Sunday, August 10, 2008

The 2008 Beijing Summer Olympics – Burning Business Issues

The Games of the 29th Olympiad begin their second major day of competition today (given the time difference(s) unless your reading this in Beijing) Sunday’s second full day of the Beijing Games will be completed when you read this. Two weeks from today it will all be over. Seemingly in the blink of an eye the $43 billion the Chinese have invested in hosting the 16 days of the 2008 Beijing Olympics will either be deemed a great investment in China’s future (likely) or the worst decision the IOC has every made (a real possibility)

There are several major matters (many serious) the International Olympic Committee will face in the next two weeks. These issues could have a lasting impact on the IOC’s future and will certainly impact the legacy of the Beijing Games

Political Gamesmanship

Last Friday (July 25, 2008), Chinese President Hu Jintao met with the media in Beijing, offering his perspective on how the leader of the world’s most populated nation feels about the upcoming Beijing Games.

"We hope that foreign reporters while in China will respect our laws and rules, report objectively, help communication and understanding between China and the peoples of the world," Hu said.

"The determining factor in securing the success of the Olympic Games is to work vigorously to promote the Olympic spirit featuring friendship, solidarity and peace," Hu said. "The key is to ensure that athletes from all countries will have a level playing field to compete fairly."

"We need to ensure that our friends from the five continents can further enhance their mutual understanding and deepen their friendship during the games," Hu said.

Since Hu met with the media the actions of the Chinese government in direct relationship to their hosting of the Beijing Games have been anything but non-political. All one needs do is consider the litany of terrible decisions made by the ruling the Communist government – the People's Republic of China.

Media censorship: after assuring the world media when the PRC successfully bid for the right to host the 2008 Summer Olympics, a cornerstone of their bid included assurances there would be no media censorship. A few days before the start of the Games the PRC and the IOC attempted to broker an agreement that would end the PRC’s decision to block several websites that looked at human rights issues in China.

Additionally reports emanated from major Australian media that emails between journalists and their home offices had been blocked.

Cheek Barred from Beijing: Tuesday, Team Darfur an athletic based advocacy group founded by 2006 Olympic Gold medal winner American Joey Cheek announced Cheek’s visa to visit Beijing had been rescinded – Cheek Banned from Beijing headlines screamed in many American papers. For his part give Joey Cheek credit – his reaction was composed and professional.

“I am saddened not to be able to attend the Games. The Olympic Games represent something powerful: that people can come together from around the world and do things that no one thought were possible. However, the denial of my visa is a part of a systemic effort by the Chinese government to coerce and threaten athletes who are speaking out on behalf of the innocent people of Darfur. Team Darfur’s main efforts have been to advocate for an Olympic Truce for Darfur, and to raise awareness about the crisis and ask for lasting peace on behalf of the children of Darfur.

“The Olympic Truce captures the spirit of the Olympics: around the Games, the world should come together to work for peace and speak out against conflict. The Chinese government’s efforts to suppress athletes, even those who are competing in the Olympic and Paralympic Games, who speak about essential human rights issues, is a violation of that core Olympic spirit.

“I still remained convinced of the great role the Olympics can play as a force for promoting peace around the world, including the still raging crisis in Darfur. Yet, despite the fact that I’ve always spoken positively of the Olympic ideal, and never called for a boycott or asked an athlete to break an IOC rule, my visa was revoked less than 24 hours before my scheduled departure.”

When contacted by the media, the media attaché at the Chinese embassy in Washington when asked about the decision to ban Cheek from Beijing essentially suggested it was none of anyone’s business what the Chinese Government did or how they did it or why they did it -- the Chinese government official who called Cheek stated simply that he was “not required to give a reason” for revoking visas.

Let the Truth set you free: Friday’s Opening Ceremony which cost more than $100 million proved again that a totalitarian government can and will do whatever they want when it comes to spinning a message. The Olympic Opening Ceremony ended when former Olympic gold medal winner gymnast Li Ning, took hold of the final torch in the 80,000 mile relay, was hoisted high above the crowd on a wire and 'ran' a lap around the rim of the stadium. As he ran his lap high above the stadium images of the Olympic Torch relay followed Li. The images were a classic ‘trick of the tail’ or revisionist history.

The Olympic Torch relay was an embarrassment to International Olympic Committee and at one point led too many nations seriously considering boycotting the Beijing Games. Telling half truths may indeed be how the Chinese conduct their affairs but telling half truths isn’t part of a real democracy.

It has been said before and it will be said again – if you’re drinking the IOC’s Beijing Kool-Aid the Games of the 29th Olympiad will be judged on how the Games where managed by the Chinese, how the facilities held up and other issues directly related to the hosting of the 29th Olympiad. But only someone who is naïve and doesn’t see the big picture would really believe that politics won’t be synonymous with the legacy from the Beijing Games.

And the image left over from the political gamesmanship in Beijing will certainly have a tremendous impact on how the IOC is able to conduct business for many years to come.

Sponsors – Bang for their buck

12 sponsor members of what some would call the most prestigious (others called it the most odorous) group in Olympic corporate history, the 12 companies who comprise the International Olympic Committee’s TOP program. These 12 companies have a great deal invested in the Beijing Games (and the 2006 Torino Games), collectively more than $866 million in cash and goods and services they have agreed to provide.

Most of the companies are American based global companies: General Electric (which owns NBC), Coca-Cola, Visa, McDonald's, Kodak, and Johnson & Johnson. (The others are Canadian-based Manulife Financial; Lenovo, the Chinese personal computer maker; the French information technology services company Atos Origin; the Swiss watch manufacturer Omega; Panasonic; and Samsung)

These 12 global brands are in essence partners with the IOC and the Chinese government in presenting the Games of the 29th Olympiad in Beijing. Over the last ten days, Sports Business News has offered an inside preview of the political, media and business issues relating to what likely will be the most controversial Olympics since the 1936 Nazi Games. These 12 companies are putting their moral, ethical and philosophical ideology on the line in the belief not in the Olympic Games but in being able to connect to what was the world’s largest untapped market. In fact, before the IOC awarded the 2008 Games to Beijing on July 13, 2001 over Toronto, China was a country few Western based companies had access to.

Two major long-term IOC TOP sponsors (Samsung and Coca-cola) invested heavily in the ill-fated Olympic Torch Relay along with TOP sponsor Lenovo, the Chinese personal computer maker who has already announced their Olympic TOP sponsorship will be one quadrennial and done at the end of the Beijing Games.

“This is a global sponsor’s worst nightmare,” said Nicholas Didow, professor of marketing at the University of North Carolina’s Kenan-Flagler Business School in an April Los Angeles Times report when asked about sponsoring the Olympic Torch relay. “At this point, it is as if you are sponsoring political and social conflict, rather than celebrating peace and unification.”

It remains to be seen what will take place in the next two weeks that could have a lasting impact on the companies who have invested hundreds of millions of dollars in the opportunity to sponsor the Beijing Games – but before the Games end wanting the ‘keys to the China cabinet’ may be a great deal more expensive to the IOC major sponsors than they had ever imagined it would be.

The Tape Delay Games

NBC (General Electric) paid the International Olympic Committee $844 million for the American broadcast rights for the Beijing Games. When you realize that represents more than 50 percent of the world-wide total rights fees ($1.44 billion) the IOC generated from the Beijing Games how NBC manages their Beijing efforts will have a tremendous long-term impact on the long-term viability of the IOC generating billions of dollars from television rights fees.

NBC has long had a philosophy that offering the Games on a tape delayed basis would best suit their needs. The 1996 Atlanta Games where televised live for the most part but those where Olympics held on American soil in the Eastern time zone. The last three Summer Games (Sydney 2000, Athens 2004 and Beijing 2008) were all hosted in countries with different time zones.

Friday NBC reported Olympic advertising sales in excess of $1 billion for the Beijing Games. After production costs of around $100 million NBC is looking at a profitable Beijing experience. Overnight ratings from Friday night’s opening ceremonies had to please NBC officials.

In the nearly 50 years of televised Olympics, NBC's coverage of the Opening Ceremony in Beijing was the MOST VIEWED EVER for a non-U.S. Summer Olympics with nearly 70 million total viewers, 14 million more than Athens (56 million).

The Opening Ceremony on NBC earned an 18.6/33 national rating for an increase of 27 percent over Athens in 2004 (14.6/27), and averaged 34.2 million viewers, nearly nine million more than Athens (25.4 million). NBC's Opening Ceremony 18.6/33 household rating is the highest rated Opening Ceremony for a non-domestic Summer Olympics ever, surpassing the 1960 Rome Games on CBS that delivered an 18.1/36, a record that stood for 48 years, according to Nielsen Media Research.

"The Olympic Opening Ceremony captivated the American public in unprecedented numbers for a non-U.S. Olympics," said Dick Ebersol, Chairman, NBC Universal Sports & Olympics. "It was a magical and memorable spectacle and a great way to start the Beijing Olympics."

Additionally, NBCOlympics.com saw its most traffic ever on Friday with 70 million page views, 10 times more than the seven million page views on the opening day of the Athens Games. The overnight rating for the Opening Ceremony was a 19 percent increase over Athens in 2004 and 16 percent higher than Sydney in 2000, according to Nielsen Media Research data released Saturday.

The 29th Olympiad has already been called “The Digital Olympics” by many media pundits. NBC Universal are offering Americans the single most ambitious digital event coverage ever including 2,200 hours of live competition encompassing 25 sports on NBCOlympics.com, with thousands more available on demand. NBCOlympics.com will serve as the Olympic fan's hub for every aspect of the 2008 Beijing Games experience.

NBC Olympics Mobile will present the most comprehensive sporting event coverage ever delivered on mobile, providing Olympic fans with the best in news and video coverage. From live mobile TV broadcasts to breaking news to text and video alerts, NBC Olympics Mobile will be the "on-the-go" destination for Olympic fans.

The ‘burning issue’ that won’t be answered until media insiders dissect the ratings – will Americans watch the Games on tape delay? And will Olympic fans head to the Internet and what long-term impact could The Digital Games have on the IOC’s ability to generate rights fees.

Athletes – drugs and endorsements

The Olympic motto is the hendiatris Citius, Altius, Fortius, which is Latin for "Faster, Higher, Stronger". The motto was proposed by Pierre de Coubertin on the creation of the International Olympic Committee in 1894. De Coubertin borrowed it from his friend Henri Didon, a Dominican priest who, amongst other things, was an athletics enthusiast. The motto was introduced in 1924 at the Olympic Games in Paris.

84 years after De Coubertin the founder of the modern Olympic Games athletes might be Faster, Higher and Stronger but how they become Faster, Higher and Stronger is another matter altogether.

International Olympic Committee president Jacques Rogge predicted there will be "30 to 40" positive doping tests at the 2008 Olympics.

Meanwhile, the head of the World Anti-Doping Agency says cheats who think they can escape detection today could find themselves unmasked and stripped of medals when new technologies are used in the future to retest frozen samples.

In two news conferences on the eve of the Beijing Games, Rogge and WADA chairman John Fahey said cheating will always be a blight on sport, but they are stepping up the fight.

The expected increase in positive tests will partly arise because the IOC is boosting the number of tests to 4,500 at Beijing and partly because the tests for human growth hormone and the blood-booster EPO are more sophisticated.

There are many reasons – many directly related to endorsement opportunities that small window of opportunity Olympians enjoy after years of working towards their Olympic Dreams.

Two weeks from tonight the Games of the 29th Olympiad will come to an end; the Olympic Cauldron containing the Olympic flame will be extinguished. In the next 15 days watch for these and other burning issues to leave a lasting imprint on the business of the International Olympic Committee and the future of the Olympic movement.

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: The Globe and Mail

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