Peter Überroth, the figure who created the Black Olympics
If a country wins the right to host the Olympics, the country’s demand for daily necessities and daily services will increase rapidly, and the consumer market will expand rapidly. In addition, a large number of foreign tourists visit, which greatly helps the development of the tourism industry. At the same time, the huge commercial opportunities created by the Olympic economy provide joint venture opportunities for numerous investors, forming a vast investment market. Therefore, the hosting of the Olympics can be said to be the country’s “goose that lays the golden egg”.
However, the past Olympics were all deficit Olympics, and the size of the deficit
was quite large. The 1972 Olympics in Munich, Germany, invested $1 billion and
ran a deficit of $600 million, and the Montreal Olympics in 1976 invested $ 2 billion and lost $1 billion, bringing the city government to the brink of bankruptcy and leaving 3 million citizens with 20 years of debt to pay. The 1980 Moscow Olympics poured in a whopping $9 billion but failed to run a deficit.
Fewer and fewer cities wanted to host the Olympics, leaving only a pile of debt,
and Los Angeles was the only city that applied for the 1984 Olympics, and it was
rightfully chosen as the host nation.
Los Angeles succeeded in hosting the Olympics, but the situation was the worst.
With only $350,000 in debt already due to publicity and advertising invested to
host the Olympics, but astronomical amounts of money are needed to host the
Olympics, so where do you get the money?
Prior to that, funding for the Olympics in various cities came from three routes.
That is, government contributions, bond issuance, and sponsorship funds. But at
the Los Angeles Olympics, these three routes face major obstacles. First, the U.S.
government declared that it would not provide financial support for the Olympics,
and second, California made bond issuance illegal. Looking at the donations,
many people at the time had a hardline attitude that “we should not spend a dime of our taxes,” so I couldn’t expect it. Under these circumstances, the preparatory team of the Los Angeles Olympic Organizing Committee decided to appoint an economic figure with extensive commercial experience as the chairman of the organizing committee. He was Peter Überloth, the electric red-colored man.
There were too many mountains for Überloth, who chaired the organizing
committee, to climb. I didn’t even have an office or a bank account. Überloth paid
$10,000 to set up a bank account and set up a temporary office, but the situation
Überloth is undergoing major reforms in preparation for the Olympics. He limited
the number of sponsors to one for each industry and no more than 30 sponsors
for the Olympics. This has had the effect of increasing the auction price of the
sponsorship amount by companies.
In addition, Überlos set a minimum sponsorship amount of $4 million for sponsor
companies, a move that began to bring in a lot of money. Coca-Cola paid $12.6
million to press Pepsi-Cola, and Japan’s Fujifilm paid $7 million to beat Kodak,
which was the No. 1 company in the industry at the time. The Los Angeles
Olympics collected a total of $180 million in sponsorship donations.
The next most important thing was the TV broadcast rights fee. Überlos first
required broadcasters competing on price to pay a $750,000 deposit, but the five
largest U.S. broadcasters were obediently forced to pay a deposit to obtain
broadcast rights. Eventually, ABC won the broadcast rights for $225 million.
Überloth then sold live overseas broadcast rights in the same way, raising a total
of $290 million in TV rights sales. In addition, Überlos took the unconventional
approach of raising ticket prices, ranging from $50 to $200. He even said that
even if the president of the United States comes, he will have to pay to buy tickets.
What have been the results of Überloth’s efforts? The Los Angeles Olympics
generated a surplus of $250 million, opening a new chapter in the history of
hosting the Games, which continued to be in the red. The 1988 Seoul Olympics
saw a surplus of $497 million, and the 1992 Barcelona Olympics had a surplus of
$40 million, with an economic impact of $26 billion. The 1996 Atlanta Olympics generated a $10 million surplus and an economic impact of $5 billion. Überloth
created the commercial marketing method of the Olympics and has been called
the “father of Olympic marketing.” Since then, several countries have jumped into
the Olympic bid and are trying to keep this “goose that lays the golden egg.”
Ultimately, a brilliant idea will determine your future career and your fortune in life.
Translation/Editing: Dong Kwang Kim