NBC Paid $1.2 Billion to Broadcast the London Olympics. Where Does That Money Go?
NBC paid the International Olympic Committee a record $1.18 billion for the U.S. broadcast rights to the 2012 London Games and $4.38 billion for the four Olympics from 2014-2020. What does the IOC do with all that cash?
According to the IOC’s Olympic Marketing Fact File:
The IOC distributes over 90% of Olympic marketing revenue to organizations throughout the Olympic Movement, in order to support the staging of the Olympic Games and to promote the worldwide development of sport. The IOC retains under 10% of Olympic marketing revenue for the operational and administrative costs of governing the Olympic Movement.
Broadcast rights—particularly U.S. broadcast rights—are the main source of the IOC’s Olympic marketing revenues, which also include money from top-tier sponsorships, ticketing and licensing. From 2005-2008, broadcast rights provided the IOC with $2.57 billion—nearly half of its total revenues—and roughly 60% of that total came from NBC. In large part thanks to the escalating cost of broadcast rights, IOC President Jacques Rogge announced last week that the IOC’s reserves have grown from $105M to $558M since 2001.
From 1958-1966, the IOC could retain all of its TV rights revenue. From 1966-1971, it pocketed the first $1 million and divided the remainder in equal thirds among the IOC, National Olympic Committees (NOCs) and International Federations (IFs). A few other formulas have been used, but today the IOC distributes 49% of TV rights revenues to the local organizing committee and 51% “throughout the Olympic Family to support the Olympic Movement worldwide.”
The Olympic marketing revenue that the IOC doles out is not distributed perfectly evenly among the 205 NOCs, 32 IFs, and organizing committees. Under the terms of a deal that dates back to 1996, the United States Olympic Committee has been guaranteed 12.75% of the U.S. broadcast revenue and 20% of the IOC’s global sponsorship revenue. As TV rights and sponsorship revenues grew, the IOC soured on the deal and argued the USOC was receiving too much of the pie.
A new deal, which will take effect in 2020, was reached in May. Under the terms of the agreement, the USOC’s TV rights share will be reduced to 7% and its sponsorship revenue will be reduced to 10%.