Author: Jeremy Bowman | February 14, 2018
Numbers on an Olympic scale
Every four years, the Olympic games capture the imagination of the sporting world unlike anything else. But behind the glitzy ceremonies and heated competition is a multibillion-dollar economic engine. In fact, the Olympics have often been criticized as a boondoggle for host cities, which often build enormous stadiums that are never used again and spend billions on a two-week party that generates little return on investment.
Still, for a host city, the prestige of welcoming the world and putting itself on the map is often worth the cost, as it makes unknown places like Pyeongchang immediately world-famous and instills a sense of pride in locals.
The journey to the Olympics can be financially risky and full of sacrifice for the athletes as well, in addition to being the culmination to a physical and competitive gauntlet that has occupied most of their lives. Keep reading to learn some financial facts about the Olympics that you probably didn’t know.
1. $13 billion
That’s the estimated cost of the 2018 Pyeongchang Olympics. Like almost all of the games before it, the Pyeongchang games is expected to go over budget. Planners had originally projected a cost of $8 billion, but now expect the total to be $13 billion. While that may sound expensive, it’s a relative bargain compared to the 2014 Sochi games, which were the most expensive ever at $51 billion due to excessive fraud and mismanagement.
The Pyeongchang committee, wary of overspending, took steps to tighten the budget by constructing a temporary stadium for an estimated $60 million to host the opening and closing ceremonies. Still, some are skeptical that the event can turn one of the poorer parts of South Korea into a tourist destination.
2. $19.74 to $874
Tickets are still available for the 2018 games, and there’s a wide range in pricing depending on the events. Prices start as low as $19.74 (or 20,000 Korean Won) for the cheap seats in events like preliminary rounds of women’s hockey, bobsled, skeleton, cross-country skiing, and others. On the other hand, tickets for the more coveted medal-round events get pricey.
Face values for the men’s gold medal hockey game top out at $828, and a seat at the figure skating Gala Exhibition will cost you $735. The most expensive remaining listed tickets are for the closing ceremonies, at $874.
Since Olympic medals weigh about a pound and are one-third of an inch thick, you may think gold-medal winners are taking home some serious bank, as gold is worth more than $1,300 an ounce. However, since 2012, Olympic medals have been gold-plated instead of solid gold, and the Pyeongchang medals will contain about 1% gold, or 6 grams. An estimate by Money magazine found that the value of the gold medal, if it were melted down, would be about $577. A silver medal, which is solid, would be worth about $320, but a bronze medal is valued at just $3.50.
The real payoff for athletes isn’t in the value of the medal itself. It’s in the bonus that home countries pay to medal winners. In the Pyeongchang games, American winners will get $37,500, while silver medalists take home $22,500, and bronze winners earn $15,000. Some other countries are even more generous -- Belarus gives its gold medalists $150,000 -- while the U.K. pays nothing in bonuses, but instead directly funds sports that have medal potential.
5. $100 million
That’s the price for top-level sponsorship deals to the International Olympic Committee. Corporate giants like Coca-Cola, Toyota, and Procter & Gamble shell out about $100 million every four years to the organizers. In addition to television commercials, such sponsors get to market their services to spectators on the Olympic grounds and even provide services directly to the organizing body, as Intel is doing with 5G wireless technology, drones, and other gear at the Pyeongchang games.
6. $900 million
The IOC isn’t the only one benefiting from the corporate windfall. NBC, the host network, is expecting to generate $900 million in ad sales, following a $500 million bounty from the Super Bowl, making it quite a bumper month for the Comcast-owned network. That revenue is up slightly from the Sochi games, when NBC brought in $800 million in ad sales. NBC has committed $12.15 billion to the Olympics to host the summer and winter games through 2032.
7. $40 million
With a net worth of $40 million, snowboarder Shaun White is the richest U.S. athlete at this year’s Olympics. Dubbed the “Flying Tomato,” the two-time gold medalist has scored sponsorships with Burton, Beats by Dr. Dre, and other brands. White is followed by female snowboarder Jamie Anderson, who won gold in 2014 and claims a net worth of $4 million. Anderson is endorsed by companies including Visa and United Airlines. Skier Lindsey Vonn has a net worth of $3 million and sponsorships from the likes of Under Armour and Red Bull.
Olympians who haven’t become household names aren’t living the high life, however. According to a 2015 study by a non-profit group, the average salary for the top 150 U.S. track-and-field athletes was just $16,553. Many athletes work part-time or second jobs to support themselves as they work toward their Olympic dreams.
While some tickets for Olympic events are still reasonably priced, the cost to attend the games isn’t cheap. According to Money, the total package including a flight to Seoul, a week-long stay in a hotel, and a ticket package for a variety of events including hockey, alpine skiing, and speed skating, would cost the average American $4,683.
10. $963 million
As with other live sporting events, it has gotten increasingly expensive to air the Olympics. Nearly half of the IOC’s funding comes from broadcast rights, and NBC is paying an estimated $963 million to air the 2018 Games. That’s less than the company pays for the Summer Games as Rio 2016 cost $1.23 billion, but the cost continues to rise. The broadcaster signed an extension to carry the six Games from 2022 to 2032 for $7.75 billion, or about $1.3 billion each.
While Olympic gold medals themselves aren’t worth a whole lot, individual medals can be valuable, especially if they have historical significance. One of the gold medals won by Jesse Owens, the American track star who “ran against Hitler” at the 1936 Berlin Games, was auctioned off for $1,466,574 -- a record for Olympic memorabilia. Similarly, the gold medal won by Jim Craig, the U.S. goalie in the “Miracle on Ice” game against the USSR in 1980, was valued between $1 million and $1.5 million at a recent auction, though there were no buyers.
Advertisers will shell out $100,000 for 30-second spots to NBC during the Olympics. While that pales in comparison to the $5 million the network charged during the Super Bowl, the Olympics present an advantage in some ways for advertisers as they can run the same ads several times during the two-week event.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Visa. The Motley Fool recommends Comcast and Intel. The Motley Fool has a disclosure policy.