Resolving the Olympic host city crisis with professional long-term marketing

Just after I graduated, in 1964, I worked for the marketing departments of a number of US food companies, where I soon learnt that “good marketing” had everything to do with (long-term) anticipation. As a Brand Manager, I was responsible for marketing brands or products and I was tasked with improving both sales and profitability year-on-year. I needed to develop plans for the long term (more than 10 years) medium term (5-10 years) and short term (1-5 years), being mindful of any trends that might take place during each period. I had to anticipate what might happen at every stage; constantly thinking about the future; constantly monitoring consumer preferences (via market research); and, above all, not being afraid to adjust strategy when consumer behaviour showed it was necessary to do so.

I am known for using ‘sound business practices’ as my lodestar during my career in sports management. Shell, Nestlé, Mercedes, Nike, McDonalds – I could easily add hundreds more company names here – epitomise global business excellence and efficiency. In many of my speeches to IFs as president of SportAccord at our annual Congress, I told them: “I totally understand that you do not consider your federation to be a company, but you should nevertheless still run it as a company!” What I meant was: run it professionally.

Even in the use of the word ‘marketing’ the stark difference between the business world and the world of sport is laid bare. For a company, marketing is a collective term for a whole series of activities around a brand or product (price, presentation, advertising, promotions, public relations, sales operations, etc.). In the sports world, however, marketing usually just refers to selling sponsorship packages. But that is just a tiny fraction of what marketing is all about. That is just ‘sales’, not marketing.

What drives business is external competition. Firms need to be both efficient and competitive, otherwise they will quickly see their sales and profits put under pressure. This competitive pressure, by contrast, is almost entirely absent in the wonderful world of sport. Apart from a single tiny dissident federation, all the IFs recognised by the IOC are the unchallenged rulers of their respective sports. Their (world) championships are the only recognised championships. In short, they are global monopolies and so have much less need to act professionally than the global companies mentioned above.

The IOC, whose main asset is the Olympic Games, also has a monopoly. There are no other Games that even remotely compare to the Olympics. In marketing-speak, the Olympic Games are a unique ‘product’.

This product has been the subject of some heated debate in recent days and weeks. With the withdrawal of the Budapest bid to host the 2024 Summer Games – leaving just Paris and Los Angeles still in contention out of a field that started with five cities – it is clear once again that there is a global shortage of potential Olympic host cities. This has rightly been described as a crisis for the IOC. The question is how far the IOC is prepared to adjust its host city strategy and, by extension, what needs to be done to alleviate the situation?

The answer to the first question is simple: the IOC currently does not have a marketing strategy for its unique product, the Olympics. Bluntly, there is no long-term strategy for the Olympic Games because, if there was, we (and I say ‘we’ because I was an IOC member) would have anticipated this current crisis at least 10 to 15 years ago and would have devised ways to deal with it. This is professional long-term marketing and it is exactly what they do at Shell, Mercedes, Nestlé and the like!

In 1996-1997, I had the pleasure of being a member of the Evaluation Commission for the 2004 Candidate Cities. In total, we visited 11 potential host cities, no mean task in itself. Following that, I was chairman of the Evaluation Committee for the 2008 Games, after which I chaired the 2008 Beijing Olympic Games Coordination Commission.

I have therefore had plenty of opportunity to study Olympic bids and gain an in-depth knowledge of the organisation and operations of the Games themselves. I quickly came to a very important conclusion, one which I aired many times with my IOC colleagues. My conclusion was that there were no more than 15 countries in the world that could potentially host the Olympics in their current form and in a professional manner. Just 15 – no more!

I also frequently told my fellow IOC members that ‘the paint on our product is starting to wear thin’ and that, in the event of an economic crisis in the West, the number of candidate cities would fall away very quickly. It should therefore come as no surprise to them that the next three Olympic Games will all be held in Asia.

If the IOC had had even a basic long-term marketing plan, we would have realised 10-15 years ago how precarious the situation was becoming and we could have prepared against this eventuality.  But, as I said, the IOC has a monopoly and is under no pressure to take these sorts of precautions. Having signed a nice fat TV contract with NBC, it was too tempting for the IOC to just sit back and rest on its laurels. “What crisis?” we would say, not realising that, while we did indeed have a lucrative TV contract, we also had… no bidding cities.

Another factor in this crisis is the extremely negative ‘reputation’ of the Olympic Games themselves, especially around its astronomic costs and poor legacy. Proactive PR is an essential part of any marketing strategy. For decades now, the Olympic Games have been tainted by extremely negative media reports about the massive investments required to host the event, all paid for with taxpayers’ dollars, not to mention reports of huge losses resulting from hosting the Olympics. (The latter are usually not true, but are written to get attention). The IOC has stumbled from denial to denial – in other words it has been reactive, not proactive – and now the damage is done. If we had had a proper long-term plan, we would also have had a strategy to combat this negative phenomenon. And if we had had a long-term plan, would we have voted so cheerfully to host the 2014 Winter Games in Sochi, where almost everything had to be built from scratch? Or would we instead have told the Russians: ‘start building and we’ll come back in four years’ time and see how you are getting on’?

IOC President Thomas Bach now says we need to change the bidding system because the current system has “too many losers” (a sentiment that could equally be applied to all gold medallists at the Games). His remark is a bit of an oxymoron given that there are now only two candidate cities. It would be understandable (if the media speculation is correct) if the IOC allocated the2024 and 2028 Games respectively to Paris and LA. But that would just be an ad hoc solution, born of necessity, and would offer no sustainable way out of the current crisis.

So much for the reasons for the current lack of bidding cities. In my next post, I will outline what I believe the IOC can do to avoid this crisis happening in the future.

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