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.”
For Turin and the surrounding region, the biggest economic impact to date has been the construction projects required to host the event. The main Olympic Village, a 39-block apartment complex that will house 2,500 people, has been built across the street from a hotel and shopping complex housed in the former factory of Fiat, the once-prosperous employer that was the main engine of the city’s economy before the factory closed in the 1980s. The village complex also includes shops, restaurants, gyms and medical services. A second village complex built in the nearby resort town of Sestriere has space for 2,000 athletes taking part in Alpine skiing events, and a third complex in the nearby village of Bardonecchia will house about 700 people involved in biathlon, snowboard and freestyle skiing. The building spree also included new speedskating and ice hockey rinks and a variety of road and other transportation improvements.
Security costs have also been heavy, topping $100 million so far. One of the biggest challenges will be screening the 2,500 athletes, 5,000 officials and 1 million spectators expected at the Games, including the armed guards who are being allowed to accompany foreign dignitaries. Italy has assigned more than 9,000 officers to provide security for the event. The airspace over the region will be closed, patrolled by AWAC surveillance aircraft deployed by NATO.
Transportation in and around the city, situated in the foothills of the Alps, has posed a separate set of challenges for local organizers. With 15 competitions spread over seven locations, many of the events can be reached only by shuttle buses carrying visitors up narrow, twisting mountain roads. Traffic jams and security checks coming into the city could create additional bottlenecks.
Turin officials are hoping the international spotlight will help invigorate its efforts at economic revival — much as the city of Detroit is hoping the recent Super Bowl will help turn its sagging economy around. But the 2006 Games may not attract the level of attention the city has hoped for.
“We are days away from the [Winter] Games and people are still trying to figure out the proper pronunciation of the city,” said The Sports Business Group's Carter. “The Beijing Games [in 2008] are just such a critical event for the sports world, for the business world, for global politics and all the rest of it that it is casting shadow over the rest of international sport.”
And the publicity for the Turin Games, so far, has been mixed. Demonstrators campaigning for a boycott of Coca-Cola, an official Olympic sponsor, have staged protests and disrupted the journey of the Olympic torch leading up to the Games.
In the end, Turin officials won’t know until well after the torch is extinguished whether the investment of hosting the Games paid off. But one group that usually comes out ahead, said Carter, is the people organizing the events.
“That fraternity and the hard work that goes into the Games pays personal dividends to the professionals that that are involved in it,” he said. “Around the world you see many of the top sports business leaders emerging from having hosted or chaired the Olympics or the World Cup or some other major event that’s come their way.”