SBJ/July 22-28, 2013/Opinion

What is your sports property doing to build, keep its fan base?

We know that many sports business professionals haven’t been too concerned to learn Russian President Vladimir Putin and others are well on their way to spending $60 billion to stage the February 2014 Winter Olympics and Paralympics in Sochi. If the Russians want to set the all-time host-city spending record on behalf of the International Olympic Committee, who among us should really care?

Certainly, other host cities could have spent much more (Beijing’s $42 billion in 2008 comes to mind, although many believe the Chinese actually spent far more) and London 2012 probably could have “pounded it,” but it was appropriately restrained and reportedly stayed under $20 billion.

So when we size up Sochi’s spending, we’re forced to admit the Russians have not been shy … even if much of the investment has come from politically prodded private-sector money. It matters not. What was once a rural town near the Georgian border is well on its way to becoming a world-class beach/ski resort that will draw tourists and outdoor enthusiasts for generations to come.

But is this the right approach for the IOC and the Olympics? Should the staggering amounts spent by the host city-state matter? Will future regions simply cozy up to governmental or private industry underwrites to fill out this trend? It depends on someone’s true (or secret) agenda.

For $80 billion, Alaskan oil money could develop a ski hill and resort destination near Mount McKinley. Or maybe Newfoundland Hydro could do something with the World Heritage Site Gros Morne and turn an environmental jewel into a tourist destination. Think what the Australian mining companies could do with the Great Barrier Reef or Ayers Rock.

It’s not an easy question, particularly when pesky taxpayer dollars are concerned. Still, as usual, we have more than a few comments.

Construction continues on the Olympic stadium in Sochi, Russia, ahead of the 2014 Olympics.
Photo by: GETTY IMAGES
First, will the topic of Olympic gigantism influence Rio 2016 and Pyongchang 2018? Does $60 billion in Russia mean we’re not far removed from the first $100 billion Games? And, while the IOC has put some controls on Games size — capping the number of athletes and sports and encouraging temporary facilities — the desire to put on the best show might float future budgets where one-upping the previous host city matters.

Secondly, and this is a little darker although far from rare, what are the geopolitical ramifications when a country uses the Olympics to make a statement about its wealth, politics or policies? Diplomatic columnists frequently suggested that Beijing 2008 was a “coming-out” party for China’s communist government and burgeoning economy. In short, one of the objectives of the 2008 Games was to show the world that China was truly a first-world country.

Well, mission accomplished. Others have done similar things, including St. Louis 1904, Berlin 1936, Tokyo 1964, Montreal 1976, Moscow 1984 and Sydney 2000. In the case of Berlin 1936, let’s not forget that what lay behind that big investment was the staging of the Games as a platform for German nationalism and a springboard for Adolf Hitler to war. Those efforts ultimately crippled the world for the next nine years (if not more) and forced the cancellation of the Olympics through 1948.

With respect to the U.S., in both 1984 and 1996, American planners made commercial statements in their staging of the Los Angeles and Atlanta Games. But where Los Angeles was praised for its distinctive (and creative) private financing, Atlanta was panned for its engagement of crass investors such as sponsors, merchandisers and licensees.

In retrospect, many in the Olympic movement begrudgingly acknowledged the U.S. helped push the IOC toward a fiscal orientation of profitability and sustainability. Canadian Dick Pound, as longtime IOC vice president of marketing, further modernized IOC strategies and helped steer the Olympic movement toward greater revenue performances.

And thirdly, let’s not forget tourism — key driver of recent mega-event investments — which has become one of the sought-after impacts of any Games. Sydney, Vancouver, Turin, Beijing and, now, Sochi, all focused on this key output throughout the prospecting, bidding and Games-winning phases. We know from our own academic research that Olympic Games do change country images in the minds of international tourists. They work, and Beijing 2008 absolutely changed how Americans and Canadians view China.

So what to make of Sochi’s expensive Games?

There are a few points of view. Financial investment aside, we see Sochi 2014 as a skilled blending of the third point, tourism, with a solid mix of the political. If we’re right, one might say the Russians are building a brilliant disguise. Yes, brilliant.

Russia will put its beaches, mountains, rugged beauty and ability to build a world-class resort in a few years on display. And not only will it host the Winter Olympics but it also will be getting the Formula One Russian Grand Prix and key games during the 2018 FIFA World Cup.

All of that will help the Russians move their image from the old, lingering perceptions of Cold War, vodka, KHL hockey and female tennis players, to that of an industrious country capable of high-level work in a spectacular sea-to-sky world. But is there more to it than meets the eye?

Hard to say. But if you have $80 billion lying around, know that you can do the same for your favorite town.

Rick Burton (rhburton@syr.edu) is the David B. Falk Professor of Sport Management at Syracuse University and former chief marketing officer for the U.S. Olympic Committee. Norm O’Reilly (norman.oreilly@ottawa.com.ca) is a professor of sport management at Ottawa University and senior adviser at TrojanOne.


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