Here’s a business model for you, one guaranteed to rake in the bucks.
Organize a really fancy, week-long track meet. Invite countries large and small to send teams. Add other sports — swimming, baseball, cycling, soccer, sport climbing, tennis, badminton, sailing … whatever! Persuade cities worldwide to compete for the privilege of hosting the meet, and require the winner to spend billions on stadia, athlete housing and single-use sports facilities. Sell the TV rights for $5 billion or so, and make the athletes and their coaches pay their own way to get there. And don’t pay the wide-eyed kids who compete — just hand the winners fake gold, fake silver and real bronze medals. Once the meet’s over, divide up the loot with your multinational cronies, and start getting ready for the next one.
What, you say??!! No city would be that dumb; your model guarantees that the host cities will lose a ton of money. So what, this track meet will be so prestigious, create so many opportunities for local politicians to enrich themselves and will be so convincingly wrapped in the mystical aura of the ancient past that you’ll have to fight off the suckers.
OK, that’s a sarcastic take on the Olympics and the “Olympic movement,” but it’s not inaccurate. Like the National Football League, FIFA or NASCAR, the modern Olympics are all about business. And the Olympic model, like that of every unique business, seeks growth, stability and sustainable monopoly.
Monopolies, as venture capitalist Peter Thiel has noted, are the purest and best businesses. Capitalism is about accumulating capital in profitable business ventures, and monopolies do just that.
“In 2012,” Thiel wrote in the Wall Street Journal a couple of years ago, “when the average airfare each way was $178, the airlines made only 37 cents per passenger trip. Compare them to Google which creates less value but captures far more. Google brought in $50 billion in 2012 (versus $160 billion for the airlines), but it kept 21% of those revenues as profits — more than 100 times the airline industry’s profit margin that year. Google makes so much money that it is now worth three times more than every U.S. airline combined.”
Conclusion: Monopolies are great. And sports monopolies are better still, because they’re almost immune from competition. Go ahead; bring on your X Games, your UFC, your pickleball — if you get big enough, we might just let you play with the big dogs.
“If you really like competition,” Thiel noted the other day, “open a restaurant! You’ll get all the competition you could ever want.”
Are the Olympics a monopoly, like Google or Facebook? Nope — they’re way beyond such transient Silicon Valley phenomena. In 50 years, Mark Zuckerberg’s grandchildren will be amazingly rich but Facebook may have disappeared, swept away by Schumpeter’s wave of “creative destruction.”
And the Olympics?
They’ll still be around. The business model, created by International Olympic Committee founder Pierre de Coubertin in 1894, appears to be as powerful and enduring as that of Harvard University (1636), West Point (1802) or the Church of Jesus Christ of Latter-day Saints (1830). The Olympics are sui generis; despite problems that could have destroyed any other multinational nonprofit (Hitler’s Berlin games, Cold War boycotts by the U.S. and the Soviet Union, rampant doping, cost overruns in Montreal, Beijing and Athens, terrorism in Munich), the IOC chugs merrily along.
Yet change will come. So far, the Rio Olympics have been an unmitigated financial disaster for Brazil, which has spiraled into economic and political collapse during the past several years. It’s clear that billions of dollars were diverted from urgent civic needs to fund Olympic infrastructure. It’s also clear that the number of cities vying to host future games has declined substantially.
At present, the IOC has four suitors for 2024: Budapest, Los Angeles, Paris and Rome. It seems likely that that Rome will drop out.
“Rome’s new mayor, 37-year-old lawyer Virginia Raggi, has repeatedly said she is not in favour of the bid,” the Local (Italy) reported in Aug. 4,” insisting the city had more pressing issues to solve, such as its decaying infrastructure, terrible waste management and endemic corruption.”
Boston dropped out earlier this year, thanks to citizen opposition led by Millennials.
Message received. The IOC and the U.S. Olympic Committee are well aware that future games will have to move away from the “Circus Maximus” model described by Andrew Zimbalist in his 2015 book.
If, as seems likely, the IOC awards the 2024 Summer Games to Los Angeles next September, expect recycled venues, less city liability and no vast and wasteful temples of sport. It may be less fun, less garish and less pretentious — but it’ll still be the Olympics, and more than a billion people will tune in.
And as for Colorado Springs, we’ll have another fun downtown festival on opening night, and I’ll definitely be there … if I can find a parking space!