London olympics 2012
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London olympics 2012



Economics of London Olympics

Economics of London Olympics



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London olympics 2012 London olympics 2012 Presentation Transcript

  • Case Study Presentation ByRamkiran Nanduri
  •  Introduction Olympic Organizing Committee Economics of the games Past Olympic Games 2012 Games Plan Ticketing Conclusion
  •  What does Olympic mean and how it born?.It comes from the city-state Olympia that was inancient Rome. The Olympics were a celebration ofstopping wars to come together for the Olympics andcelebration of the god Zeus. .When and where Olympic started and Played First?The Modern Olympic Games first held in 1896 inAthens, Greece. Total Participants were:241,Totalsports were 9 and games held between (6 - 15 April1896) 10days.
  •  Can any one tell how many times Olympic organised till date: 26th time except 1916,1940 and 1944 because of worldWar.
  •  Country Gold Silver Bronze USA 11 7 2 Greece 10 17 19 (Highest medal winner) Germany 6 5 2 France 5 4 2 Great Britain 2 3 2 Hungary 2 1 3 Austria 2 1 2 Australia 2 0 0 Denmark 1 2 3 Switzerland 1 2 0 Mixed Team 1 1 1
  • 1)Four rounds of voting done by the Members of IOC held in Singapore ,117 IOC Session on 6july 2005.2)Total 9 cities finally submitted Application.3)Cities were Paris(France)Leipzig(Germany),New York(USA),Istanbul(Turkey),Havana(Cuba),Mos cow(Russian Federation),London (Great Britain),Spain and last Brazil.
  • Rounds 1 2 3 4London 22 27 39 54Paris 21 25 33 50Madrid 20 32 31 -New York 19 16 - -Moscow 15Result: London won by 4 votes.
  •  It will cover: The 80000-seat Olympic stadium for opening and closing ceremonies and athletics. The 17500-seat Aquatics center –for diving,swimming,and water polo. The 12000-seat London Velopark –for indoor track cycling and outdoor BMX Cycling. 12000- Seat basket ball arena. The 17000-bed Olympic Village.
  •  IOC (International Olympic Committee) is a non-profit organization based in Lausanne , Switzerland Governed by 115 voting members And staffed by 150 full time employees Provided contractual guidelines, managed copyrights, trademarks and other assets IOC is Also responsible for negotiating and managing broadcasting rights and international sponsorships while OCOG(Organizing Committee For The Olympic Games) is responsible for ticketing, domestic sponsorships and domestic licensing
  • Source Organization Amount(in millions) ResponsibleBroadcast Rights IOC $1332International IOC $405Sponsorships OfGames Sydney OCOG $551Ticketing To Games Sydney OCOG $492DomesticSponsorships OfGames Sydney OCOG $52Licensing RightsTotal $2832
  •  50% to 65% of the broadcasting rights and international sponsorships went to OCOG OCOG is also associated with expenses of planning the games, housing the athletes and running the events. OCOG employed several hundred individuals over the four to seven years leading up and including the games
  • Source Approx. Amount(In Millions) ($)Sydney Organizing Committee Of 2137The Olympic GamesNational Olympic Committee 321International Federations 200International Olympic Committee 173Total $2832
  •  Revenues Generated for Broadcast Rights 2000 Sydney Games. $ $1,400 2,832 Millions $1,200 International Sponsorship of $1,000 Games $800 Ticketing to $600 Games $400 $200 Domestic Sponsorship of $0 Games Amount ( in Millions) Licensing Rights
  •  Allocation of Revenues Sydney Organizing from the Games. $ $2,500 Committee 2,832 Millions $2,000 National Olympic Committees $1,500 $1,000 International $500 Federation $0 Amount ( in Millions) International Olympic Committee
  •  Using its allocations of the olympic revenues, the host city OCOG had to plan for, organize & manage the 17 days of the game, all with in the contractual obligations set forth by IOC.
  •  Staging the opening ceremony, closing ceremony & sporting events. Arranging for required stadia, arenas, training facilities & equipment. Housing & feeding the athletes & officials. Anticipating & solving potential transportation problems Meeting the needs of the media. Providing security to ensure a safe & peaceful olympics.
  • Infrastructure costs $ 2 billion for Sydney.ranged for SYDNEY, $ 15 billion for AthensATHENS & BEIJING $ 40 billion For Beijing.
  •  London Olympics is an “Everybody Game” Stakeholders are 60 million British. Free Open Air Festivals before games. Large Screen TVs around UK. Preliminary Football Rounds at Glasgow, Cardiff, Manchester, Brimingham and Newcastle. Availability of tickets to all at a accessible price.
  •  Initial Budget in 2004 : £2 billion Revised Budget in 2007 : £3 billion ◦ £560 m two new venues (including £250 m for the Olympic Stadium). ◦ £650 million for the Olympic village. ◦ £1.5 billion to run the Games. ◦ £200 million on security.Current Estimates in 2011 : £9 billion
  • Projected revenue : £ 3.75 billion £1.5 billion from a special Olympic National Lottery. £625 million from a council tax surcharge of £20 per year for London households. £560 million from IOC television and marketing deals. £450 million from sponsorship and official suppliers. £300 million from ticket sales. £250 million from the London Development Agency. £60 million from licensing.
  • Expenditure in $ Mil 2000 Olympic Park 6000 Transportation Misc4000
  • Funding % 5 20 National taxes London Taxes National Lottery Misc 6015
  • Revenue million Olympic National Lottery £250 £60£300 Council tax £1,500.00 IOC Broadcasting£450 £560 Sponsorship £625 Ticket sales London Development Agency
  • Total Expenditure (Billion USD)353025201510 Total Expenditure 5 (Billion USD) 0 Athens Beijing (Estimated) London (Projected) 2004 2008 2012
  • 350 300 302 301300250 204 205 201200 2012 london150 125 112 106 2008 Beijing100 2004 Athens50 26 28 28 0 Nations Sport Events Athelets (X 100)
  • BROADCAST REVENUE (MILLION USD)200018001600140012001000800600400 Broadcast200 0 Revenue… Sydney Seoul Atlanta Beijing Athens Barcelona Los Angeles 1984 1988 1992 1996 2000 2004 2008
  • INTERNATIONAL SPONSORS700 REVENUES 606600500 464 405400300200 195 No of Sponsers 120100 67 9 12 10 11 11 12 0 Seoul Athens Sydney Barcelona Atlanta Beijing 1988 1992 1996 2000 2004 2008
  • 1210 8 6 4 Tickets availabe for sale (in millions) 2 Tickets sold (in millions) 0 Sydney Barcelona Seoul Atlanta Athens Beijing Los angeles Ticket Revenue (in 100 millions) 1984 1988 1992 1996 2000 2004 2008
  •  Total 33 Venues New Olympic Park – East London By Developing 500 acre existing industrial and waste land to include:- ◦ 80,000 Seat Olympic Stadium ◦ 17,500 Seat Aquatic Center ◦ 12,000 Seat London Velopark ◦ 12,000 Seat Basketball Arena ◦ 15,000 Seat Olympic Field Hockey Center ◦ 17,000 Bed Olympic Village
  • Sport: Athletics & Paralympic Athletics Location: In the south of the Olympic Park Permanent or temporary: Permanent Number of events: 208 Status : Construction completed & Turf laid in Nov 11.Cost : £760m Utility After Ganes : Venue for sports, athletics, as well as cultural & community events.
  • Cost : £268mSport: Diving, Swimming & Modern PentathlonLocation: South-east corner of the Olympic ParkPermanent or temporary: PermanentNumber of events: 192Status : Construction completed in July 2011.Utility After Ganes : Venue for sports, athletics, as well as cultural & community events.
  • Sport: Basketball ,Wheelchair Rugby & Handball (Finals). Location: In the north of the Olympic Park Permanent or temporary: Temporary (re- useable) Number of events: 7Cost :£42 m Status : Construction completed in Jun 11. Utility After Ganes : relocated elsewhere in the UK
  • Cost : £44 mSport: Handball, Goalball & Modern PentathlonLocation: west of the Olympic ParkPermanent or temporary: PermanentNumber of events: 6Status : Construction completed in July 2011.Utility After Ganes : Sports, health and fitness club with changing facilities
  • Cost : £105 mSport: Track Cycling & Paralympic Track CyclingLocation: North of the Olympic ParkPermanent or temporary: PermanentNumber of events: 28Status : Construction completed in Feb 2011.Utility After Games : The facility will be owned, funded and run by the Lee Valley Regional Park Authority.
  • Sport: Hockey & Paralympic FootballLocation: Olympic ParkPermanent or temporary: TemporaryNumber of events: 4Status : Construction completed in Oct 2011.Utility After Games : The facility will be moved north to Eton Manor.
  • Sport: Canoe & SlalomLocation: 30km north of the Olympic ParkPermanent or temporary: PermanentNumber of events: 4Status : Opened to Public since Spring 2011.Utility After Ganes : It will be owned, funded and managed by Lee Valley Regional Park Authority.
  • Capacity: 17,000 Beds Location: Olympic Park Permanent or temporary: Permanent Developer : Qatari Diar and British developer Delancey to manage East Village. Utility After Games : Will be calledCost :£557m East Village and become home to 3,600 families from 2013.
  •  Travel of 100% of ticketed spectators by Public Transport” Upgradation of East London connectivity. 12 Car Subway shuttle “Olympic Javelin” Price of ticket to include public transportation. 240,000 passengers/ hour into/out Olympic Park.
  • Ten public transport linesfeeding into Stratford.Representing the capabilityof a train arriving in the areaevery 15 seconds.“ Expenditure for expansion£1.4bn.395 trains services.29 Hitachi six-car electricmultiple units capable of140mph (225km/h)
  •  Ticketing revenue (650 m out of 3 billion (21%)) excl exp on infra by ODA Comparison to other sporting events ◦ Man Utd over the season earnings $ 150 million ◦ NY yankees $ 120 milliion
  •  Previous experience from other Olympics ◦ 2004 Athens - small size of city, limited capacity of venues ◦ 2008 Beijing - artificially low prices ◦ 2000 Sydney - large city, sports loving country
  • How can the Head of Ticketing for the 2012London Olympics reconcile the diverging needs? He is expectsed to sell $650 million worth oftickets, yet the stadia need to be filled and anydecision has to be accepted as fair by thepublic… Maximize revenues Maximize attendance at all venues and dates Fill the seats with knowledge spectators Ensure tickets for the average Londoner
  •  Culture and atmosphere of the city Location of city affects the reach ◦ Beijing, London Internet ticketing Global financial crisis
  •  Beijing experience ◦ Tickets sold to sponsors, IOC staff, media may go unused ◦ Spectators purchase tickets for day long events but attend only few hours ◦ People buy tickets as souvenirs with no intention to attend ◦ Availability to convenient transport
  •  Max revenues are generated by broadcast rights. $1.7 billion for the beijing games. Broadcast rights and international sponsorships are controlled by IOC. The locog has control over the ticketing revenues, the domestic sponsorships, and the licensing (merchandising). Ticketing revenues fluctuate in a well-defined bandwidth, with price being highly variable, The inventory of available seats is mostly fixed.
  •  Beijing saw a lot of short attention-span spectators, who would leave their seats after a couple of hours or a couple of events. Beijing authorities bussed in „artificial‟ spectators Other budgeted „other events‟, set to amount to 365,000 seats? Maybe some creative events could boost that number? Or maybe even extend the closing ceremony to two days? Although Beijing was far from ticket revenue maximization, it did manage to sell out the entire 6.8 million stock of tickets, something no other Olympic game has done since the 1984 los Angeles.
  •  Ticket revenue is a complex equation with several tiers. ◦ At the top are corporate tickets, typically accompanied by special facilities and access. ◦ At the bottom are simple limited-event tickets. ◦ The opening and closing ceremonies are the blockbusters: held in the biggest venues, fetching the fattest prices, and certain to sell out. Historically, prices vary from just below $1000 to less than $5
  •  80% of olympics tickets are expected to be sold in the UK The remaining 20% of tickets are predicted to be sold internationally. Experience of previous games is that ◦ majority of attenders come from within 1 hour‟s travel time; ◦ Most will be day visitors, but some will stay over. Top countries will be the us, canada, australia, france, germany, netherlands , japan (the pattern mirrors normal london tourism.)
  •  Most spectators will see 1 - 3 events over 2 - 3 days, giving ample opportunity for entertainment in between sports fixtures Some will stay for the evening Availability of late-night transport will have an impact The 100m mens final is on a Sunday evening, as is the closing ceremony; The opening ceremony is a Friday evening.
  •  Tickets need to be affordable and accessible to as many people as possible. The ticketing plans have the clear aim of filling venues to the rafters. All tickets for events in and around london to include a travel card.
  •  Head of ticketing – Paul Williamson Mechanics at these games ◦ 8 million tickets to 26 sports over 17 games ◦ The tickets were priced from $10 to $ 100 ◦ 75% of these tickets will be on sale to the public from March 2011 ◦ 66% of these tickets will be priced at £50 or under ◦ 90% of these tickets will be priced at £100 or under ◦ 31% (2.5 million tickets )will be priced at £20 or under ◦ Ticket allotment was to be regulated by a matching process of demand vs availability ◦ In case of oversubscription for a particular type lottery system was to be followed
  •  Out of the 8.8 million tickets available 25% tickets to be allotted to 205 national Olympic committees, federations and IOC affiliates – on request basis(by late 2010) and full payment By summer of 2011 both would be processed and informed of allotment Remaining tickets to be offered for direct sale
  •  Easy sells – opening and closing ceremony, track & field finals, swimming,gymnastics ◦ Demand exceed supply ◦ Will sell at any price ◦ Expected revenue 40 % Football ◦ Most popular sport on earth ◦ 2 million tickets, expected revenue 10% ◦ Constrained by absence of big stars due to age factor Hard sells – all other sports ◦ Supply exceeds demand Targets set ◦ Sell 85 % seats
  •  Willingness to pay depends on ◦ Comparison with other sporting events in the area ◦ Global appeal of the sport ◦ Local appeal ◦ Stage of the event ◦ Particular athlete or team
  •  LONDON 2012 TICKETSHARE„ which will see many thousands of school children receiving tickets to the games. London 2012 „get set‟ programme.100,000 tickets to be donated to schools in London and around the UK via the London 2012 get set education network PAY YOUR AGE scheme will operate for over 200 Olympic games sessions. This will see anyone who is 16 and under at the start of the games pay their age – and anyone over the age of 60 pay £16. (1.3million tickets)
  •  The london 2012 sign up programme over 1.7 million people have signed up and are receiving news and discount ticket offers for sporting events. London 2012 will have more tickets on sale for disabled people than any previous olympic games.
  •  Out of the 2.5 m cheap tickets 1 m are for football matches, a sport not associated with the Olympics by many. Londoners around the Olympic park have been living on a building site and have not got any concessions. "There has not been enough done for Londoners to enjoy a once-in-a-lifetime chance to watch the Olympic games. Neale Coleman, the mayor of Londons Olympic advisor, defended locogs strategy he said: "locog have to strike a balance with accessibility and affordability while raising a large amount of revenue. "They have increased the number of tickets available and that has enabled a more affordable package to be made available.
  •  The budget for the London 2012 Olympic and paralympic games. Sport and Society : The summer olympics though the lens of social science. . . . . . . . .