Is Hosting the Olympics Good or Bad for a Nation’s Brand?

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With the International Olympic Committee (IOC) set to have chosen Paris over Los Angeles as the site for the 2024 Olympics, it is timely to ask: Is hosting the Olympics good for a nation’s brand, and do they provide a good financial return on investment?

The Olympics in general does not always offer flattering views of a host country. Wall-to-wall media coverage can turn negative. For example, it was widely reported last year that Russia was engaged in a state-run athletic doping program involving as many as 30 sports and 1,000 athletes. The system included secretly swapping out urine samples through a hole in the wall at the 2014 Sochi Olympics. Many Russian athletes were barred from the 2016 Rio games. As a result, there have been calls for FIFA (Federation Internationale de Football Association) to strip Russia of its hosting privileges for the 2018 World Cup.

“Sports fans and spectators have been deceived…. The desire to win medals superseded [Russia’s] collective moral and ethical compass and Olympic values of fair play,” noted Richard McLaren of the World Anti-Doping Agency, according to USA Today.

How do scandals like this — or positive events, on the flip side — affect the world’s opinion of Russia or of any nation? Do international sporting events such as the Olympics have an effect on the “nation brand” of the host country? If so, the stakes are high and pay off go far beyond the realm of sports. How a country is perceived globally can affect its success in tourism, foreign trade and foreign direct investment, according to research by Wharton marketing professor David Reibstein.

At the most recent Wharton Nation Branding Conference, which was hosted by Reibstein, panelists in the session “Nation Branding by International Sports” examined these issues. Moderator Ken Shropshire, the director of the Wharton Sports Business Initiative and a professor of legal studies and business ethics, said that while much has been said about how important sport is to bringing nations together (“I could give you overworked quotes from Mandela, Churchill, and others,”) there has been little discussion about what sport does for a nation’s brand.

He invited Stephen Greyser, a Harvard Business School emeritus professor of marketing and communications, to weigh in on whether events like the Olympics or the World Cup are “worth the effort” for a country. Greyser said they generally do enhance a country’s brand, but the economics are often more problematic.

Branding a Nation Through Sports

In Greyser’s view, the “first successful effort to brand a nation through sport” was the 1936 Berlin Olympics. “Hitler had a big idea, which was to get a seat at the global table beyond merely military power.”

“[In 2008] advocates basically captured the Olympic flame, not literally, but figuratively.” –Stephen Greyser

He also noted that the concept of nation-branding pervaded China’s handling of the 2008 Beijing games. “In China their goal was broad recognition as a leader on the global stage that transcended political power.” He said that China was largely successful, but that in terms of political reputation, the country was thrown into a negative light.

He described how the choice of Beijing for the Olympics sparked international protests against China’s record on human rights, Tibet and other issues. “Advocates basically captured the Olympic flame, not literally, but figuratively,” he observed. Many of the protests occurred along the route for the Olympic torch, a route which in 2008 still extended around the world. In fact, said Greyser, it was as a direct result of the bad publicity that year that the ritual was changed to have the torch ceremony occur only in the host country.

Shropshire said that he witnessed conscious nation-branding efforts, or rather city branding, while a part of the team planning the 1984 Los Angeles Olympics. “What L.A. wanted to accomplish was to be thought of as an economic player on the Pacific Rim and not just as Hollywood. It was a big-business kind of focus that they were striving to portray.”

Planning and operations are a key factor in projecting a good image of the games, Greyser noted. TV coverage of the 2016 Rio Olympics often unintentionally revealed many empty seats. He suggested that the Rio planners could have partnered with a supermarket or department store chain to offer low-cost or free tickets for events anticipated to have low attendance.

Greyser said there are plenty of examples of economic failures, noting specifically the 1976 Montreal Olympics. “Only in 2005 were the bonds [finally] paid off.… It was a huge financial albatross.”

The Rio Games: Broken Promises?

Did the most recent Olympics, the 2016 Rio games, have an effect on Brazil’s nation brand? International journalist Alex Cuadros, the author of the 2016 book Brazillionaires, pointed out that hosting the Olympics was “a really bad decision for Brazil” as was the 2014 World Cup.

He noted that the Olympics cost Rio $12 billion and the city had to ask the federal government — itself in the midst of an economic crisis — for a bailout. According to Cuadros, most of the Olympic budget was “purported to be private, but a lot.… is public. And a lot of tax incentives and land transfers didn’t enter into the calculus.”

He described Rio as a city with a woefully inadequate infrastructure in which many residents live in favelas: informal settlements known for being plagued by poverty. The plan for the Olympics included building permanent new train and bus lines that would help working-class people commute and would integrate the favelas with the rest of the city.

But “the reality of what happened with that money is very different from the ambition,” said Cuadros. He said the neighborhoods that benefitted from new transportation systems, such as Barra da Tijuca and Ipanema, were already among the wealthiest. He stated that some of the individuals profiting the most from the Olympics were “well-connected real estate tycoons” whose projects included building a golf course on what had been environmentally-protected land.

“When you think about the brand of Brazil, one of the promises in the bidding for the Olympics was to clean up Rio’s water.”–Alex Cuadros

“And when you think about the brand of Brazil, one of the promises in the bidding for the Olympics was to clean up Rio’s water,” said Cuadros, noting that about half of Rio’s sewage still flows untreated from homes into the waterways. He said the city made no progress on the matter, and the water pollution received a lot of bad press. For example, the Associated Press reported finding drug-resistant bacteria in the bay. Cuadros recalled seeing a news photo of the lagoon for the Olympic rowing events in which the water was “covered with a kind of white foam of indeterminate origin.”

Greyser agreed, “If one thinks about the rowers and the sewage, that’s not a good combination. You fall out of the boat, you’ve got trouble.”

Cuadros added, “That’s not the kind of branding you want for a city. But more importantly, [the Olympics was] representative of a missed opportunity to really substantively improve the city for the majority of its residents.”

Tulio Milman, an international journalist with the Brazilian media company Grupo RBS, flatly disagreed with Cuadros’s assessment of the Rio Olympics. “I think it was great for Brazil, and sometimes I think the standards of judgment are different when you talk about Brazil.”

He went on to cite, by comparison, recent Olympic games that were marked by bizarre, even tragic events that made headlines. In Beijing at the city’s ancient Drum Tower, the father-in-law of the U.S. Olympic men’s volleyball coach was stabbed to death by a Chinese man who then jumped to his own death. At the London 2012 games, a British spectator shouted insults at Jamaican sprinter Usain Bolt and threw a beer bottle onto the track moments before the 100-meter final. And at the Athens 2004 games, a defrocked Irish priest rushed onto the marathon road and pushed Brazilian contender Vanderlei De Lima into some spectators, possibly robbing him of the gold medal.

“I think people are realizing that Paralympics are… even more connected to the Olympic spirit than the Olympics itself.” –Tulio Milman

And at some Olympic games, simple disorganization tainted the experience. Milman, who worked as a volunteer for the 1992 Barcelona Olympics, recalled waiting on line for hours for the required uniform, only to be told there weren’t any left. Another example of poor planning was put forth by Greyser, who described how for the 2004 Athens games, facilities were so far behind schedule that people joked Beijing was already making better progress toward 2008.

“So what happened in Brazil during the games? The audience was too noisy: oh, shame on us,” Milman said sardonically. In spite of the nation’s political and economic crises, he said, Brazil had delivered a successful Olympics.

The Paralympics: More Olympian than the Olympics?

Milman also spoke about the Paralympics, which took place in Rio in September. Though a veteran sports journalist, he had never before covered the event, and it left an impression on him.

“Think about Usain Bolt or Michael Phelps. They are designed to win: the bones, the muscles … everything. But think of an armless archer, for instance.” Or, he said, consider a blind soccer player relying only on his hearing and a small ring attached to the ball. “This is something fantastic.” He commented that at the core of the Paralympics is the capacity to adapt, which he said is a very important asset — if not the most important one — for individuals, companies and nations.

He noted that two million tickets were sold for the Rio Paralympics. “Not as big as the Olympics five million — but it’s something very impressive.” He added that Google searches for the Paralympic games were higher for the Rio event than for any previous Paralympics.

“I think people are realizing that Paralympics are not any more a by-product of the Olympics, but something with a lot of potential, with a very important message, and even more connected to the Olympic spirit than the Olympics itself,” he said.

As nations continue to battle to host major international sports events, it’s evident that there are big risks and big rewards. Said Greyser, “Remember, reputation is from the outside in. It’s what other people think, not what you think.”

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