all the events? Sorry, you’re just not membership material

Want to join the IOC and get free tickets to all the events?  Sorry, you're just not membership material

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


Not much pay, but IOC membership has many perks

Not much pay, but IOC membership has many perks

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 organization 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.

IOC Subsidiary #1: The National Olympic Committees that build the teams in each country

IOC Subsidiary #1: The National Olympic Committees that build the teams in each country

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

IOC Subsidiary #2: International Federations that preside over the sports

IOC Subsidiary #2: International Federations that preside over the sports

Next are International Federations.

IFs organize 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

IOC Subsidiary #3: Local Organizing Committees For The Olympic Games (OCOGs) run the big show

IOC Subsidiary #3: Local Organizing Committees For The Olympic Games (OCOGs) run the big show

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 organizing committee.

Source: The IOC

Revenue #1: The Broadcast Bidding War

Revenue #1: The Broadcast Bidding War

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

Revenue #2: A prestige event for international sponsors

Revenue #2: A prestige event for international sponsors

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

Revenue Source #3: A mandatory event for domestic sponsors

Revenue Source #3: A mandatory event for domestic sponsors

The largest source of advertising revenue comes from domestic sponsorship, which is managed by the local Organizing 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

Revenue Source #4: Endless licensing

Revenue Source #4: Endless licensing

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

Revenue #5: Tickets

Revenue #5: Tickets

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.

Bottom Line? It doesn’t suck to be Count Rogge or another member of the IOC.

Bottom Line?  It doesn't suck to be Count Rogge or another member of the IOC.

We especially love the part about not having to watch the games on tape delay…

Read more: http://www.businessinsider.com/olympics-inc-inside-the-business-of-the-ioc?op=1#ixzz230Bwx6fo