Business Gains Of Olympics Economics Essay

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1.0 Introduction

Olympics is the world famous sports event that connecting billions of people as well as all the male and female potential athletes from various countries worldwide. It was held once every four years. In 776 BC, the first and ancient Olympic Games were conducted in Greece (History of the Olympic Games). Traditionally, only men are allowed to take part in Olympics Games. The traditional events of sports comprise running, wrestling and others. Pierre de Coubertin was the founder of modern Olympics Games and he found the governing body of Olympics, which is the International Olympic Committee (IOC), in the year of 1894. The current president of IOC is Jacques Rogge (The Organization, 2012). While in the year of 1896, the first modern games of Olympics were conducted in Athens with over 275 participants who were from 13 different countries (Ungar, 2000). Summer and Winter Olympics Games were held every two years for one at a time. The former Olympics Games include badminton, boxing, diving, handball, basketball, baseball, gymnastics, volleyball and others events. The latter Olympics Games consist of events such as skating, ice hockey, biathlon, skiing, and so forth (The Olympic Games, 2013).

Olympics' objective is to build a world that is better to live and full of peace. This can be achieved by providing education to young generation through sports event in the light of Olympism and the value of Olympism (The Organization, 2012). It also strives to increase the awareness of environmental issues to the public. Besides, the goal of Olympics also includes promoting the competitions and events of sport through organizations at national and international level all around the world. They also work together with firms at private and public sectors in order to foster development in sports for all levels which including the participation of women as well. Eliminating the discrimination of gender in sport is one of the objectives of Olympics (Olympic Games, 2012).

Olympics also fight against doping in order to preserve their athletes and promoting a fair play in sport as well as facilitating the sport ethics. They show opposition towards any abuse of commercial of athletes and sport. Olympics also provide supports in terms of financial and educational for the developing countries. Apart from that, Olympics also aims to promote the cultural exchange between sport and culture as well as developing the education of Olympics to the public (Goal of Olympic Movement, 2012).

The symbol of Olympics is five rings that are intertwined among one another. Each of the rings has colors that are not the same and it stands for distinct continents. Black ring indicates Africa, yellow ring represents Asia, blue ring indicates Europe, red ring represents America and lastly, green ring indicates Australia (Olympics History, 2012). Furthermore, this symbol is featuring on the flag of Olympics on a background of white color. In the year of 1920, the Olympics flag was flown for the first time. The Olympics torch or flame is representing the sequel between the Olympics Games at ancient time and the modern games of Olympics. In addition, the Olympics Motto is "Citius-Altius-Fortius" which stands for the meaning of faster, higher and stronger (Olympic Games History). Wreaths that are made of branches of olive will be given to the ancient Olympics Games' winners as it symbolizes their victories. In contrast, the winners of modern Olympics Games will receive gold, silver and bronze medals (The Olympic Games, 2010). Apart from Athens (1896), modern Olympics Games were held in another 47 nations. For instance like London (2012), Vancouver (2010), Beijing (2008), Torino (2006) and others countries in different years (Olympic Games, 2012).

2.0 Business Gains of Olympics

Olympics are not only a sporting event, it also brings several short term advantages and various long term benefits for businesses as well as the hosting countries.

2.1 Benefits for Businesses

2.1.1 Increase Sales

Businesses can increase their sales during Olympic Games. Foreign visitors and local people will spend more on this particular period. They will increase their spending budget on buying commodity, shopping, accommodation and so forth. This allows business people to generate greater incomes and revenues.

2.1.2 Advertisement

In addition, advertisement revenues also assist media firms to earn higher incomes (Donner, 2012). There are lots of companies want to advertise their brands, products and services during the Olympics Games period. This is because it helps to create higher brand awareness of the company to the public. It also allows organizations to introduce themselves to the world because Olympic Games attract the attention of audiences from different corners in the world.

2.1.3 Sponsorship

Furthermore, sponsorship provides several benefits to the sponsors and their businesses. One of the benefits gained is positive reputation. For example, the sponsor partners of Olympics consist of Coca Cola, McDonald, Omega, Samsung and others. Moreover, firms can increase its brand equity and reposition their brands through sponsorship. It also assists organizations in achieving their company's goals in terms of revenues or shares. The benefits gained through sponsorship can be transformed to offer internal reward for employees to increase their morale and motivate them to work better for the companies (Olympics Sponsorship, 2001). When work productivity of employees increase, the gross profit margin earned by the companies will increase too.

2.2 Benefits for Hosting Countries

2.2.1 World Profile of the Country

By hosting the Olympic Games, the country itself is being introduced and promoted to people all around the world. The hosting countries are exposed at international level and gain world profile through broad exposure from mass media (Economic Impacts of Olympic Games, 2009). For example, Sydney 2000 Olympic Games has high economic growth rate because the transportation system is improved, tourism is promoted and other factors. These help to promote the reputation of Sydney at international level (Economic Impacts on Olympic Host Countries).

2.2.2 Tourism

Large volume of visitors will be attracted into the cities. Nations that hosted Olympics can generate more incomes because of the massive influx of visitors. Tourism is the main income for the hosting countries. When visitors spend more, the countries' economic will boost up and result in long term profitability. The currency of host countries will increase too. For example, London 2012 Olympic Games has successfully attracted the attention of more than five billion people and it also attracts high volume of visitors to the country which foster the economic growth (Bazlyankova, 2012). For example, Beijing 2008 Olympic Games attracts large volume of visitors into the cities and generate more incomes for local businesses. The country's economic growth is increased because of the increase in sales. The total retail sales for consumer products in Beijing has increased 14.5%, which approximately 191.67 billion Yuan, in the year of 2003 (Advantages to the Olympic Host Country, 2005). Furthermore, 500 thousand visitors are attracted to Sydney because it is the host country of Olympic Games for the year of 2000.

2.2.3 Revenues from Ticket Earnings

The hosting countries also generate incomes through ticket earnings and gain revenues through the rights of telecast. For example, Los Angeles 1984 Olympic Games earn 123 million US dollars from sponsors, Seoul 1988 earns 493 million, Barcelona 1992 earns 505 million, Atlanta 1996 earns 540 million and Sydney 2000 earns 550 million. This will increase the revenues of tax for the hosting countries' government as well.

2.2.4 Revenues from TV Rights

Telecast rights allow the host countries of Olympics Games to generate more incomes. For example, Athens 2004 Olympic Games earn 1373 million US dollars from the rights of TV, Sydney 2000 earns 1318 million, Atlanta 1996 earns 1318 million, Barcelona 1992 earns 471 million, Seoul 1988 earns 327 million and Los Angeles 1984 earns 286 million (Economic Impacts of Olympic Games, 2009).

2.2.5 Job Opportunities and Creation of Development Programs

Various job opportunities are offered to the communities because of the building of new stadium or others. These short terms jobs can help to reduce the unemployment rate in hosting countries. Other benefits for communities also consist of development programs in terms of youth and education, training as well as cultural. Apart from that, funds are being generated for the economic development of communities in the hosting countries. For example, Job opportunities are offered to over 650 thousand employees for the Tokyo 1964 Olympic Games. These lead to the rapid economic growth of Japan which transformed the country to be the second largest economy worldwide. In addition, Seoul 1988 Olympic Games create more jobs to employ up to 330 thousand employees (Economic Impacts on Olympic Host Countries). Moreover, the employment growth rate for Sydney 2000 Olympic Games is 1.7% while for Athens 2004 Olympic Games is 1.2%.

2.2.6 Infrastructure and Transportation Improvement

Besides, the hosting countries will put hard efforts in order to lead their nations move towards modernization so that it meets the standard of worldwide. They will put in high investment for the development of infrastructure and transportation in order to transform them to become more efficient, attractive and convenient for people who came to the hosting countries because of Olympics (Sverrisson, 2012). The benefit of infrastructure also impacts the economic in long term. Development of infrastructure includes Olympic park, new stadium, road facilities, new hotels, communication facilities and so forth. The convenient transportation system and improved conditions of infrastructure will benefit local residents of the hosting countries in future. For example, London 2012 Olympic Games invests in the improvement of transportation and infrastructure by upgrading the train services in country. They also extend the network of DLR and increase 45% of the capacity of jubilee line (Pros and Cons of London 2012, 2011). East London has the new rail links as well. In addition, Beijing 2008 Olympic Games improves the infrastructure and constructs new buildings such as The Bird's Nest, The Water Cube and others. The country also refurbishes some of the cities. It comprises the landmark of city, old streets and other areas.

2.2.7 Attract Foreign Investment and increase GDP

Besides, through Olympics, hosting countries can obtain greater investment from foreign investors. The Foreign Direct Investment (FDI) will increase too. Investment will become more attractive as the investment in infrastructure will result in the improvement of overall production conditions for companies at domestic and international level. The value of Gross Domestic Product (GDP) will increase too. For example, more than 10 million of investment has been generated by London 2012 Olympic Games. The GDP of London has increased by 1.2% to 1.6% (Johnson, 2012). In addition, Beijing 2008 Olympic Games put in high investment that costs around $40 million to give support to Olympics (Economic Impacts of Olympic Games, 2009). Furthermore, Tokyo 1964 Olympic Games has invested approximately 6825 million US dollars on the Olympics Games. The growth rate of investment shows an increment of 21% (Economic Impacts on Olympic Host Countries). The growth rate of the GDP of Japan has increased by 17%. The annual gross national product (GNP) and the income of Japan show an increment too.

3.0 Negative Impacts of Olympics

In addition to benefits and business gains, Olympics also have several negative impacts on the hosting countries, particularly for poor countries that hosted Olympics.

3.1 Debt

To host the Olympic Games, the host countries need to put in high investment and lofty budget for the project. Host countries that fail in managing the costs and expenditures of Olympic Games may cause the countries to incur high debt in future. For example, the Montreal 1976 Olympic Games left a debt that is approximately $1.5 billion to the country (Gersten, 2012). The country took about thirty years to pay off the bad debt which means the citizen of Montreal has been suffered for three decades. Besides, Athens 2004 Olympic Games has a debt of approximately $14 billion.

3.2 Waste of Resources

Hosting countries need to utilize various resources for the development of infrastructure and others system for Olympic Games. This can be considered as a waste of resources because they can use the resources or investments in other way which will maximize the citizen's welfare. For example, in 1996 Atlanta Olympic Games, the country invests in accommodation and this cause the citizens of around 15000 to be drawn out from the projects of public housing (Malfas, Theodoraki, & Houlihan, 2004).

3.3 High Facilities Maintenance Cost

Hosting countries have invested heavily to improve and upgrade the infrastructure and construct new building for the Olympic Games. However, the maintenance fees for these facilities can cost a bomb to the hosting countries. For example, Beijing 2008 Olympic Games has invested $423 million to build a new stadium, which is the Bird's Nest. Yet, the stadium's maintenance fees are up to $90 million annually (Thomas, 2010).

3.4 The Poor Suffer

Host countries of Olympic Games often invest and channel the funds generated to the capital cities. People in power and businesses will gain benefits from it. However, there is a lack of development programs or upgrading of infrastructure in the suburban district. Poor citizens still need to suffer because of the underdevelopment of those areas.

3.5 Lack of Long Term Jobs

Job opportunities are provided by the hosting countries in order to fulfill the high demand of labor force during the actual Olympics Games. However, these short term jobs will terminate right after the Olympic Games are ended. Local employees or expatriates who work during the Olympic Games will become jobless. Atlanta 1996 Olympic Games is an example of this. The employment rate is almost full during the games but the unemployment rate is high after the games (Mega-sporting Event in Developing Nations). There is a short of jobs that will allow employees to work for a long period of time and sustain their future career paths. Barcelona Olympic Games also encountered the same issue.

4.0 Conclusion

In conclusion, Olympics can bring several advantages and disadvantages to the businesses as well as the countries that hosted the games. Businesses can earn long term profitability through the increase of sales, revenues gain from advertisement and positive brand image that result from sponsorship. In addition, host countries can gain international reputation through Olympics. They also can generate more incomes and increase the tax revenues for government through the earnings from ticket and TV rights. Besides, hosting Olympic Games will attract greater investment from foreign investors and this will cause the GDP to increase. In addition, the games also help to promote the economic growth through tourism as well as job creation and development programs for the communities. Furthermore, host countries also provide convenient for citizens in future by upgrading and development the infrastructure and transportation system in the cities.

However, Olympic Games also cause some negative impacts to the host countries. Mismanagement will cause the host countries to have high debt. Resources wastage and high maintenance cost of the facilities built are other negative effects of the games. There is also a lack of long term job and the poor will suffer from the Olympic Games since all the benefits go to the power people and businesses.

It seems that the benefits of holding Olympic Games outweigh its costs. The most important factor for a nation is its economic growth. Since Olympic Games promote and boost up the growth of economy, hence, countries that want to host the games and participate in the bidding process are increased. However, host countries have to take into consideration about the social and economic impact on the local citizens in future. Looking after the welfare of the public is more vital than generating profits for a country. Promoting humanities is always one of the significant goals of hosting an Olympic Games.