By common consent, a brilliant Olympics. Team GB delivered in spades, Danny Boyle and his team crafted superb opening and closing ceremonies (all credit to the performers and technicians involved for that) and London showed again its true colours in welcoming, entertaining and looking after the world when they come to visit.
But it all came at a cost and, at first sight, the numbers seem a little eye-watering…
Whilst final accounts are still pending, received wisdom on the overall final cost is £10 billion; around £8 billion for the Olympic Delivery Authority (ODA) and £2 billion for the London Organising Committee (LOCOG) operating budget.
Where did the funding come from? The Department for Culture Media and Sport (DCMS) and the Olympic Lottery Fund contributed c £7 billion between them with the Greater London Assembly (GLA) pitching in with just shy of a billion to cover the ODA’s costs. The aim was to raise the £2 billion LOCOG operating budget from private sources (sponsorship, broadcast rights, and ticket and merchandise sales) and early indications are that this was achieved.
These are the sort of numbers, though, that only really mean anything to most of us if put into some sort of context. For example, total annual tax receipts in the UK are in the region of £575 billion, so the public money committed represented around 1.4% of total annual Government income; about the same in terms of percentage of annual income spent as the average UK household buying a half way decent laptop computer. Slightly less eye-watering when put that way.
However, you and I, the great British public (via the DCMS, Lottery and GLA) sponsored this event to the tune of some £8bn – or, put as figures with numbers of zeros more easy for us non-bankers to grasp: Londoners to the tune of around £285 and the rest of the country around £110 for every man, woman and child.
So, should we be happy with the return on our sponsorship investment?
The first thing to understand is that no-one hosts an Olympics to make money on the event. The fact of the matter is that staging an Olympics is more likely to bankrupt a city than it is to see it turn any profit that a balance sheet would recognise.
So why do it?
London is a global brand, and brands stand or fall on their reputation among consumers. Owners of the major commercial brands invest billions worldwide every year in advertising and promotions to in an attempt to shift and reinforce perceptions in the minds of consumers in the hope that they will favour them above their competitors.
And London needs new consumers as much as any other brand, in its case in the two key areas where it can see direct commercial benefits: inward investment from businesses; and tourism.
To attract and keep those consumers, London needs to be seen as a major world player that is modern, dynamic, competitive, driven by achievement, welcoming, safe, diverse, competent, well-organised, fun, cultured…the list could go on.
Now, you could promote yourself to the world saying you are all those things, to which the likely reaction would be “well you would say that”.
But, what if… there was a quadrennial global event you could stage… with your name all over it… watched by billions worldwide… that illustrated all those values perfectly… and reflected them back on you as host… so people reached those conclusions for themselves.
And there’s your answer: reputational value. If you are a global city meaning business and wanting the world to know, the Olympic Games is the world’s biggest branding exercise.
And it works.
Hosting the 1992 Olympics marked a watershed in Barcelona’s position as a World city. According to this report, between 1990 and 2000, the number of hotel beds in the City rose by 85%, occupancy rates rose from 71 to 80% and “overnight stays” (a key measure of the popularity of a city as a tourist destination) grew by 105%.
20 years ago few would have even thought about going to Barcelona for the weekend. Now, it is one of the most popular weekend break destinations in Europe, a remarkable achievement and one precipitated entirely by their hosting of the Olympic Games.
Working from a higher base on all those measures, London will clearly never see such spectacular growth rates, but London needs continually to maintain and strengthen (rather than establish) its position on people’s consideration lists both as a business and tourist destination. Our hosting of the Olympics was more about staying ahead of the pack than seeking entry to it.
I also hope it helped people understand London a little better. If London can be characterised as having a personality, it can be seen as distant, aloof – even aggressive sometimes. It can be a difficult place to love if you don’t live here and “get” the place, but hosting the Olympics put a huge smile on its face and, for a month, everybody loved London. Let’s hope it lasts.
So was it worth the money?
I’m going to say yes, but, then again, I would because I’m a London tour guide and my government has just spent £8 billion promoting the city I represent and love.
I’d be really interested to hear what you think though…