Local planners are counting on the deep pockets of corporate America to cover almost one-third the private cost of the 2024 Olympics, anticipating more money from domestic sponsorships than any previous Summer Games, according to a Globe analysis.
At $1.52 billion, some critics say, the revenue estimate could be too ambitious — with no way to insure against shortfalls due to corporate tight-fistedness or indifference to a US Olympics.
“Maybe” such a return is possible, said David D’Alessandro, former chief executive of John Hancock Financial Services, which had been an international sponsor of the Games. “It will be tough and certainly not the slam-dunk they portray. Everything has to go right, including no recession at the wrong time.”
But experts with the US Olympic Committee, who developed the revenue figure with Boston 2024, say they are supremely confident in the number, given recent Olympic trends of strong corporate support, particularly in the upcoming 2016 Rio and 2020 Tokyo Games.
Olympic specialist Lisa Delpy Neirotti thinks Boston 2024’s projection may in fact be too low.
“I think $1.5 billion is a conservative estimate,” said Delpy Neirotti, a professor of sports management at George Washington University. “We have large businesses here and we have a large economy and an economy with disposable income.”
Corporate sponsorships are critical to the Olympic movement, especially in the United States, where government support for the Games is limited.
Boston 2024 projects that the sponsorships they would sell cooperatively with the USOC would provide about 31 percent of the $4.8 billion, privately funded operating budget for a local Olympics, if Boston wins the right to host the Games. It is the largest single category of revenue in the Boston 2024 operating budget.
For perspective, that sponsorship forecast is more than three times the $426 million raised by Atlanta organizers for the last US Summer Games in 1996, according to figures from the International Olympic Committee. The Atlanta number would be about $645 million in 2015 dollars.
The 2008 Beijing Games raised about $1.3 billion in sponsorships, in inflation-corrected dollars, according to the IOC, and the 2012 London Games about $1.2 billion. China has the world’s second-largest economy behind the United States, while England is fifth in the world, according to 2014 statistics kept by the World Bank. Boston’s sponsorship target is about 10 percent bigger, corrected for inflation, than the $1.248 billion Chicago organizers predicted in 2009 for their ultimately unsuccessful bid for the 2016 Summer Games, according to an analysis by a Chicago research organization.
Victor Matheson, an economist at the College of the Holy Cross in Worcester, said Boston 2024’s overall operating budget, including sponsorship projections, depends on good fortune in both revenues and expenses.
“Maybe it’s doable,” he said, “but you’d have to be lucky on both ends.”
But Karen Kaplan, chief executive of the advertising giant Hill Holliday and an adviser to Boston 2024, said she is confident the corporate appetite for what would be the first US Summer Games in 28 years would be extremely strong. American companies, she said, assign a high value on associating themselves with the Olympic movement — “a very powerful and protected brand.”
Rio, which beat Chicago among others for the right to host the Games next summer, originally planned to raise $570 million in domestic sponsorships to supplement $692 million in government money for the Olympic operating budget, according to an IOC report. However, Olympic planners upped their sponsorship goals to $1.5 billion in 2013, in response to political unrest over the public expense of the Games, according to the Associated Press.
Public reports in December said Rio had reached $1 billion in corporate sponsorships, with more than a year to go. Brazil’s economy, the world’s seventh largest, is 13 percent as big as the US economy, according to World Bank data. Rio has additional public expenses outside its operating budget.
In Tokyo, with five years to go before the city hosts in 2020, domestic sponsorships revenue has already reached an estimated $1.4 billion, according to an April report by the Wall Street Journal. Japan has the world’s third largest economy, about 26 percent of the size of the US economy.
If Boston were to win the IOC vote in 2017, the local organizing committee and the USOC would sign a partnership to develop a joint marketing team to sell sponsorships.
In addition to the money from those sponsorships, local Olympic planners would expect $1.5 billion in operating revenue from the IOC, which shares broadcast fees and its own sponsorship money with the host city of each Olympics. The dozen or so IOC sponsors, called the Olympic Partners or TOP sponsors, are generally huge international companies, such as McDonalds and Coca-Cola.
What makes it tricky for local organizers is that these premiere sponsors have exclusivity in their categories, according to the USOC. If McDonalds is the “quick service restaurant” of the Olympics, then Boston 2024 and the USOC cannot sell a sponsorship to a rival in the same category, which puts some huge corporations off limits. Sponsorships grant certain marketing rights and permit the use of designated Olympic images, according to the IOC.
Boston 2024 also expects $535 million in revenue from Olympic licensing and merchandising; the torch relay, which is a sponsored event; and other profit streams.
The local organizing committee shares a portion of its revenue from both domestic sponsorships and the licensing/merchandising category with the US Olympic Committee, for the support of US athletes, according to the USOC.
Under Boston 2024’s new budget, released June 29, the USOC would receive about $413 million of the estimated $2.05 billion raised through sponsorships and licensing — or about 20 percent. Though the USOC already has sponsors, its partnership with Boston 2024 “will have the freedom to approach anyone in any category cleared by the IOC for the Games,” said Lisa Baird, USOC chief marketing officer.
Finally, Boston 2024 expects $1.25 billion in ticket revenue.
In addition to the operating budget, Boston 2024’s plan relies on private investment, some public infrastructure improvement, and for the federal government to oversee security.