A new report shows evidence that canceling the Olympic Games could have major economic implications for the sports industry in general.
Research from GlobalData reveals that in the cycle between 2017-2020 the IOC generated $1.6 billion in revenue through its Olympic Partner program (TOP) while broadcast revenues came in at $4.5 billion. Domestic partners of Tokyo’s local organizing committee have generated a further $3.3 billion in revenue over the same period.
“The Olympic Games is the pinnacle of sporting achievement for many athletes, but the event is even more crucial in terms of supporting the International Federations whose sports make up the Games,” said Conrad Wiacek, head of Sport Analysis for GlobalData.”For at least half of the 28 federations whose sports make up the Olympic program, almost all of their funding will come from the Olympic cycle. Based on annual reports, some sports receive up to 95 percent of their funding from the Olympic Games with the likes of Gymnastics, Boxing and Modern Pentathlon all seeing a significant portion of their revenue coming post-Olympics.”
Concerns over COVID-19 have created intense debate over whether Japan should go ahead with hosting the games. The implications if they do not go ahead could be very real.
According to GlobalData, if the Games were cancelled, IOC would be under tremendous pressure to refund broadcast contracts and make restitution to sponsors, which in turn would mean that the 28 International Federations would see a financial hit. The IOC distributes 90 percent of revenue generated through an Olympic cycle to support athletes and promote world sport, highlighting how crucial the Olympic Games is to the future development of sports and athletes.
“For the likes of FIFA and World Rugby, this loss of revenue would be insignificant due to their other stronger revenue streams such as their respective World Cups,” Wiacek admits. “However, even for relatively financially secure sports such as Athletics and Cycling the financial hit could see their annual budgets impacted by up to 25 percent, which coming in the midst of a global pandemic that has already had a significant impact on revenues could be disastrous.”
