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The Olympics: Business and Sports Collide on World's Center Stage

The HBS Business of Sports Club proudly presented its “Business of the Olympics” panel discussion Thursday, March 9. The concept of the panel was generated from a recent event at the Harvard Club: “Harvard in the Olympics,” featuring Harvard University alumni who had competed or participated in the Olympics. Several HBS alumni are past Olympians, including Paul Wylie, HBS ’00. The “Business of the Olympics” event featured three distinguished speakers covering topics ranging from how to plan an Olympics to Olympics branding, sponsorship and broadcasting.

Paul George, who spoke at the event, has been involved with sports for nearly 40 years. Beginning with his days as a competitive figure skater when he won the U.S. Junior Pair Championship in 1962, he later held senior volunteer management positions with the U.S. Olympic Committee and World Cup Soccer. His recent sports positions include serving as a member of the IOC Coordination (Oversight) Commission and 2006 Torino Olympic Winter Games; President of the U.S. Figure Skating Foundation; Vice President of the U.S. Olympic Committee; and U.S. Chef de Mission of the 1998 Nagano Olympic Winter Games.

Mr. George is a graduate of Harvard College and Boston University School of Law. He is currently an attorney with Kellogg & George, a business law firm in Wellesley, MA, that concentrates on corporate law, venture capital and business and estate planning.

Mr. George discussed the business history of the Olympics, beginning with the milestone Los Angeles summer games in 1984. After the financial disaster of the 1976 summer games in Montreal, no city wanted to host the Olympics. However, in 1984, Los Angeles stepped up, and thanks to the leadership of current U.S.O.C. Chair Peter Ueberroth, turned the Olympics into a financial success. The three key initiatives were to recruit volunteers instead of paid staff; to utilize existing venues as much as possible and reduce new construction costs; and to leverage corporate sponsorships in a new way. The result was a $250 million surplus, and the Olympics have been financially profitable ever since.

The Olympics require the successful integration of athletes, spectators, government organizations, Olympic organizations, the media, sponsors and TV. While international federations run each sport, national Olympic committees are responsible for selecting, organizing and bringing a team to the Olympics. The summer games currently have an operating budget of $3 billion and run 300 events. The winter games feature 84 events and have an operating budget of $1.4 billion. The budget does not include the cost of infrastructure to the host cities or the increasing cost of security, which was close to $1 billion for the 2004 summer games in Athens.

Mr. George touched on the reasons cities bid for Olympic games, including business development, urban renewal, international media attention and tourism. Though unsuccessful, New York’s 2012 bid did unify the city, bringing together diverse communities and spurring new urban development.

Mr. George discussed the five major revenue sources for the Olympics: TV broadcast, TOP Worldwide Sponsorship Program, domestic sponsorship, ticketing, and licensing. Revenues are dispersed throughout the Olympic movement, supporting the staging of games and promoting the worldwide development of sport.

Finally, Mr. George shared many of the challenges of the Olympics, including the size and cost of hosting the games, lack of a full-scale dress rehearsal, disruption and local political disputes, security and the continued threat of terrorism, post Olympic blues – what does a city do next, and the decline in TV viewership.

The second speaker, Stephen A. Greyser, is the Richard P. Chapman Professor (Marketing/Communications) Emeritus at Harvard Business School, where he specializes in brand marketing, advertising/corporate communications, sports management and nonprofit management. Greyser conceived and developed the HBS MBA elective course “The Business of Sports,” reflecting his life-long fandom and long-time business involvement in sports. He has also been on the selection committee for the Boston Red Sox Hall of Fame, and wrote the 30th anniversary souvenir pamphlet for “The Impossible Dream” 1967 pennant-winners. He is a former sports broadcaster and radio-TV producer, including a Red Sox pre-game fan quiz program.

Professor Greyser’s most recent HBS teaching assignments include electives on Corporate Communications and The Business of Sports. He teaches the Business of Sports at Harvard’s Extension School and in Harvard Law School Professor Weiler’s Sports and the Law course. Known as “the Cal Ripken of HBS,” in almost 40 years of teaching, he has never missed a class. Professor Greyser has been the faculty advisor of the Business of Sports Club since its inception.

Professor Greyser discussed how the Business of the Olympics is about leveraging the brand. The brand equity of the five rings is worth millions of dollars in sponsorship, broadcasting and advertising. The key for sponsors is to use the brand effectively in promoting their products. Professor Greyser highlighted how the Olympic brand stands for high-level competition, national patriotism and values of sport, and effectively draws in professional leagues such as the famed NBA Dream Team.

Greyser also discussed endorsements by Olympic athletes. He identified three key elements of endorsement potential: visibility of the sport, medal performance and individual personality. For more on this, please see Professor Greyser’s interview titled “Winners and Losers at the Olympics” in the March 6 edition of HBS Working Knowledge: //hbswk.hbs.edu/item.jhtml?id=5247&t=marketing

Jeff Dinski, a current RC student, rounded out the panel. Jeff spent six years in media as a researcher, writer and producer, first at NBC, then at ESPN. At NBC, Jeff worked on two Olympic games, helping launch NBCOlympics.com for the 2000 Sydney Olympics, and then serving as an Olympic researcher and writer for the 2002 Salt Lake City Winter Games. In 2003, Jeff joined ESPN to launch a new morning program called “Cold Pizza,” which was designed to be ESPN’s answer to “Good Morning America” and the “Today Show.” After serving as senior writer for 10 months, Jeff became one of the show’s producers, overseeing projects including coverage of the World Series, the Republican National Convention and the 2004 NFL season.

Jeff discussed the Olympics from the TV broadcasting perspective, citing the significant amount of money spent on bringing the Olympics to the home viewer. NBC paid $613 million for the rights to broadcast the recent Torino Winter games and has contracts for every Olympics through 2012, worth a total of $4.3 billion. Broadcasting rights account for 40 percent of total Olympic revenues.

Despite a 25 percent decrease in ratings from the 2002 Nagano Winter Games, NBC still made a handsome profit from Torino, pulling in a $50 million profit and recording an average of 20.2 million viewers per night. The Olympics remain the number-one brand in sports consistently profitable. Because the Olympics attract a wide audience demographic, NBC effectively advertises for many of its other programs.

Delivering the Olympics to the U.S. market is always a challenge, with time zone differences, decisions to feature actual events versus human-interest stories, and how to reach a younger demographic. In addition, competing networks learned from the recent games that they can effectively compete for ratings with top programming such as “American Idol.”

Future possibilities include video on-demand, allowing viewers to choose which sports to watch when they want to watch and increased website offerings. Torino resulted in a quadrupling of NBC Olympic website hits since Salt Lake City, and the key will be to leverage the Internet in the future while maintaining national borders and rights.

The audience left with a much finer appreciation for the business aspects o
f the world’s leading athletic event. Please join us for the next event on the afternoon of Thursday, April 6: the Business of Sports Club Spring Conference, featuring speakers and panelists from professional sports leagues, franchises and the retail industry.

March 27, 2006
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