Pulling Off a Rare Olympic Feat in Paris: Turning a Profit

Bloomberg Audio Studios, podcasts, radio news. In just two weeks, the thirty third Olympics will get underway in Paris, and for the first time in history, the Summer Games won't kick off in a stadium, but instead on a river the seen And that's not the only thing that will be different about this year's Olympic Games.

I think what's at stake is nothing less than the credibility of the IOC.

Hugo Miller is a reporter with Bloomberg who's been covering the run up to the Games. He says the reason that Paris has become such a high stakes event for the International Olympic Committee or IOC, has to do with the history of the Games and their history of blowing the budget.

From really the origins of the Games, when they were first the modern incarnation Olympics, it was very much about prestige. It was very much about pomp and circumstance. What that led to over time was a very bloated form of games. There was no sense of not doing things. It was always about doing things and more when in doubt add another ceremony or whatever it might be.

But a series of Olympics marred by terrorism and cost overruns in the nineteen seventies called that strategy into question.

It began with the terrible tragedy of the murder of eleven Israeli athletes in Munich in nineteen seventy two.

So shame on you, International Olympic Committee, because you have forsaken the eleven members of York Olympic family.

Then in nineteen seventy six you had an absolute fiscal disaster that beset Montreal. Then you had the Winter Olympics which were scheduled to be held that year in Denver, before the taxpayers revolted and said no thanks.

Innsbruck, Austria eventually agreed to host the Winter Olympics in nineteen seventy six, but more sees followed. The nineteen eighty Summer Olympics in Moscow were boycotted by sixty five countries, including the United States, due to the Soviet Union's war in Afghanistan.

The final outcome we'll say more about the state of East West relations than about international sport. It certainly looks as if the Olympic spirit is going to have to struggle to survive.

By nineteen eighty four, very few cities were clamoring to host the games.

You had a whopping two bidders, you had Los Angeles and Tehran, but that bid quickly became very complicated when a revolution overtook the country. So essentially the IOC was left with a single bidder, and that was mister Peter Eyuberoth and his bid in La.

Peter Uberoth was a star water polo athlete in college who dreamt of one day becoming an Olympian, but he couldn't quite make it as an athlete and instead found it a successful travelingecy. His background as a successful business person meant he had a different vision for how the Olympics should be run.

He said, listen, I essentially think we need to run a modern, no nonsense games. We're going to house athletes and student dormitories. We're not going to build any stadia. We're going to use the existing Rose Bowl and the LA Coliseum, and we're going to do this and we're going to do this on budget, on time the way I want to do it. And essentially IOC had no choice because that was the only big going.

So on July twenty eighth, nineteen eighty.

Four, Movies for You on the five of U leagues in the world.

Then President Ronald Reagan opened the twenty third Olympic Games in Los Angeles.

I declare hope the Olympic Games of Los Angeles.

The ceremony featured eighty four grand pianos being played by eighty four LIBERACEI lookalikes.

So it certainly had glitz. It certainly had a kind of hollywoods sizzle. But what it didn't have is a sense of sort of unlimited budgets.

The Games were the first to include the women's marathon, rhythmic gymnastics, and synchronized swimming as events, and they were also the first to ever turn a profit, meaning Uberov did eventually achieve his dream of making Olympics history.

He famously was the first and I think to this day, only Olympic Games architect that managed to deliver a sizeable profit of some two hundred and fifty million dollars.

Today, on the show Why Paris is trying to follow in LA's footsteps and what a paired down, cost conscious Olympics could mean for the future of the Greatest show on Earth, I'm Sarah Holder, and this is the big take from Bloomberg News. To understand just how hard it is to run a profitable Olympic Games helps to understand how the games make money, says Bloomberg reporter Hugo Miller.

The games are paid for with a very carefully determined budget, which is made up essentially of revenues from sponsorship. From what's called the top sponsorship, it's the Olympic Partnership program right now, they include Ali Baba, Airbnb, Bridgestone, Tires, Coca Cola, Intel, to name just a few, and they will contribute what is currently thought to be between two and a half to three billion dollars for an Olympic cycle, and that would be a four year period.

But that's not the only source of revenue.

There's also revenue coming from.

TV rights, though that could be changing as viewer habits change. Already, TikTok announced a sponsorship agreement with the British Olympics team, which brings us to a third source of revenue funding from the private sector.

And the challenge I think every organizer has is to maximize the contributions from the private sector and minimize the amount of simple donations or funding from state coffers.

The aim is to make sure that it's not cities themselves that are actually paying for the cost of the games, but that's been hard to achieve.

There is a difference between what is spent on the games and what is spent on the infrastructure of the games, and that's where the Olympics have got into trouble.

Hugo says that even though Peter Uberot's nineteen eighty four La Olympics offered a roadmap for how to run a profitable games, like, for instance, by using stadiums that already existed for many years, organizers just didn't heed those lessons. Take the Athens Olympic Games in two thousand and four, which cost over ten billion dollars.

There are some people that even say that the sovereign debt crisis that befell the EU ten years ago, which began in Greece, began with the Olympics.

Then there was Sochi in twenty fourteen. In those games, the Russian government spent over fifty billion dollars, and then the twenty sixteen Rio Games, which became known for building white elephants stadiums for events that went unused after the games.

There were famously photos of the Olympic swimming pools filled with just sort of green mold in the water six months after the games. Terrifying.

Yeah, these cost overruns and abandoned projects made it harder and harder for cities to convince their residents that hosting the Olympics was all it was cracked up to be.

There are a number of cities where the citizens have ultimately decided that no, thank you, we don't want to host the games. This was true of Rome, this was true of Boston, this was true of Oslo, Norway. In fact, the Winter Olympics for twenty twenty two that were just held in Beijing, there was only two bidders. There was Beijing and al Mati. Because the other bidders that were essentially all in Europe had all said no thank you.

IOC decided something had to be done, so they changed everything, including how cities even raise their hand to host the Olympics.

So, rather than having a beauty pageant where the IOC delegates physics cities and then there was a grand opening of an envelope a year later and the winner is announced and all the others go home and cry into their beers, you have a very different system where you have countries saying hey, I'm interested, and the IOC says, okay, what are you thinking? And then there's a series of conversations that are held privately, which some people might say, well,

Hugo says. This has meant that fewer cities are even submitting bids, but that's fine as far as the IOC is concerned, since the bids it is getting are now more likely to be realistic, which brings us to Paris.

The IOC is definitely hoping that Paris twenty twenty four will work, will come off as a shining example of a new streamlined, more socially, more fiscally, more environmentally responsible Olympics.

Coming up after the break Paris's plan to make the Olympics more sustainable, and whether it will work. The Paris Olympics' organizing Committee has said that its four point seven billion dollar budget will be ninety six percent finance by the private sector. Government officials have said that the Games will be the most economical in decades, Bloomberg's Hugo Miller says they have taken notable steps to make sure those statements are more than just talk.

Paris is not spending large amounts on new stadia. It's using, in fact, an old stadium used to host the World Cup as their main athletics venue. They are stressing the construction of temporary facilities. They're even going to be holding beach volleyball beneath the Eiffel Tower using temporary grandstands bleachers. So in essence, they're trying to capitalize on the existing infrastructure and existing beauty of a city like Paris, and that they hope is going to keep costs down.

But there's always the possibility that something could happen to derail even the best laid plans.

I think the big wildcard in the Paris scenario is the security aspect. We just don't know what could be happening or could happen over the course of the next three weeks to four weeks in Paris, and either a single event could send cost skyrocketing as suddenly literally thousands of additional security needs to be brought in.

But even with that asterisk, Hugo says that the Paris organizers have been getting high marks for their cost consciousness.

In terms of the operational costs that have been planned out. Even Cynics seem to be saying that Paris is doing a good job of their planning.

The hope is that if these games do come in on budget, it could serve as a blueprint for subsequent Olympics.

What begins in Paris is an unprecedented run of six Olympics being held in very pretty city scapes, naturally stunning scenery, whether you're talking the Alps for the Winter Olympics or the likes of a Paris or an La or even a Brisbane on the Australian coast.

But if history is any guide, getting the strategy to stick could prove tricky. After LA's nineteen eighty four success, cities only managed to learn half of Uberroth's lesson. They emulated the Hollywood sizzle and forgot all about the cost taming strategies. Plus, Hugo says that it's not just about economics when it comes to the Olympic Games, and that could lead the games to be hosted in some places that don't exactly scream budget.

I think the chance that the IOC wants to take risk of your bets with the Games is very high after twenty thirty two. And probably the country that is most aggressively, discreetly but aggressively bidding to host the Olympics and even Winter Olympics is believe it or not, Saudi Arabia. So as crazy as it sounds, it may be the case that Saudi Arabia bids for and wins the rights to a Winter Games in the twenty thirties to come.

Why not just have one place host the Olympics every year? Why even compete and have to build all these new stadiums every year to win the Games.

That's a very sensible idea, the idea of having one single host. People say Athens, it was the historic host of the Olympics, so why not Athens? And then why not a sensible, fiscally prudent country like Norway hosts the Winter Games where there's guaranteed snow. I think that's not going to happen because the IOC believes that it wants to bring the Olympic spirit around the world. They very

I guess the Olympics isn't ultimately only about financial prudence. It's about having the world come together for this event.

We forget that, but it's supposed to be about a two week festival of sporting excellence.

So, Hugo, are you going to the Olympics this year? What sport are you most excited to watch there?

Indeed I am. I hope I can get out of the city for at least an afternoon to catch the biking, the mountain biking. If not, hopefully I will catch some of the road racing through the scenic streets of Paris.

That's it for this episode of The Big Take from Bloomberg News. I'm Sarah Holder. This episode was produced by David Fox. It was edited by Tom O'Sullivan. It was mixed by Blake Maples. It was fact checked by Jessica beck Our Senior producers are Naomi Shaven and Kim Gettelson, who also edited this episode. Our senior editor is Elizabeth Ponso. Nicole beamsterbor is our executive producer. Sage Bauman is Bloomberg's