By Mark E. Moore
Faculty Member, Sports and Health Sciences at American Public University
The Olympics are sporting events at their best. The Olympic Games offer the milestones achieved by world-class athletes, superb competitions and patriotism from almost every country in the world. It’s a spectacle of unmatched global excitement that offers the ‘thrill of victory’ and the ‘agony of defeat.’
But the Games are more than just a global sports competition. They provide financial benefits to their hosts, to athletes and to businesses.
Hosting the Olympic Games Creates Revenue
Like all mega-events, the Olympics have significant financial impact on the host city. According to Bangladeshi news source The Financial Express, the 2016 Summer Games are expected to generate four billion dollars in revenue for Rio.
Similarly, the International Olympic Committee (IOC) should earn $3.8 billion from the telecasting of this year’s events and festivities, according to The Hindu Business Line.
Olympic Medals Equate to Income
While it may seem that Rio’s Olympic Committee and the IOC build financial equity at athletes’ expense that is not the case. Olympians also link their own competitive success to wealth generation.
Olympic athletes obtain riches from two revenue streams. National Olympic Committees pay their respective athletes for each medal won. The United States Olympic Committee offers $25,000 for a gold medal, $15,000 for a silver medal and $10,000 for a bronze medal. These financial awards are taxable in the U.S.
Other nations provide payment to medalists, too. For instance, Singapore paid $700,000 or more to a gold medalist and China offered victorious Olympians luxury cars, houses and sizable amounts of cash.
For additional motivation for Olympians to perform at the highest level, National Olympic Committees have awarded monetary prizes to athletes since the enactment of The Amateur Sports Act of 1978.
Olympians Earn Income by Becoming Brand Spokespersons
While National Olympic Committees make sure their top Olympians have comfortable lives, there is also another avenue athletes can use for broadening their wealth: endorsements. The Olympics enables its stars to excel as endorsers and earn millions of dollars in the process.
Top athletes earn sizable incomes through endorsements of corporate products. Swiss tennis player Roger Federer is the top athletic endorser in the world, making $60 million through corporate deals. American basketball player LeBron James generated $54 million in athlete endorsements over the past 12 months.
ROI for Olympic Sponsors
Corporations incur a significant return in investment from working with Olympians to promote their brands and experience a healthy spike in brand equity. There’s nothing like athlete competition on the global scale to evoke interest in Olympians as product endorsers from large and small businesses.
Given the demand for publicly known advocates in the corporate arena, there are plenty of opportunities for Michael Phelps, Katie Ledecky, Simone Biles and other U.S. athletes to hone their endorsement skills all the way to the bank. For example, NBA star Paul George played in Rio this year, knowing that his corporate endorsement potential could have a noticeable upswing.
We should value the importance of athletic prowess and incredible internal motivation of the Olympians, but also understand that extrinsic motivation has a role in their accomplishments. After all, it will be ‘Rio to Riches’ for many of the games’ top performers with marketability.
About the Author
Dr. Mark Moore is an adjunct faculty member at American Public University. His writing interests are in the areas of sport marketing and sport finance. Mark is also an author of a textbook on corporate sport marketing.
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