The Olympics and the Paradox of Commercialization

By Richard Pound, Harvard Business Review:

Regular as clockwork, every four years there are predictable lamentations in the media concerning the over-commercialization of the Olympics. The complaint has always struck me as paradoxical.

Look to any other realm of organized sport as we know it today, and it is clear that without private sector support, it could not exist. Spectators who pay to attend sport events and who are willing to absorb, in the price of goods and services, the investment by the private sector are the sine qua non of organized sport.

Governments have neither the resources nor the appetite for such endeavours. Indeed, this was a reality that plagued the first half century of the Games, when host cities sometimes balked at the costs and reneged on their commitments (as when Rome, selected as the host for the 1908 Games, withdrew on the stated basis that the costs resulting from the eruption of Mount Vesuvius left it with insufficient resources), other Games were conducted in full austerity mode (for example, when Antwerp was awarded the 1920 Games, largely in recognition of the damage suffered by Belgium at the hands of the Germans), and some were downright cancelled (1940 and 1944, when World War II intervened).

Meanwhile, we know that, in professional and entertainment sports, spectators are happy to accommodate major commercial involvement. Stadia and media are filled with commercial messaging. Players wear patchworks of commercial logos and advertising. Commercial and public-relations machines turn out Brazilian rainforests’ worth of materials linking athletes and teams to commercial enterprises.

Considered in this context, the Olympics stand among the least commercial events in the world. No advertising of any sort is permitted within the competition venues. No athlete may wear any clothing or equipment with any commercial identification whatsoever, other than small indications as to the manufacturer of the clothing or equipment. Hence the paradox: the least commercialized sports event in the world is accused of over-commercialization while those most heavily commercialized receive no similar complaints.

How do we account for the double standard? No doubt it is owing to the very differentiation which the Olympics brand has been able to achieve in comparison with other sports events. As aspirational events for the youth of the world, the Games take on a cast of purity that many worry will be stained by commercial relationships, even though they may recognize the necessity for funding them. Indeed, this is a suspicion of which Olympic sponsors themselves are aware. Consumers, they have discovered, respond well to their sponsorship so long as it is clear that they are contributing to the organization of the Games or to the support of the athletes’ training. People are put off by sponsors who simply slap the five Olympic rings on packaging without indicating that the commitment goes beyond a financial transaction.

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