Turin turns to Games for economic revival

John W. Schoen Senior producer • Profile • E-mail

As the flaming Olympic torch moves closer to the opening ceremonies of the 2006 Winter Games, organizers in the host city of Turin are putting the finishing touches on years of preparations and billions of dollars spent to get their city ready for its moment in the international spotlight.

For this once-thriving industrial city, times have been tough. Fiat, once the region's dominant employer, is struggling to reverse years of losses; an unsuccessful alliance with General Motors was recently dissolved. City officials hope the investments made to prepare for the Games, along with the tourism and notoriety that come with them, will provide an important catalyst for the region's revival.

The Italian government recently stepped in to cover a $96 million budget gap in the local organizing committee's budget, approving various measures including a scratch-card, Olympics-themed lottery that is expected to raise $24 million. City officials won’t know until well after the last ticket receipts are counted and the athletes, officials, journalists and spectators have gone home, whether their bet on the Games paid off.

Turin’s dilemma is shared by many cities vying to host the Olympics, say sports business analysts.

“There's such a tremendous amount of investment spending on the hope that it will pay dividends in travel, tourism and notoriety,” said David Carter, founder of The Sports Business Group, a consulting firm for the sports and entertainment industries. “You have to wonder if some of these cities can really make it pencil out.”

Though the official budget for the Turin Games hit $1.5 billion, much of that money was raised outside of the local organizing committee through the sale of broadcast rights and corporate sponsorships. NBC bought the rights to the Turin Games in 1995 as part of a $3.5-billion deal that includes every Summer and Winter Olympics from 2000 through 2008. In 2003, NBC paid $2.2 billion for the rights to the 2010 Winter Games and the 2012 Summer Games. (MSNBC is a Microsoft-NBC joint venture.)

Additional funding comes from rights sold to European and Japanese broadcasters. Corporate sponsorships provide the other main source of revenues to offset the cost of hosting the competitions. Those revenues are collected by the International Olympic Committee, which divides them up between the local organizing committee and the sanctioning bodies for various sports.

“The IOC owns the right to the rings, the name Olympics, and the Olympiad, so in the end they dictate how this goes,” said Kenneth L. Shropshire, director of the Wharton Sports Business Initiative.

Ticket sales provide a relatively small portion of total revenues. And the ticket sales for the Turin Games have been agonizingly slow, though they’ve reportedly picked up in the past few weeks. As of last week, some 700,000 of the 1 million available tickets had been sold, raising some $70 million or about 90 percent of its final target. But after ticket sales, there are relatively few ways for the local organizing committee to raise money.

“You can do an official coin program, you can do an Olympic-themed lottery,” Shropshire said.  “But none of them are as big-dollar generators as the sponsorships, the television revenues and tickets.”

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