Professional Report of 2018 Winter Olympic Games

Professional Report of 2018 Winter Olympic Games

The Winter Olympic Games are an event involving multiple sports events being played and is held every year at different venues. To host the games a country has to make a bid to the IOC outlining why they think they should host the games. The IOC then selects the most successful bid of the most economically viable country while maintaining diversity continentally. This report is aimed at analyzing the financial viability of the three cities that have placed bids, Munich, Annecy and PyeongChang, for the 2018 winter Olympic Games and identifying the most preferred bid. Since the economic viability of a city and the country in which it is located shall be based on their ability to raise revenue, and market the games, the IOC shall focus on these two areas. The countries shall raise revenue in three main ways: sale of tickets, sponsorship and licensing.

Ticketing

In terms of sale of tickets, all cities have strategies that shall ensure maximum sale of tickets and ensure that the stadiums fill up. Munich estimates to generate revenue of about 208.4 million USD (2010), PyeongChang estimates a 235 million USD (2010) and Annecy estimates about 206.9 million USD (2010). Therefore, in terms of the sale of tickets, PyeongChang shall have the leading sales followed closely by Munich and then Annecy considering all factors remain constant and estimated figures materialize. The estimated sell-out rates for these three cities are 89 percent, 81.9 percent and 85 percent for Munich, Pyeongchang and Annecy respectively (Games bid, 2011).

Therefore, this means that though Pyeongchang is leading in the sales figures its rate of selling out the tickets is still wanting. All cities have a strategy that shall ensure maximum ticket sales across all classes of citizens and through availability at as many purchase points as possible. Advance booking strategies shall also be applied where clients could book tickets up to 6 months before the games begin.

Sponsorship

            In terms of sponsorship Munich has a national sponsorship program for the winter games that shall generate about 511.2 million USD (Games bid, 2011) in terms of revenue. The program shall consist of three levels of sponsorship. The first one shall be the Top Sponsors who shall give about 299.8 million USD (Games bid, 2011) sponsorship, the second being the Providers with 179.1 million dollars (Games bid, 2011) and the suppliers with 32.3 million dollars (Games bid, 2011). Pyeongchang shall have an estimated 500 million dollar (Games bid, 2011) domestic sponsorship program that shall be divided into three tiers almost similar to the Munich one.

Tier one shall be composed of Domestic Partners who shall contribute 360 million dollars (Games bid, 2011). Tier two shall be composed of Sponsors who shall be responsible for 90 million dollars (Games bid, 2011) and the third Tier shall be composed of Suppliers who shall contribute 50 million dollars (Games bid, 2011). In Annecy, there shall be three levels of sponsorship also. They shall contribute 455 million dollars (Games bid, 2011), 206.7 million dollars (Games bid, 2011) and 103.35 million dollars (Games bid, 2011) for the first, second and third level respectively. All sponsor’s contributions are said to be real estimates that were achieved after close observation of the current experiences and thus are said not to change come the year 2018. However the Annecy figure includes 18 million for the Paralympic Games. Annecy here takes the lead, followed by Munich and then Pyeongchang.

Licensing

            Munich plans to license the selling of different merchandises that have memorabilia value and collectability. The estimated income from these shall be 36 million dollars (Games bid, 2011). The licensing intended in Munich shall target both foreign and local companies and shall aim at making the trade as fair as possible. In Peyongchang the licensing of merchandise sales shall also be carried out and shall consist of 30 types of trendy consumer goods and 20 types of memorabilia. Memorabilia shall include items like dolls, key chains and Korean handicrafts while trendy goods shall include apparel, hats and bags.

The estimated revenue from licensed merchandise shall be about 490 million USD (Games bid, 2011) while there also shall be an additional 27 million USD (Games bid, 2011) from fees. In Annecy there shall be an estimated 40 million dollars acquired from their licensing program that shall include merchandise like luggage, office supplies, games and glasses just to name a few.

The OCOG Budget- Revenues and Expenditures (Forecast)

            Due to its non profit making nature, the OCOG has estimated its revenues and expenditures to have an equal figure of about 1.522 billion USD (2010) (Games bid, 2011). These are the figures in Munich. In Pyeongchang, the OCOG budget is estimated at 1.531 billion USD (2010) (Games bid, 2011) and in Annecy the budget is estimated at 1.85 billion dollars (Games bid, 2011). The country’s budgets that do not fall under the arm of the OCOG are as 3.301 billion USD (2010) (Games bid, 2011) for Annecy, 1.864 billion USD (2010) (Games bid, 2011) for Munich and a whooping 6.432 billion (Games bid, 2011) for Pyeongchang. Most of the items that appear in the budgets include items related to infrastructure, communication, fields, transport facilities, hotels and shopping complexes.

Preferred Bid

Based on the various sections discussed above, the most preferred bid for the host of the 2018 Olympic Games would be Pyeongchang. This is due to the high revenue formation rate that it has and the low amount of money that the OCOG is supposed to add onto the already collected sum. The systems of economy used in the country to redistribute the resources to the whole country shall also be good and shall have the greatest good. The predictions made by Pyeongchang offer the most favorable environment for the Olympic Games and the economy, infrastructure and the raising of the living standards of the people of Korea. The development levels that shall be achieved in the city and the country shall benefit the future generations of the country.

The 235 million (Games bid, 2011) dollars revenue that the country expects in the sale of tickets shall be a milestone in the achievement of their economic prosperity. The 81.9 percent (Games bid, 2011) rate of sales of the tickets, though the lowest is still an estimate and owing to the laid down strategies, they are subject to much improvement. The domestic sponsors in the city and Korea as a country have offered 500 million dollars (Games bid, 2011) as support to the games and this shall create a significant mark in their budget. The business people in Korea and other foreign business people are estimated to establish businesses that shall enable Korea to raise 490 million dollars (Games bid, 2011) in form of merchandise licenses. The OCOG has the lowest budget in the country owing to the large investment the country has made in the preparation for the games as they have invested over six billion in the venture. In terms of economic viability, so long as the set estimates do not falter by large margins, the Pyeongchang city shall indeed be the host of the 2018 Olympic and Paralympic Games.

References

Adam, B 2010, Economic Impact of the Olympics Games, John Willey and Sons, London.

Elcombe, T & Wenn, S 2011, Thoughts on Olympic Revenue and the IOC , SAIS Review, Vol. 6(1), pp. 117-133.DOI: 10.1353/sais.2011.0011s

Games bid 2011, Summary of Annecy 2018 Final Presentation to the IOC, Retrieved from: http://www.gamesbids.com/eng/winter_olympic_bids/annecy_2018/1216135787.html

Games bid 2011, Summary of Munich 2018 Presentation to the IOC, Retrieved from:  http://www.gamesbids.com/eng/winter_olympic_bids/munich_2018/1216135786.html

Games bid 2011, Summary of PyeongChang 2018 Final Presentation to the IOC, Retrieved from:  http://www.gamesbids.com/eng/winter_olympic_bids/pyeongchang_2018/1216135788.html

IOC, 2011, 2018 Candidature Acceptance Procedure: Xxiii Olympic Winter Games, Author, Durban.

John, K, Bernhard, W & Richard, L 2010, Bidding for Sport Mega-Events. University of Adelaide Press Publishers, Adelaide.

Joseph, K 2011, Economics of the Olympic Games, SAIS Review, Vol. 31 (1), pp. 87-97, DOI: 10.1353/sais.2011.0003.

McHugh, D 2010, Cost Benefit Analysis of Olympic Games, Economics Vol. 1, pp 1-60.

Peitsmeier, H 2011, Olympic Bid 2018: The perfect stage, Sage, New York.

World Media 2011, Korea economic report Vol. 22(1-11), Author, Pyeongchang.

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